What is a key difference in the nature of reports between regular financial audits and audits under GAGAS?

The key distinction lies in the additional requirements under Generally Accepted Government Auditing Standards (GAGAS). When an audit is conducted in accordance with GAGAS, it not only assesses the financial statements but also emphasizes the importance of compliance with laws and regulations, as well as the evaluation of internal controls.

GAGAS mandates auditors to issue supplementary reports concerning compliance and internal control, which are integral to the audit process. This additional layer ensures a more comprehensive examination that goes beyond mere financial accuracy, addressing how well the audited entity is adhering to relevant laws and standards, and evaluating its internal governance structures. This heightened scrutiny is crucial for entities funded by government resources, as it enhances accountability and transparency.

In contrast, regular financial audits typically do not require these compliance and internal control reports, focusing primarily on the accuracy of the financial statements themselves. Thus, the correct answer underscores the broader scope and rigorous standards associated with GAGAS, ensuring that public funds are handled responsibly.