Govt Standards
Financial audits of certain governmental entities are required to be performed in accordance with generally accepted government auditing standards (GAGAS) as issued in Government Auditing Standards. These standards do not require, as part of an auditor’s report, the inclusion of
A) A statement as to whether the tests performed provide sufficient appropriate evidence to support an opinion on internal control over financial reporting.
B) The significant deficiencies, with identification of material weaknesses.
C) Sampling methods used to test the controls designed to detect fraud whether or not material fraud is found.
D) A description of the scope of testing of internal control over financial reporting.
C) Sampling methods used to test the controls designed to detect fraud whether or not material fraud is found.
The financial auditor’s report on internal control and compliance in accordance with Government Auditing Standards (the Yellow Book) is required to include
A) 1 only
B) 2 only
C) Both 1 and 2
D) Neither 1 nor 2
A) 1 only
Which of the following is a documentation requirement that an auditor should follow in a financial audit in accordance with Government Auditing Standards?
A) The audit documentation should contain copies of documents examined.
B) The auditor should document the supervisory review of the evidence that supports the findings, conclusions, and recommendations contained in the auditors’ report.
C) The auditor should document all deficiencies in internal control discovered during the audit.
D) The audit documentation should contain a caveat that all instances of material misstatements and fraud may not be identified.
B) The auditor should document the supervisory review of the evidence that supports the findings, conclusions, and recommendations contained in the auditors’ report.
An auditor was engaged to conduct a performance audit of a governmental entity in accordance with Government Auditing Standards. These standards do not require the auditor to report
A) The audit objectives and the audit scope and methodology.
B) All significant instances of noncompliance.
C) The views of the audited program’s responsible officials about the auditor’s findings.
D) A concurrent opinion on the financial statements taken as a whole.
D) A concurrent opinion on the financial statements taken as a whole.
Tell, CPA, is auditing the financial statements of Youth Services Co. (YSC), a not-for-profit organization, in accordance with GAGAS as promulgated in Government Auditing Standards. Tell’s report on YSC’s compliance with laws and regulations is required to contain statements of
A) Both Positive and Negative Assurance
B) Negative Assurance Only
C) Positive Assurance Only
D) Neither Positive nor Negative Assurance
D) Neither Positive nor Negative Assurance
In accordance with the standard on independence stated in Government Auditing Standards, an audit organization may perform nonaudit services that do not violate the fundamental principles on which the standard is based. Thus, the audit organization most likely may do which of the following without impairing its independence by performing nonaudit services?
A) Performing internal audit assistance services.
B) Providing advice and responding to questions.
C) Operating the audited entity’s information technology system.
D) Changing journal entries without management’s approval.
B) Providing advice and responding to questions.
The purpose of performance auditing is to determine whether the desired results of a program are being achieved. The first step in conducting such an audit is to
A) Evaluate the system used to measure results. B
B) Determine the time frame to be audited.
C) Collect quantifiable data on the program’s success or failure.
D) Identify the legislative intent of the program being audited.
D) Identify the legislative intent of the program being audited.
Which of the following statements represents a quality control requirement under Government Auditing Standards?
A) A CPA who conducts government audits is required to undergo an annual external peer review when an appropriate internal quality control system is not in place.
B) A CPA seeking to enter into a contract to perform an audit should provide the CPA’s most recent external peer review report to the party contracting for the audit.
C) An external peer review of a CPA’s practice should include a review of the working papers of each government audit performed since the prior external quality control review.
D) A CPA who conducts government audits may not make the CPA’s external quality control review report available to the public.
B) A CPA seeking to enter into a contract to perform an audit should provide the CPA’s most recent external peer review report to the party contracting for the audit.
In a financial audit under Government Auditing Standards, procedures have disclosed material instances of noncompliance with regulations. The report most likely should
A) Also disclose inconsequential instances of noncompliance.
B) Indicate that the audit was designed to provide reasonable assurance that noncompliance that could result in criminal prosecution would be detected.
C) Express a qualified opinion.
D) Place the findings in proper perspective.
D) Place the findings in proper perspective.
In reporting under Government Auditing Standards, an auditor most likely would be required to report a falsification of accounting records directly to a federal inspector general when the falsification is
A) Discovered after the auditor’s report has been made available to the federal inspector general and to the public.
B) Reported by the auditor to the audit committee as a significant deficiency in internal control.
C) Voluntarily disclosed to the auditor by low-level personnel as a result of the auditor’s inquiries.
D) Communicated by the auditor to the auditee and the auditee fails to make a required report of the matter.
D) Communicated by the auditor to the auditee and the auditee fails to make a required report of the matter.
Reporting on internal control over financial reporting as part of a financial audit under generally accepted governmental auditing standards (GAGAS) requires a
A) Written report describing the entity’s controls specifically designed to achieve the internal control objectives of safeguarding of assets and compliance with laws and regulations.
B) Written report describing each significant deficiency observed, including identification of those considered material weaknesses.
C) Statement of negative assurance that the controls not tested have an immaterial effect on the entity’s financial statements.
D) Statement of positive assurance that controls designed to detect material errors and fraud were tested.
B) Written report describing each significant deficiency observed, including identification of those considered material weaknesses.
Generally accepted government auditing standards use which of the following terms to describe a professional requirement to comply with a standard or provide a special explanation for not doing so?
A) Explanatory requirement.
B) Conditional requirement.
C) Unconditional requirement.
D) Presumptively mandatory requirement.
D) Presumptively mandatory requirement.
The services provided by government auditors may extend beyond the expression of an opinion on the fairness of financial presentation to include reporting on
A) Performance and Compliance, but not Economy & Efficiency
B) Performance, Compliance, and Economy & Efficiency
C) Compliance only
D) Performance and Economy & Efficiency, but not Compliance
B) Performance, Compliance, and Economy & Efficiency
An auditor most likely will be responsible for communicating significant deficiencies in the design of internal controls
A) To a court-appointed creditors’ committee when the client is operating under Chapter 11 of the Federal Bankruptcy Code.
B) To shareholders with significant influence (more than 20% equity ownership) when the deficiencies are deemed to be material weaknesses.
C) To the Securities and Exchange Commission when the client is a publicly held entity.
D) To specific legislative and regulatory bodies when reporting under Government Auditing Standards.
D) To specific legislative and regulatory bodies when reporting under Government Auditing Standards.
Under Government Auditing Standards, an engagement may be a(n)
A) Attestation Engagement or Performance Audit
B) Attestation Engagement Only
C) Performance Audit Only
D) Neither Attestation Engagement nor Performance Audit
A) Attestation Engagement or Performance Audit