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

Fund-raising efficiency is a measure of performance that expresses how much an organization spends in raising a dollar of donations.

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 50 percent of federal funds expended by the auditee.

Churches must file a Form 990.

Under the terms of the Single Audit Act and its amendments,what percentage of federal awards expenditures must be selected for audit?

The purpose of audits conducted under the Single Audit Act is to provide assurance that federal and state funds are expended in accordance with grant agreements,and with financial management and other standards promulgated by the federal government.

Supporting expenses are included in the numerator of the program expense ratio.

Bonds which carry the full faith and credit of a government are called general obligation bonds.

The program expense ratio is calculated as follows: Total expenses / (Program service expenses + supporting service expenses).

Service Efforts and Accomplishments Reporting is best completed by using a variety of measures,which are reported consistently.

Assume the mission statement for the City Fire Department is as follows: To minimize the combined cost of fire prevention and fire loss. Give an example of Input,Output,Outcome,and Efficiency measures that might be used in Service Efforts and Accomplishments Reporting.

In a governmental audit the auditor:

The document often relied on for financial analysis by investors and creditors for bonds in the secondary market is:

List four sources of income that are not subject to the unrelated business income tax.

Which of the following provisions of the Sarbanes-Oxley Act already existed in governmental auditing standards?

The program expense ratio for a not-for-profit organization will improve if the organization shifts costs from fund-raising to administrative expenses.

Which of the following is not prohibited of organizations receiving tax-exempt status under IRS Section 501(c)(3)?

Why is Service Efforts and Accomplishments reporting especially important for governmental and not-for-profit entities?

Which of the following is an area of concern by the IRS with respect to tax-exempt organizations?

A tax-exempt organization is required to pay income taxes on

A tax-exempt organization must pay income taxes on income generated from trade or business activities unrelated to the entity's tax-exempt purposes.