Exam 13: Auditing, Tax-Exempt Organizations, and Evaluating Performance

The IRS announced that it considers tax-exempt organizations to be one of its four highest enforcement priorities.What are the three areas of concern for the IRS?

Which of the following is not part of a financial audit?

Assume the mission statement for the Area Homeless Shelter is as follows: To provide temporary shelter and meals to area homeless and to assist them in obtaining self sufficiency. The Shelter has approached you about contributing a substantial amount of money to support their operations.Before contributing your money,you would like to evaluate the Shelter's service efforts and accomplishments.Give an example of Input,Output,Outcome,and Efficiency measures that you might find useful in assessing the Service Efforts and Accomplishments of the Area Homeless Shelter.

What is the maximum threshold for a tax-exempt organization to file a form 990-EZ?

The Government Accounting Standards Board has authority for issuing Governmental Auditing Standards,but not auditing standards for private companies and not-for-profits.

Which of the following is not considered to be a major user group by the GASB?

While the Sarbanes-Oxley Act applies only to corporations filing with the Securities and Exchange Commission,several provisions of the Act already existed in governmental auditing standards,and others are being voluntarily adopted by not-for-profit organizations.

While the principal users of corporate audit reports are investors and creditors,the main user of Single Audit reports is the federal government.

Section 501(c)(3),exempt organizations are prohibited from supporting political candidates or campaigning to influence legislation.

Which of the following items,helpful for analysis,could be found in the statistical section of the CAFR?

Tax-exempt organizations are required to file Form 990 by the 15th day of the 5th month following the organization's taxable year.

In a governmental audit the auditor is required to report directly to appropriate officials in addition to the board or audit committee.

Assuming an auditee is not considered low-risk,the auditor is required to express an opinion on compliance on major programs,which must add up to 90 percent of federal funds expended by the auditee.

Supporting expenses are not included in the numerator of the program expense ratio.

Form 990,Return of Organization Exempt From Income Tax,requires all of the following except:

Tax-exempt organizations are required to pay tax at the corporate or trust rate on the income generated from any trade or business activities unless the money is used to carry out the entity's tax-exempt purposes.

Unrelated Business Income Tax is an excise tax,applied to the gross receipts of a business activity.Therefore allocations of expenses incurred in generating the income are irrelevant.

The Single Audit Act intends that auditors conducting regular financial audits of state and local governments and not-for-profits organizations provide assurance to the federal government that:

The Single Audit Act is intended to provide assurance to the federal government that federal funds have been expended in accordance with laws and regulations,but does not include a report on internal controls.

Which of the following would be a financial audit (or a part of a financial audit)under the Government Auditing Standards?