Yellow Book Audit Services

Yellow Book Audits, Done Right by Yellow-Book-Qualified Senior Auditors

Need a Yellow Book audit? Our audit services are completed by our senior auditors. We are PCAOB-registered and peer-reviewed by another CPA audit firm every 18 months.

What Is a Yellow Book Audit?

A Yellow Book audit is a financial statement audit performed under Generally Accepted Government Auditing Standards (GAGAS), published by the U.S. Government Accountability Office.

Printed copies of the GAGAS standards traditionally feature a yellow cover, hence the nickname. Yellow Book audits contain the same information as a regular GAAS audit, PLUS additional details regarding internal controls, compliance with laws and regulations, and auditor independence.

Yellow Book Audit vs. Single Audit

Yellow Book audits (GAGAS) may be required if your organization receives government funding, including certain nonprofits that do NOT meet the federal funds expenditure threshold that would trigger a single audit requirement.

The key difference between a Yellow Book audit and a single audit is the final statement included in single audits, called the Schedule of Expenditures of Federal Awards (SEFA).

If you meet the threshold for single audit filing, you also need to include a Schedule of Expenditures of Federal Awards (SEFA).

When Is a Yellow Book Audit Required?

Yellow Book audits are required in the following scenarios:

• When required by federal grant or contract - An awarding federal agency or program can require a Yellow Book audit, even if your organization falls below the single-audit threshold.
• When required by your state or local government - Many state and local governments are required by their own statute to be audited under Generally Accepted Government Auditing Standards (GAGAS).
• If you receive pass-through funding - You may be required to undergo a Yellow Book audit by the pass-through entity if you’re a federal funds subrecipient.
• You’re subject to HUD, DOT, or other similar program-specific requirements - Certain federal programs require you to submit Yellow Book audits, regardless of the amount of federal funding you receive.

What a Yellow Book Audit Covers

Yellow Book audits include the following sections:

• Financial statements (same as a GAAS audit)
• A report on the internal controls you have in place for your financial reporting, in compliance with any relevant laws, regulations, contracts, and/or grant agreements
• Our identification of any significant deficiencies and/or material weaknesses in your policies and procedures
• Our findings and recommendations for improvement

Who Needs a Yellow Book Audit?

• Nonprofits receiving federal grants (HUD, HHS, DOT, EPA, DOE program funds)
• State and local government entities
• Quasi-governmental entities (port districts, water districts, etc.)
• Government contractors with specific contract terms
• Subrecipients of federal pass-through funding
• School districts and charter schools receiving federal education funds

PCAOB Audit vs. Yellow Book Audit

PCAOB Audit vs. GAAS Audit by a PCAOB-Registered CPA Firm

PCAOB audits are frequently sold to companies who do NOT need them.

At Clarity Tax, we don’t think you should pay more for something you don’t need.

There are PCAOB audits (rarely needed) and there are GAAS audits performed by PCAOB-registered firms. They are NOT the same thing, and one costs 4-5 times as much as the other.

Most firms don’t need an actual PCAOB audit, even if you received a request for one.

Why You Should Engage Clarity Tax Group for Your Yellow Book Audit

Yellow Book audits can have a significant impact on federal funding awards for your organization, influence your loan eligibility and lending terms, and influence investors and other stakeholders.

That’s why we adhere to the highest standards for quality and customer satisfaction, including:

• Registration with the PCAOB (Public Company Accounting Oversight Board)
• Submission to peer reviews conducted by a separate, objective CPA audit firm every 18 months (ask to see our most recent opinion)
• Yellow Book audits completed by senior auditors. Some CPA audit firms hand them over to junior auditors. We don’t.
• Same-day responsiveness, any time of year. Some CPA firms close during the off-season. We stay open and respond quickly when you need us.
• Transparency. We don’t think you should be sold something you don’t need. We won’t recommend a Yellow Book (GAGAS) audit if a standard GAAS audit is sufficient.

Your Yellow Book Audit Process:What to Expect

1. Free 30-minute scoping call where we confirm whether you actually need a Yellow Book audit or if a standard financial statement audit would be sufficient
2. We send you our engagement letter, including a FREE quote with a FIXED fee
3. We do a pre-audit readiness review (books check)
4. We request the financial documents we need from you. Audits typically take 6-8 weeks or less if you can respond quickly to our requests and have clean books
5. When the audit is complete, we go over any findings/deficiencies/weaknesses we identified, then complete our financial statement opinion and internal control/compliance report
6. We meet (remotely) for a final post-audit debrief, including recommendations on what to fix for next year

Yellow Book Audit FAQs

Is a Yellow Book audit the same as a single audit?

No. Single audits contain all of the information included in a Yellow Book audit PLUS a Schedule of Expenditures of Federal Awards (SEFA). Single audits may be required if you have $1 million or more in federal award expenditures in a single fiscal year beginning on or after October 1, 2024. This amount was raised from a $750K threshold under the 2024 Uniform Guidance update.

How long does a Yellow Book audit take?

Yellow Book audits take about 6-8 weeks to complete, but can be done in as little as 4 weeks if you have clean books and respond quickly to our requests for information.

Does my nonprofit need a Yellow Book audit if our federal grant is small?

Your nonprofit may still need a Yellow Book audit if it’s required by a federal grant or contract, your state or local government, if you receive pass-through funding, or if you’re subject to HUD, DOT, or other similar program-specific requirements. Contact us to determine if you need a Yellow Book audit.