Question 1

Circular A-133, issued by the Office of Management and Budget,

Accepted Answer

A) Applies only to state and local governments 
B) Applies only to not-for-profit organizations 
C) Applies to both 
D) Applies to neither 
A) Applies only to state and local governments 
B) Applies only to not-for-profit organizations 
C) Applies to both 
D) Applies to neither

Question 2

A CPA has conducted an audit of the financial statements of an entity that received federal financial assistance and had one program that qualified as a major program.The CPA's responsibility related to reporting on internal control for this entity is to:

Accepted Answer

A) Issue a report on internal control relating to the financial statements. 
B) Issue an opinion on internal control relating to the financial statements. 
C) Issue a report on internal control relating to the financial statements and a report on internal control related to the federal program(s). 
D) Issue a report on internal control relating to the financial statements and an opinion on internal control related to the major program. 
A) Issue a report on internal control relating to the financial statements. 
B) Issue an opinion on internal control relating to the financial statements. 
C) Issue a report on internal control relating to the financial statements and a report on internal control related to the federal program(s). 
D) Issue a report on internal control relating to the financial statements and an opinion on internal control related to the major program.

Question 3

GAO independence guidelines permit CPA firms to determine the estimated useful lives of their clients' assets.

Accepted Answer

A) True 
 B)False

Question 4

Which the following is not included in the GAO auditing standards for financial statement audits?

Accepted Answer

A) General standards. 
B) Field work standards. 
C) Reporting standards. 
D) Statistical sampling standards. 
A) General standards. 
B) Field work standards. 
C) Reporting standards. 
D) Statistical sampling standards.

Question 5

Which of the following is NOT included in the general standards of GAGAS?

Accepted Answer

A) Qualifications. 
B) Quality control. 
C) Planning. 
D) Independence. 
A) Qualifications. 
B) Quality control. 
C) Planning. 
D) Independence.

Question 6

Reports issued by CPAs conducting audits subject to the GAO standards must include all of the following except:

Accepted Answer

A) A description of the scope of compliance testing. 
B) A description of the scope of internal control testing. 
C) A description of any irregularities and illegal acts found. 
D) A description of any sampling methodology and sampling plans used. 
A) A description of the scope of compliance testing. 
B) A description of the scope of internal control testing. 
C) A description of any irregularities and illegal acts found. 
D) A description of any sampling methodology and sampling plans used.

Question 7

A CPA has conducted an audit of the financial statements of an entity that received federal financial assistance and had one program that qualified as a major program.The CPA's responsibility related to reporting on compliance for this entity is to

Accepted Answer

A) Issue a report on compliance related to the entity. 
B) Issue an opinion on compliance related to the entity. 
C) Issue a report on compliance related to the entity and a report on compliance related to the federal program(s). 
D) Issue a report on compliance related to the entity and an opinion on compliance related to the federal program(s). 
A) Issue a report on compliance related to the entity. 
B) Issue an opinion on compliance related to the entity. 
C) Issue a report on compliance related to the entity and a report on compliance related to the federal program(s). 
D) Issue a report on compliance related to the entity and an opinion on compliance related to the federal program(s).

Question 8

Which of the following is NOT included in the general requirements for which the auditor must test compliance with federal regulations?

Accepted Answer

A) Matching funds. 
B) Drug-free workplace. 
C) Political activity. 
D) Prevailing wage. 
A) Matching funds. 
B) Drug-free workplace. 
C) Political activity. 
D) Prevailing wage.

Question 9

An attestation engagement might include examination of prospective or pro-forma financial statements.

Accepted Answer

A) True 
 B)False

Question 10

To "attest" means to confirm that something is true, correct, or genuine.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is NOT a technique used by an auditor in a performance audit engagement to gain an understanding of the controls in place to ensure that a program meets its objective?

Accepted Answer

A) Reading the legislation. 
B) Making inquiries of employees. 
C) Flow-charting appropriate systems. 
D) Preparing and administering questionnaires. 
A) Reading the legislation. 
B) Making inquiries of employees. 
C) Flow-charting appropriate systems. 
D) Preparing and administering questionnaires.

Question 12

The Schedule of Findings and Questioned Costs should include all of the following except

Accepted Answer

A) Information on types of opinions expressed on the financial statement. 
B) Information on all weaknesses in internal control. 
C) List of material noncompliance. 
D) Known questioned costs. 
A) Information on types of opinions expressed on the financial statement. 
B) Information on all weaknesses in internal control. 
C) List of material noncompliance. 
D) Known questioned costs.

Question 13

Which of the following must have an audit under GAGAS?

Accepted Answer

A) A state government that receives more than $500,000 in federal awards during the year. 
B) A local government that receives more than $501,000 in federal awards during two years. 
C) A state government that expends more than $500,000 in federal awards during the year. 
D) A local government that expends more than $501,000 in federal awards during two years. 
A) A state government that receives more than $500,000 in federal awards during the year. 
B) A local government that receives more than $501,000 in federal awards during two years. 
C) A state government that expends more than $500,000 in federal awards during the year. 
D) A local government that expends more than $501,000 in federal awards during two years.

