Government auditors perform a wide range of work that varies significantly by assignment type, objective, and level of assurance required. Understanding these distinctions helps clarify how financial, attestation, and performance audits each support accountability in public programs.
This lesson is a preview from Graduate School USA's Basic Governmental Auditing Course.
Government auditors perform a wide range of work, but most assignments fall into two fundamental categories. Some engagements involve verifying or attesting to information prepared by others, such as in financial statement audits. Others require auditors to develop and report new information, as is the case with performance audits. Understanding how these assignments differ is essential because the nature of the work determines the objectives, the applicable standards, and the expected audit outcome.
Types of Assignments Recognized by Auditing Standards
Audits begin with clearly defined objectives, and those objectives determine the type of audit to be performed. Under the Generally Accepted Government Auditing Standards (GAGAS), also known as the Yellow Book, audits fall into three primary categories:
- Financial audits
- Attestation engagements
- Performance audits
Each type serves a different purpose and provides a distinct level of assurance.
Financial Statement Audits
Financial statement audits focus on determining whether an entity’s financial statements are presented fairly in all material respects and follow an applicable financial reporting framework, typically Generally Accepted Accounting Principles (GAAP).
When performed in accordance with GAGAS, financial audits also include reporting on:
- Internal control over financial reporting
- Compliance with laws, regulations, contracts, and grant agreements that materially affect the financial statements
The objective is usually to issue a clean (unqualified) opinion. If auditors identify errors or omissions, they encourage management to make corrections so the statements reflect accurate and compliant information.
Attestation Engagements
Attestation engagements provide assurance on subject matter or assertions that are the responsibility of another party. GAGAS recognizes three types:
Examination
Provides the highest level of assurance. Auditors obtain sufficient, appropriate evidence to express an opinion on whether the subject matter is presented in accordance with the criteria.
Review
Provides a moderate level of assurance. Auditors perform limited testing to conclude whether anything came to their attention indicating that the subject matter does not conform to the criteria.
Agreed-Upon Procedures (AUP)
Auditors perform specific procedures agreed upon with the requesting party and report the factual results. No opinion or assurance is provided.
Performance Audits
Performance audits provide objective analysis to help decision-makers improve program performance and operations, enhance public accountability, reduce costs, and strengthen oversight. These audits focus on gathering factual, evidence-based information and presenting it in a report that includes findings, conclusions, and often recommendations.
Common performance audit objectives relate to:
- Program results
- Economy and efficiency
- Internal control
- Compliance
- Prospective analysis
Examples of Areas Assessed in Performance Audits
Performance audits can address a broad range of questions, such as:
- Are program results adequate?
- What is the impact of a major initiative?
- Are resources being acquired economically and used efficiently?
- Are services being delivered on time and at an acceptable level of quality?
- Are internal controls adequate?
- Is the entity complying with laws, regulations, and grant requirements?
- Are there viable alternative approaches?
- What future outcomes can be expected under different scenarios?
Successful performance auditing requires auditors to apply technical knowledge, analytical skills, and professional judgment to meet stakeholder expectations.
Examples of Common Audit Types
Program Audits
Program audits may examine whether:
- Program objectives are appropriate and relevant
- Desired results are being achieved
- Barriers are impeding performance
- Alternative approaches could yield better results
- The program overlaps with or duplicates other efforts
- Applicable laws and regulations are being followed
- Management controls effectively track and report performance
- Reported performance measures are valid and reliable
Economy and Efficiency Audits
These audits may consider whether an entity:
- Follows sound procurement practices
- Acquires appropriate resources at a reasonable cost
- Protects and maintains its assets
- Uses staffing, equipment, and facilities efficiently
- Complies with relevant laws and regulations
- Has adequate controls to measure and monitor economy and efficiency
- Reports valid and reliable performance data
Government auditors operate within a structured system of standards, expectations, and professional responsibilities designed to promote transparency and accountability across public programs. Whether conducting financial audits, attestation engagements, or performance audits, auditors rely on recognized standards such as GAGAS to guide their work and ensure consistency and quality.