When in the course of human events it becomes necessary for auditors to implement the 2018 Yellow Book (i.e., financial audits for periods ending on or after June 30, 2020) it is important that they not overlook a new requirement found in the Yellow Book’s quality control requirements. Under the 2018 Yellow Book, at least annually, the audit organization is required to obtain written affirmation of compliance with its policies and procedures on independence from all of its personnel required to be independent.
Fortunately, firms will not have to obtain this declaration of independence via quill pen and parchment. The 2018 Yellow Book allows firms the freedom to obtain the new written affirmation of compliance in either paper or electronic form. As an expediency measure, firms may obtain the written affirmation of compliance more frequently than once per year (e.g., affirmation may be obtained on a per-engagement basis when such engagements last less than one year) rather than remember this annual requirement.
Charlie Blanton, CPA is the Senior Director of Governmental and Nonprofit Content for Surgent CPE, where he authors Surgent’s government and not-for-profit CPE courses and is a frequent webinar instructor. Charlie has over 25 years of experience in auditing and industry having worked at KPMG, the Texas Society of CPAs, Taylor Publishing, Texas Wesleyan University, and the AICPA.
The Auditor’s Declaration of Independence was last modified: February 23rd, 2022 by Richard Daisley, CPA