Question 1

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. 
D)  Specialists in accounting generally conduct financial statement audits whereas performance audits may require more program-specific knowledge and fewer accounting skills. 
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. 
D)  Specialists in accounting generally conduct financial statement audits whereas performance audits may require more program-specific knowledge and fewer accounting skills. C

Question 2

An elected state auditor, employed by the state, would NOT be considered independent when auditing which of the following entities?

Accepted Answer

A)  A component unit of the state. 
B)  An agency of the state. 
C)  The office of the state auditor. 
D)  All of the above. 
A)  A component unit of the state. 
B)  An agency of the state. 
C)  The office of the state auditor. 
D)  All of the above. C

Question 3

If a program to be subjected to a performance audit lacks clearly defined objectives, what can the auditor do?

Accepted Answer

A)  Decline the audit until the entity defines its objectives. 
B)  Personally discern the objectives based on the auditor's opinion. 
C)  Examine the legislation to see if the legislation articulated the goals and objectives of the program. 
D)  Create a list of goals and objectives. 
A)  Decline the audit until the entity defines its objectives. 
B)  Personally discern the objectives based on the auditor's opinion. 
C)  Examine the legislation to see if the legislation articulated the goals and objectives of the program. 
D)  Create a list of goals and objectives. C

Question 4

Per OMB Circular A-133, "questioned costs" are those that should not be reimbursed under a federal grant because they are in violation of laws of provisions pertaining to the grant.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is NOT a consideration in resolving an ethical dilemma?

Accepted Answer

A)  What are the facts? 
B)  Who is affected? 
C)  Who will know about this action? 
D)  What are the alternative courses of action? 
A)  What are the facts? 
B)  Who is affected? 
C)  Who will know about this action? 
D)  What are the alternative courses of action?

Question 6

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 7

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

Accepted Answer

A) True 
 B)False

Question 8

GAO performance audit standards do NOT include which of the following?

Accepted Answer

A)  The auditor should be independent of the entity being audited. 
B)  The work should be adequately planned. 
C)  The auditor should prepare written work papers. 
D)  The auditor should obtain an understanding of management controls relevant to the audit. 
A)  The auditor should be independent of the entity being audited. 
B)  The work should be adequately planned. 
C)  The auditor should prepare written work papers. 
D)  The auditor should obtain an understanding of management controls relevant to the audit.

Question 9

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 10

Each federal financial assistance program has specific compliance requirements. Which of the following is not an example of the general nature of the specific compliance requirements?

Accepted Answer

A)  Eligibility of individuals or groups to participate in the program. 
B)  Allowability of certain types of goods or services that may be acquired. 
C)  Maximum dollar amounts of expenditures. 
D)  Matching fund requirements. 
A)  Eligibility of individuals or groups to participate in the program. 
B)  Allowability of certain types of goods or services that may be acquired. 
C)  Maximum dollar amounts of expenditures. 
D)  Matching fund requirements.

Question 11

What is the auditor's responsibility for the Schedule of Expenditures of Federal Awards?

Accepted Answer

A)  No responsibility for this Schedule. 
B)  Report on the Schedule without issuing an opinion. 
C)  Express an opinion on the fair presentation of the Schedule. 
D)  Express an opinion on the fair presentation of the Schedule in relation to the basic financial statements taken as a whole. 
A)  No responsibility for this Schedule. 
B)  Report on the Schedule without issuing an opinion. 
C)  Express an opinion on the fair presentation of the Schedule. 
D)  Express an opinion on the fair presentation of the Schedule in relation to the basic financial statements taken as a whole.

Question 12

Newly installed computer programs are one indicator that a government's participation in a federal program may be at high risk of noncompliance.

Accepted Answer

A) True 
 B)False

Question 13

The AICPA originally established auditing standards for federal single audits.

Accepted Answer

A) True 
 B)False

Question 14

Under GAO (GAGAS) standards, independent auditors must report all instances of fraud or illegal acts that they discover during the course of an audit.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is an example of a financial audit?

Accepted Answer

A)  An audit of financial statements to determine if they are presented fairly in accordance with generally accepted accounting principles. 
B)  An audit to determine whether the objectives of a new program are suitable and relevant and whether the entity has complied with laws and regulations that may have a material effect on the financial statements. 
C)  An audit of the financial report on the Noxious Weed Special Revenue Fund to determine whether the entity has complied with specific finance-related requirements. 
D)  An audit to determine whether an entity is acquiring its resources economically and efficiently. 
A)  An audit of financial statements to determine if they are presented fairly in accordance with generally accepted accounting principles. 
B)  An audit to determine whether the objectives of a new program are suitable and relevant and whether the entity has complied with laws and regulations that may have a material effect on the financial statements. 
C)  An audit of the financial report on the Noxious Weed Special Revenue Fund to determine whether the entity has complied with specific finance-related requirements. 
D)  An audit to determine whether an entity is acquiring its resources economically and efficiently.