Question 14

An independent CPA is engaged to audit the financial statements of Holland City .The city has a variety of revenue sources including a $350,000 grant from the U.S.Department of Housing and Urban Development.Which of the following audit standards must the CPA use when conducting the audit?

Accepted Answer

A) The AICPA audit standards. 
B) The GAO audit standards. 
C) The OMB audit standards. 
D) All of the above. 
A) The AICPA audit standards. 
B) The GAO audit standards. 
C) The OMB audit standards. 
D) All of the above.

Question 15

Under the Single Audit Act, the required report on compliance and on internal control over financial reporting

Accepted Answer

A) Is based on the audit requirements of the GAO's Government Auditing Standards. 
B) Need not be issued if the auditors do not identify internal control deficiencies or instances of noncompliance. 
C) Must be countersigned by the inspector general of the cognizant agency. 
D) Should describe the scope of the auditors' testing. 
A) Is based on the audit requirements of the GAO's Government Auditing Standards. 
B) Need not be issued if the auditors do not identify internal control deficiencies or instances of noncompliance. 
C) Must be countersigned by the inspector general of the cognizant agency. 
D) Should describe the scope of the auditors' testing.

Question 16

The Single Audit Act distinguishes between major and nonmajor federal programs.One factor that distinguishes a major from a nonmajor program is inherent risk.Which of the following is NOT a characteristic of "inherent risk"?

Accepted Answer

A) Significant prior audit findings. 
B) Significant violation of the terms of a specific grant due to a misunderstanding of the requirements. 
C) Weakness in the entity's internal controls. 
D) Lack of oversight by federal agencies. 
A) Significant prior audit findings. 
B) Significant violation of the terms of a specific grant due to a misunderstanding of the requirements. 
C) Weakness in the entity's internal controls. 
D) Lack of oversight by federal agencies.

Question 17

GAO standards specify that performance audit reports should be timely and include several items.Which of the following items is NOT required under the GAO standards?

Accepted Answer

A) Significant audit findings. 
B) Recommendation as to how to correct problems. 
C) Explanation of the audit's objectives and of its scope and methodology. 
D) Details about the number of items tested and the sampling techniques used. 
A) Significant audit findings. 
B) Recommendation as to how to correct problems. 
C) Explanation of the audit's objectives and of its scope and methodology. 
D) Details about the number of items tested and the sampling techniques used.

Question 18

A CPA has conducted an audit of the financial statements of an entity that received federal financial assistance.The CPA identified one major federal program and four nonmajor federal programs.The CPA's responsibility related to the Schedule of Expenditures of Federal Awards is to:

Accepted Answer

A) Express an opinion as to whether the Schedule is fairly presented. 
B) Express an opinion as to whether the Schedule is fairly presented in relation to the financial statements taken as a whole. 
C) Express negative assurance on the Schedule. 
D) The CPA has no responsibility with regard to the Schedule. 
A) Express an opinion as to whether the Schedule is fairly presented. 
B) Express an opinion as to whether the Schedule is fairly presented in relation to the financial statements taken as a whole. 
C) Express negative assurance on the Schedule. 
D) The CPA has no responsibility with regard to the Schedule.

Question 19

The Single Audit Act of 1984 was passed to eliminate the costly practice of requiring separate audits for each federal program in which an organization participated.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is NOT a key difference between financial and performance audits?

Accepted Answer

A) Financial statement audits focus on the entity as a whole whereas performance audits generally focus on a specific program or activity. 
B) Financial statement audits generally are conducted annually whereas performance audits generally are conducted irregularly. 
C) Financial statement audits are conducted using very well defined standards whereas performance audits are conducted without reference to any standards. Specialists in accounting generally conduct financial statement audits whereas performance audits may require more program-specific knowledge and fewer accounting skills.d) 
A) Financial statement audits focus on the entity as a whole whereas performance audits generally focus on a specific program or activity. 
B) Financial statement audits generally are conducted annually whereas performance audits generally are conducted irregularly. 
C) Financial statement audits are conducted using very well defined standards whereas performance audits are conducted without reference to any standards. Specialists in accounting generally conduct financial statement audits whereas performance audits may require more program-specific knowledge and fewer accounting skills.d)

Circular A-133, issued by the Office of Management and Budget,

A CPA has conducted an audit of the financial statements of an entity that received federal financial assistance and had one program that qualified as a major program.The CPA's responsibility related to reporting on internal control for this entity is to:

GAO independence guidelines permit CPA firms to determine the estimated useful lives of their clients' assets.

Which the following is not included in the GAO auditing standards for financial statement audits?

Which of the following is NOT included in the general standards of GAGAS?

