Government Auditing Standards (GAS), issued by the U.S. Government Accountability Office (GAO), require auditors to report on compliance with provisions of laws, regulations, contracts, and grant agreements. The compliance report must describe the scope of the testing, the auditor's responsibilities, and the results of the tests, including any identified instances of noncompliance. While auditors test internal controls over compliance, the standards do not mandate that the formal report include a descriptive "review of major internal control cycles." Instead, the report focuses on communicating any identified significant deficiencies or material weaknesses in internal control over compliance.

A. Reporting on areas of noncompliance is a fundamental requirement and a primary purpose of the compliance report under GAS.

B. The report must describe the auditor's responsibility for testing compliance to provide context for the audit's objectives and procedures.

D. The scope of compliance testing must be clearly stated so that users of the report understand the extent of the work performed.

1. U.S. Government Accountability Office. (2018). Government Auditing Standards: 2018 Revision (GAO-18-568G). Chapter 5, "Reporting Standards for Financial Audits," paragraphs 5.15-5.24, outline the required elements for the auditor's report on internal control and compliance. These sections mandate reporting on the scope, auditor's responsibility, and results of compliance tests but do not require a review of internal control cycles.

2. Ruppel, W. (2019). Governmental Accounting Made Easy. John Wiley & Sons. Chapter 13, "Auditing Governments and Not-for-Profit Organizations," discusses the reporting requirements under Government Auditing Standards, emphasizing the need to report on compliance findings, scope, and responsibilities, distinguishing this from a narrative review of control systems. (Note: While this is a published book, it is authored by a reputable academic and widely used in university curricula on governmental accounting).

3. University of North Carolina, School of Government. (n.d.). Introduction to Governmental Accounting and Reporting. Course materials on financial audits in the public sector explain that the Yellow Book report focuses on communicating deficiencies and noncompliance rather than providing a descriptive analysis of entire control cycles. The required elements align with options A, B, and D.