Question 1

The introductory paragraph of an audit report introduces the auditor and his/her background and qualifications to perform the auditor.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following best describes the relationship between generally accepted auditing standards (GAAS)and generally accepted government auditing standards (GAGAS)?

Accepted Answer

A)  GAAS apply to independent CPA auditors; GAGAS apply to governmental auditors.
B)  Audits conducted in conformity with GAGAS may also require the auditor to conform to GAAS.
C)  Audits done in accordance with GAGAS must also be done in accordance with GAAS.
D)  Audits of state and local governments always required that the audit be conducted in accordance with both GAAS and GAGAS. B

Question 3

Performance audits provide an auditor's independent assessment of the performance and the management of an entity,program,service,or activity against objective criteria.

Accepted Answer

A) True 
 B)False  True

Question 4

Government Auditing Standards (GAS)issued by the U.S.Comptroller General,also referred to as generally accepted government auditing standards (GAGAS)apply to all of the following audits,except

Accepted Answer

A)  Financial statement audits of federal organizations made by the Government Accountability Office.
B)  Financial audits of not-for-profit organizations that do not receive or expend federal financial awards.
C)  Financial audits of federal grants made by independent CPAs.
D)  Financial statement audits of federal programs made by state auditors.

Question 5

Which of the following statements concerning the Single Audit Act of 1984 (with 1996 Amendments)is correct?

Accepted Answer

A)  Only those entities receiving over $500,000 a year in federal financial assistance are required to have a single audit.
B)  Those entities expending under $500,000 a year in federal awards are exempt from single audit requirements.
C)  The Single Audit Act only applies if an entity has high risk programs.
D)  The single audit is optional for all entities receiving federal awards.

Question 6

Audits of state and local governments may be performed by all of the following except

Accepted Answer

A)  Independent CPAs.
B)  State audit agencies.
C)  Federal grantor agencies.
D)  Client management.

Question 7

An unqualified audit opinion rendered on a governmental unit's general purpose external financial statements means those statements

Accepted Answer

A)  Contain departures from GAAP that may make them misleading.
B)  Have been audited by an auditor with limited qualifications.
C)  Present fairly in conformity with GAAP.
D)  Have been certified as free from error.

Question 8

Describe the importance of materiality for auditors and explain how materiality is determined in audits of state and local governments that follow GASB standards.

Accepted Answer

The answer of Describe the importance of materiality for auditors...

Question 9

Why should persons interested in public administration and persons interested in working as accountants for governments have an understanding of audit objectives and standards?

Accepted Answer

The answer of Why should persons interested in public administration...

Question 10

What are the objectives of the Single Audit Act Amendments of 1996 (and original Single Audit Act of 1984),and to whom is it applicable?

Accepted Answer

The answer of What are the objectives of the Single...

Question 11

One of the primary purposes of the Single Audit Act of 1984 (amended in 1996)is to

Accepted Answer

A)  Detect fraud,waste and abuse in government entities.
B)  To promote the efficient and effective use of audit resources by consolidating audit activity into one organization-wide audit.
C)  Make audit activity legal at the federal level.
D)  Allow federal auditors greater access to government entities receiving federal funds.

Question 12

"An unqualified opinion on the financial statements of a local government means that all statements in the comprehensive annual financial report (CAFR)have been audited and conform with GAAP." Do you agree or disagree? Why?

Accepted Answer

The answer of "An unqualified opinion on the financial statements...

Question 13

Which of the following is the highest in the hierarchy of generally accepted accounting principles according to AICPA Statement of Auditing Standard No.69,as amended by SAS No.91,for the federal government entities?

Accepted Answer

A)  AICPA Audit and Accounting Guide.
B)  FASB emerging issues task force reports.
C)  GASB statements.
D)  FASAB statements.

Question 14

Which of the following kinds of information is not included within the scope of a financial statement audit of a state or local government?

Accepted Answer

A)  Governmental activities financial information.
B)  Management's discussion and analysis (MD&
A)  .
C)  Major funds financial information.
D)  Business-type activities financial information.

Question 15

In the standard auditor's report for a state or local government,the introductory paragraph identifies the opinion units on which the auditor is expressing an opinion and refers to the accompanying financial statements of those units.Name or describe the financial statements that are usually accompanying the standard report.

Accepted Answer

The answer of In the standard auditor's report for a...

Question 16

In audits of state and local government units which of the following paragraphs may not be required in the auditor's report for every audit?

Accepted Answer

A)  Introductory paragraph.
B)  Scope paragraph.
C)  Explanatory paragraph.
D)  Opinion paragraph.

Question 17

The following audit report was rendered on the financial statements of Beachtown:  Required:
Evaluate the extent to which this audit report conforms to that required by generally accepted auditing standards (GAAS).Identify areas of noncompliance with GAAS requirements that have been omitted.

Accepted Answer

The answer of The following audit report was rendered on...

Question 18

A single audit conducted pursuant to the Single Audit Act Amendments of 1996 requires which of the following types of audits?

Accepted Answer

A)  Financial Audit: Yes; Performance Audit: No
B)  Financial Audit: No; Performance Audit: No
C)  Financial Audit: No; Performance Audit: Yes
D)  Financial Audit: Yes; Performance Audit: Yes

Question 19

Which of the following would be considered Category (b)GAAP for state and local government auditees?

Accepted Answer

A)  AICPA Practice Bulletins if specifically made applicable to state and local governments by the AICPA and cleared by the GASB.
B)  GASB Technical Bulletins.
C)  GASB Statements and Interpretations.
D)  GASB Implementation Guides.

Question 20

Which of the following is not one of the types of opinions an auditor may render in accordance with generally accepted auditing standards?

Accepted Answer

A)  Satisfactory.
B)  Qualified.
C)  Unqualified.
D)  Adverse.

Exam 12: Budgeting and Performance Measurement

The introductory paragraph of an audit report introduces the auditor and his/her background and qualifications to perform the auditor.

Which of the following best describes the relationship between generally accepted auditing standards (GAAS) and generally accepted government auditing standards (GAGAS) ?