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

Which of the following is not a unique characteristic that distinguishes ethical decisions made by employees of governments from those made by employees of for-profit entities?

The Schedule of Findings and Questioned Costs should include 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 internal control for this entity is to:

Financial audits generally are conducted annually. Performance audits generally are conducted

Performance audits must be conducted by independent auditors.

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?

In a highly controversial move, the mayor and city council approved the purchase of the Swim and Gym, a local private facility that was facing bankruptcy. The mayor promised the public that the facility would be operated on a business-like basis and would be fully supported by user fees. No city money was to be spent on the Swim and Gym. Critics of the purchase complain that city laborers are frequently seen at the facility, the facility was re-roofed during the first year, and employees at the facility are considered city employees and earn the same benefits as other city employees. To quiet the vocal opponents to the operation of the Swim and Gym, the mayor asked the internal audit department to conduct an audit of the operation. You are assigned to the task. REQUIRED: What are the issues you want to address in this audit?

A CPA prepares 'working papers' in an audit of an entity that receives federal financial assistance. Which of the following statements is true with regard to such 'working papers'?

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 a necessary condition for a performance audit?

An auditor of any government or not-for-profit that receives federal monies must include a report on the entity's internal control structure within their audit report or provide a cross-reference to that report.

In a performance audit of a not-for-profit organization, procedures that auditors would follow to gain an understanding of management controls would NOT include

The following descriptions relate to an independent public accounting firm that has as clients some governments and not-for-profit entities that receive federal financial assistance. REQUIRED: For each of the following independent situations, describe the possible violations of GAO standards (Government Auditing Standards) and conclude whether or not the situation is a violation. a) A college graduate who is not a CPA is assigned by her firm to the audit of Grover County. Because she is not a CPA, the firm did not send her to any continuing education courses this year or last year. b) An auditor has prepared working papers using a new computer software package. The financial statements and audit reports generated by the software are well designed and incorporate all required accounting and auditing standards. Because the program is so powerful, it is also quite complex. Printouts of the financial statements and supporting schedules do not include much of the information necessary to determine that the auditor was justified in his/her conclusion. Most of that information is part of the computer program, however. c) While auditing a not-for-profit entity, the auditor discovered that a secretary had been embezzling money from the petty cash fund. In relation to the financial statements taken as a whole, the amount stolen was not material. The auditor discussed the issue with the entity's management. The theft was reported to the appropriate law enforcement personnel and the bonding company reimbursed the not-for-profit entity for the full amount of its loss. Since there was no effect on the financial statements, the theft was not mentioned in the auditor's report. d) The internal auditor of Sunningdale City reports to the city's chief financial officer. The internal auditor audited the city's health and welfare division for purposes of expressing an opinion on the financial statements prepared by that division and submitted to a federal agency.

Which of the following groups is responsible for administering the Single Audit Act?

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

An auditor is engaged to audit the Eastern Planning and Development District, a not-for-profit entity that receives federal financial assistance. The auditor designed his audit to provide reasonable assurance of detecting material misstatements resulting from illegal acts. What additional requirements does the auditor have with regard to compliance?

What amount of continuing professional education would an auditor, who is not a CPA but who is engaged in the audit of a City that receives significant amounts of federal financial assistance, be required to complete?

Which of the following is NOT true of an attestation engagement?

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

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