The 2025 GAO/CIGIE Financial Audit Manual, Volume 3: What’s New and Why It Matters
The U.S. Government Accountability Office (GAO) and the Council of the Inspectors General on Integrity and Efficiency (CIGIE) have released the 2025 update to the Financial Audit Manual (FAM), Volume 3—better known as the Federal Financial Reporting Checklist. The FAM is a three-volume framework for conducting federal financial statement audits: Volume 1 covers methodology, Volume 2 provides implementation guidance, and Volume 3 contains the checklist used by preparers and auditors to assess GAAP compliance. This revision weaves in all FASAB standards through July 2025 and OMB Circular A-136 guidance as of July 14, 2025, signaling that agencies should align current-year reporting with the latest federal accounting policy. It supersedes prior versions and is intended for 2025 federal entity financial statement audits.
The update reflects a collaborative process: GAO and CIGIE jointly refreshed the checklist and circulated a draft to CIGIE’s Financial Statement Audit Network in April 2025, incorporating community feedback into the final release. The document expressly aims to help users determine whether statements are prepared in accordance with U.S. GAAP for federal entities while reminding users to apply professional judgment and consider FASAB, OMB, and Treasury guidance beyond the checklist’s prompts.
Several changes stand out for FY 2025 reporting. First, the Management’s Discussion and Analysis (MD&A) section now anticipates early adopters of SFFAS 64, offering alternate pathways depending on whether an entity continues under SFFAS 15 or elects early implementation of SFFAS 64. This aligns with A-136’s encouragement to adopt SFFAS 64 early and clarifies that MD&A content must be balanced, integrated, concise, and understandable. Second, A-136’s shift to single-year reporting is reflected with conforming edits across the checklist, emphasizing that entities present current-year statements, notes, and RSI unless FASAB requires comparative information.
Inventory reporting tightens, particularly for significant entities, through a new disclosure requirement, and the seized and forfeited property sub-topics are revised to track A-136 and Technical Bulletin 2024-1. Liability-area guidance is refreshed, including “Advances from Others and Deferred Revenue/Other Liabilities,” ensuring harmony with the latest A-136 templates and definitions. The leases topic has been streamlined by removing prior implementation subsections and questions now that lease standards are operationalized government-wide. Deferred Maintenance and Repairs adds a targeted question to sharpen consistency of RSI reporting.
Payment Integrity Information Act reporting also receives updates, giving agencies clearer navigation for the “Other Information” section and linkages to PaymentAccuracy.gov and high-priority programs flagged in MD&A. In parallel, two climate-related edits appear: the removal of an MD&A question tied to A-136 section II.2.5, and the elimination of the prior “Climate Related Financial Risk for Certain CFO Act Agencies” topic consistent with A-136 and Executive Order 14148. Rounding out cross-government reporting hygiene, the Federal Entity Trading Partner Information topic is revised to support improved intra-governmental agreement and eliminations.
For practitioners, the practical message is straightforward: use the checklist as a structured roadmap, but treat it as non-authoritative; the underlying FASAB, OMB A-136, and Treasury guidance remain the governing sources. The 2025 edition is a timely consolidation that standardizes what agencies should present this year while offering a bridge to SFFAS 64’s refined MD&A approach. Those responsible for drafting or auditing AFRs and PARs will find the single-year presentation, strengthened inventory and liabilities disclosures, streamlined leases treatment, and sharper payment integrity and trading-partner prompts especially consequential to getting FY 2025 right.
This summary credits the GAO/CIGIE teams responsible for the update, including GAO’s Financial Management and Assurance leadership and project team, and CIGIE’s Audit Committee.
Disclaimer: This post provides a general summary of GAO/CIGIE’s FAM Volume 3 (2025 Update) for informational purposes only. It is not legal or accounting advice. Readers should consult the official FAM, FASAB standards, OMB A-136, and agency policy before making decisions or taking action.