Question 16

The federal government (and other governments) is known for an affinity for "alphabet soup"-- a proliferation of acronyms to refer to agencies, departments, legislation, programs, and even lawsuits.
REQUIRED:
What do the following acronyms stand for? Briefly, what is each organization responsible for in relation to auditing?
a) OMB
b) GAO
c) AICPA
d) PCAOB
e) GASB
f) FASB
g) FASAB

Accepted Answer

Responses should include the following p

Question 17

Performance audits are sometimes referred to as "operational" audits.

Accepted Answer

A) True 
 B)False

Question 18

The Yellow Book is an informal term for the compendium of all AICPA audit standards.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

An independent auditor has conducted an audit of the financial statements of an entity that receives federal financial assistance, but that is not subject to the OMB standards. What report(s) must the auditor issue at the completion of this engagement?

Accepted Answer

A)  Only an opinion (or disclaimer of opinion) on the financial statements. 
B)  An opinion (or disclaimer of opinion) on the financial statements and a report on internal control. 
C)  An opinion (or disclaimer of opinion) on the financial statements, a report on internal control, and a report on compliance. 
D)  An opinion (or disclaimer of opinion) on the financial statements, a report on internal control, and an opinion (or disclaimer of opinion) on compliance. 
A)  Only an opinion (or disclaimer of opinion) on the financial statements. 
B)  An opinion (or disclaimer of opinion) on the financial statements and a report on internal control. 
C)  An opinion (or disclaimer of opinion) on the financial statements, a report on internal control, and a report on compliance. 
D)  An opinion (or disclaimer of opinion) on the financial statements, a report on internal control, and an opinion (or disclaimer of opinion) on compliance.

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

An elected state auditor, employed by the state, would NOT be considered independent when auditing which of the following entities?

If a program to be subjected to a performance audit lacks clearly defined objectives, what can the auditor do?

Per OMB Circular A-133, "questioned costs" are those that should not be reimbursed under a federal grant because they are in violation of laws of provisions pertaining to the grant.

Which of the following is NOT a consideration in resolving an ethical dilemma?

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?

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

GAO performance audit standards do NOT include which of the following?

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"?

Each federal financial assistance program has specific compliance requirements. Which of the following is not an example of the general nature of the specific compliance requirements?

What is the auditor's responsibility for the Schedule of Expenditures of Federal Awards?

Newly installed computer programs are one indicator that a government's participation in a federal program may be at high risk of noncompliance.

The AICPA originally established auditing standards for federal single audits.

Under GAO (GAGAS) standards, independent auditors must report all instances of fraud or illegal acts that they discover during the course of an audit.

Which of the following is an example of a financial audit?

Performance audits are sometimes referred to as "operational" audits.

The Yellow Book is an informal term for the compendium of all AICPA audit standards.

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

An independent auditor has conducted an audit of the financial statements of an entity that receives federal financial assistance, but that is not subject to the OMB standards. What report(s) must the auditor issue at the completion of this engagement?

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

Federal Government Accounting

Filters

Exam 15: Auditing Governments and Not-For-Profit Organizations

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

An elected state auditor, employed by the state, would NOT be considered independent when auditing which of the following entities?

If a program to be subjected to a performance audit lacks clearly defined objectives, what can the auditor do?

Per OMB Circular A-133, "questioned costs" are those that should not be reimbursed under a federal grant because they are in violation of laws of provisions pertaining to the grant.

Which of the following is NOT a consideration in resolving an ethical dilemma?

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?

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

GAO performance audit standards do NOT include which of the following?

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"?

Each federal financial assistance program has specific compliance requirements. Which of the following is not an example of the general nature of the specific compliance requirements?

What is the auditor's responsibility for the Schedule of Expenditures of Federal Awards?

Newly installed computer programs are one indicator that a government's participation in a federal program may be at high risk of noncompliance.

The AICPA originally established auditing standards for federal single audits.

Under GAO (GAGAS) standards, independent auditors must report all instances of fraud or illegal acts that they discover during the course of an audit.

Which of the following is an example of a financial audit?

Performance audits are sometimes referred to as "operational" audits.

The Yellow Book is an informal term for the compendium of all AICPA audit standards.

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

An independent auditor has conducted an audit of the financial statements of an entity that receives federal financial assistance, but that is not subject to the OMB standards. What report(s) must the auditor issue at the completion of this engagement?

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

Federal Government Accounting

Filters