Reports issued by CPAs conducting audits subject to the GAO standards must include all of the following except:

A CPA has conducted an audit of the financial statements of an entity that received federal financial assistance and had one program that qualified as a major program.The CPA's responsibility related to reporting on compliance for this entity is to

Which of the following is NOT included in the general requirements for which the auditor must test compliance with federal regulations?

An attestation engagement might include examination of prospective or pro-forma financial statements.

To "attest" means to confirm that something is true, correct, or genuine.

Which of the following is NOT a technique used by an auditor in a performance audit engagement to gain an understanding of the controls in place to ensure that a program meets its objective?

The Schedule of Findings and Questioned Costs should include all of the following except

Which of the following must have an audit under GAGAS?

An independent CPA is engaged to audit the financial statements of Holland City .The city has a variety of revenue sources including a $350,000 grant from the U.S.Department of Housing and Urban Development.Which of the following audit standards must the CPA use when conducting the audit?

Under the Single Audit Act, the required report on compliance and on internal control over financial reporting

The Single Audit Act distinguishes between major and nonmajor federal programs.One factor that distinguishes a major from a nonmajor program is inherent risk.Which of the following is NOT a characteristic of "inherent risk"?

GAO standards specify that performance audit reports should be timely and include several items.Which of the following items is NOT required under the GAO standards?

A CPA has conducted an audit of the financial statements of an entity that received federal financial assistance.The CPA identified one major federal program and four nonmajor federal programs.The CPA's responsibility related to the Schedule of Expenditures of Federal Awards is to:

The Single Audit Act of 1984 was passed to eliminate the costly practice of requiring separate audits for each federal program in which an organization participated.

Which of the following is NOT a key difference between financial and performance audits?

The Government and Not-For-Profit Environment

Fund Accounting

Issues of Budgeting and Control

Recognizing Revenues in Governmental Funds

Recognizing Expenditures in Governmental Funds

Accounting for Capital Projects and Debt Service

Capital Assets and Investments in Marketable Securities

Long-Term Obligations

Business-Type Activities

Pensions and Other Fiduciary Activities

Issues of Reporting, Disclosure, and Financial Analysis

Not-For-Profit Organizations

Colleges and Universities

Health Care Providers

Managing for Results

Federal Government Accounting

Filters

Exam 16: Auditing Governments and Notforprofit Organizations

Circular A-133, issued by the Office of Management and Budget,

A CPA has conducted an audit of the financial statements of an entity that received federal financial assistance and had one program that qualified as a major program.The CPA's responsibility related to reporting on internal control for this entity is to:

GAO independence guidelines permit CPA firms to determine the estimated useful lives of their clients' assets.

Which the following is not included in the GAO auditing standards for financial statement audits?

Which of the following is NOT included in the general standards of GAGAS?

Reports issued by CPAs conducting audits subject to the GAO standards must include all of the following except:

A CPA has conducted an audit of the financial statements of an entity that received federal financial assistance and had one program that qualified as a major program.The CPA's responsibility related to reporting on compliance for this entity is to

Which of the following is NOT included in the general requirements for which the auditor must test compliance with federal regulations?

An attestation engagement might include examination of prospective or pro-forma financial statements.

To "attest" means to confirm that something is true, correct, or genuine.

Which of the following is NOT a technique used by an auditor in a performance audit engagement to gain an understanding of the controls in place to ensure that a program meets its objective?

The Schedule of Findings and Questioned Costs should include all of the following except

Which of the following must have an audit under GAGAS?

An independent CPA is engaged to audit the financial statements of Holland City .The city has a variety of revenue sources including a $350,000 grant from the U.S.Department of Housing and Urban Development.Which of the following audit standards must the CPA use when conducting the audit?

Under the Single Audit Act, the required report on compliance and on internal control over financial reporting

The Single Audit Act distinguishes between major and nonmajor federal programs.One factor that distinguishes a major from a nonmajor program is inherent risk.Which of the following is NOT a characteristic of "inherent risk"?

GAO standards specify that performance audit reports should be timely and include several items.Which of the following items is NOT required under the GAO standards?

A CPA has conducted an audit of the financial statements of an entity that received federal financial assistance.The CPA identified one major federal program and four nonmajor federal programs.The CPA's responsibility related to the Schedule of Expenditures of Federal Awards is to:

The Single Audit Act of 1984 was passed to eliminate the costly practice of requiring separate audits for each federal program in which an organization participated.

Which of the following is NOT a key difference between financial and performance audits?

The Government and Not-For-Profit Environment

Fund Accounting

Issues of Budgeting and Control

Recognizing Revenues in Governmental Funds

Recognizing Expenditures in Governmental Funds

Accounting for Capital Projects and Debt Service

Capital Assets and Investments in Marketable Securities

Long-Term Obligations

Business-Type Activities

Pensions and Other Fiduciary Activities

Issues of Reporting, Disclosure, and Financial Analysis

Not-For-Profit Organizations

Colleges and Universities

Health Care Providers

Managing for Results

Federal Government Accounting

Filters