Question 1

Service Efforts and Accomplishments Reporting is best completed by using

Accepted Answer

A)  A standard single measure to evaluate or present information. 
B)  A variety of measures which vary from year to year in order to evaluate and present information. 
C)  Only the information that is favorable to the organization. 
D)  A variety of measures which are consistent from year to year.

Question 2

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

Accepted Answer

A)  Statement of Program Accomplishments 
B)  Governance, Management and Disclosures 
C)  Statement of Cash Flows 
D)  Compensation Schedules

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

To compute the net debt per capita,a user of financial statements would need to look at (in the CAFR):

Accepted Answer

A)  The government-wide Statement of Net Position and the population from the statistical section. 
B)  The debt and the amount available to pay that debt in the governmental funds Balance Sheet, and the population from the statistical section. 
C)  The debt in the governmental funds Balance Sheet, the amount available in the government-wide Statement of Net Position, and the population from the statistical section. 
D)  The debt in the government-wide Statement of Net Position, the amount available to pay that debt in the governmental funds Balance Sheet, and the population from the statistical section.

Question 5

Service Efforts and Accomplishments reporting is relevant because:

Accepted Answer

A)  SEA reporting provides more complete information about a government entity's performance than can be provided by the basic financial statements. 
B)  The GASB requires supplemental reporting of service efforts and accomplishments. 
C)  Enterprise fund statements do not do a good job of measuring efficiency or effectiveness. 
D)  All of the above.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Entities that are tax-exempt under IRS Section 501(c)(3)with gross receipts less than $500,000 may file Form 990-N (electronic postcard).

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)  A charity with gross receipts of < $25,000. 
B)  A charity with gross receipts of < $50,000. 
C)  A charity with gross receipts of < $500,000. 
D)  A charity with gross receipts of < $500,000 and total assets of < 2.5 $million.

Question 9

Which of the following are not required disclosures in a Form 990?

Accepted Answer

A)  A Statement of Functional Expense. 
B)  A discussion of program effectiveness. 
C)  A Statement of Revenues, Expenses and Changes in Net Assets. 
D)  None of the above. They are all required disclosures.

Question 10

Which of the following is a governmental audit type that has a primary concern with providing reasonable assurance about whether financial statements are presented fairly?

Accepted Answer

A)  Attestation Engagement. 
B)  Performance Audit. 
C)  Nonaudit services. 
D)  Financial Audit.

Question 11

Entities that are tax-exempt under IRS Section 501(c)(3)are prohibited from having surpluses (revenues exceed expenses).

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not true regarding the Single Audit Act and its amendments?

Accepted Answer

A)  Governments and not-for-profit organizations that exceed $50 million in federal awards are normally assigned a cognizant agency to provide guidance. 
B)  Smaller governments report to oversight agencies, typically the agency providing more funding than any other agency. 
C)  The auditor is not required to test internal controls to gain an understanding of internal controls for use in selecting programs for audit. 
D)  All of the above are true.

Question 13

Which of the following audit opinions is issued when a government fails to comply with generally accepted accounting principles?

Accepted Answer

A)  Qualified 
B)  Adverse 
C)  Either of the above, depending on the severity of the noncompliance 
D)  Neither (a) or (b) above

Question 14

To apply for tax-exempt status,a non-profit organization must file:

Accepted Answer

A)  IRS Form 501(c)(3). 
B)  IRS Form 990. 
C)  IRS Form 1023. 
D)  None of the above.

Question 15

Entities that are tax-exempt under IRS Section 501(c)(3)are permitted to endorse political candidates or attempt to influence legislation.

Accepted Answer

A) True 
 B)False

Question 16

Governmental attestation engagements must comply with both the Government Auditing Standards and with the AICPA's attestation standards.

Accepted Answer

A) True 
 B)False

Question 17

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.

Accepted Answer

A) True 
 B)False

Question 18

The Government Accountability Office has authority for issuing Generally Accepted Auditing Standards.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following activities give rise to Unrelated Business Income Tax?

Accepted Answer

A)  Investment income arising from investment of unrestricted funds. 
B)  Business operated for the convenience of employees and patients. 
C)  Sale of donated merchandise. 
D)  None of the above.

Question 20

Which of the following is not a difference between private sector auditing and governmental auditing?

Accepted Answer

A)  The public availability of audit reports. 
B)  Testing of compliance with laws and regulations. 
C)  Governmental audits require auditor knowledge of government accounting and auditing. 
D)  None of the above; these are all differences between private sector auditing and governmental auditing.

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

Service Efforts and Accomplishments Reporting is best completed by using

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

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

To compute the net debt per capita,a user of financial statements would need to look at (in the CAFR) :

Service Efforts and Accomplishments reporting is relevant because:

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

Entities that are tax-exempt under IRS Section 501(c)(3)with gross receipts less than $500,000 may file Form 990-N (electronic postcard).

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

Which of the following are not required disclosures in a Form 990?

Which of the following is a governmental audit type that has a primary concern with providing reasonable assurance about whether financial statements are presented fairly?

Entities that are tax-exempt under IRS Section 501(c)(3)are prohibited from having surpluses (revenues exceed expenses).

Which of the following is not true regarding the Single Audit Act and its amendments?

Which of the following audit opinions is issued when a government fails to comply with generally accepted accounting principles?

To apply for tax-exempt status,a non-profit organization must file:

Entities that are tax-exempt under IRS Section 501(c)(3)are permitted to endorse political candidates or attempt to influence legislation.

Governmental attestation engagements must comply with both the Government Auditing Standards and with the AICPA's attestation standards.

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.

The Government Accountability Office has authority for issuing Generally Accepted Auditing Standards.

Which of the following activities give rise to Unrelated Business Income Tax?

Which of the following is not a difference between private sector auditing and governmental auditing?