A5 M7 Government Audits Flashcards
What are the Government Auditing Standards for reporting of a financial statement audit?
1) report on IC and compliance describing scope of auditor testing and findings
2) under AICPA, provide a high level of assurance about IC over financial reporting in form of opinion
What is an economy and efficiency audit?
determines whether the business has reportable measure of economy and efficiency that are valid and reliable
What is the role of a program audit?
to determine the extent to which an entity’s programs achieve the desired level of results
What can be reported on a performance audit?
the methods of statistical sampling used in performing tests of controls and substantive tests
What do government auditing standards published by the government accountability office focus on?
audits of federal financial assistance and government organizations (NFPs, other orgs, governments etc.)
What is an unconditional requirement?
indicates that a requirement must be followed in all cases when relevant
What is a presumptively mandatory requirement?
indicates that a requirement should be followed but in some cases may need to depart from requirement and explain why
What is an explanatory requirement?
used in GAGAS that does not impose a requirement, but uses words like “might” “may” and “could” to describe explanatory material
Why does GAGAS require more reporting responsibilities than GAAS?
because they include reports on compliance with laws, rules, and regulations that have a material impact on F/S and ICFR
What type of audit engagements are government auditing standards associated with?
- financial audits
- attest engagements
- performance audits
What types of audits are 2 CFR 200 and the Single Audit Act associated with?
- single audits
- program specific audits
What types of audits are GAAS associated with?
- audits
- reviews
- compilations
What are the auditor’s objectives in a compliance audit for a governmental entity?
to form an opinion on whether the government complied in all material respects with applicable compliance requirements
What are questioned costs?
Relate to single audits, resulting from:
1) violation or possible violation of a state, regulation, or terms and conditions of a federal award
2) not supported by adequate documentation
3) may appear unreasonable
What steps should an auditor take when they believe they have identified fraud?
1) extend audit procedures if fraud has occurred
2) inform the party that has oversight or mgmt
What should an auditor report on a performance audit?
1) statement of audit objectives and description of audit scope
2) indications of instances of illegal acts found during audit
3) important views of entity’s responsible officials concerning auditor findings
What are the audit documentation requirements under GAS?
1) evidence of supervisory review of work performed supports findings, conclusions, and recommendations
2) departures from GAGAS and impact on audit due to noncompliance from law, regulation, scope limitations etc.
-good documentation so oral explanations not required
What are the basic elements of a report on compliance?
1) statement that audit should be planned to obtain reasonable assurance about whether noncompliance could have a material effect on entity programs
2) state that a compliance audit does not provide legal determination of entity’s compliance
How should the report of IC results be presented?
on the F/S or in a separate report containing the info
What items are included in compliance audit workpapers?
1) risk assessment procedures performed to understand ICFR
2) responses to assessed risk of noncompliance including tests of compliance and IC
3) materiality levels
Note: never discuss conclusions for an opinion
What should an auditor do if they decide to issue separate reports instead of a combined ICFR and compliance with regs and laws?
auditor should state in audit report that separate reports will be issued and would appear as a paragraph entitled “Other Reporting Required by Government Auditing Standards” in auditor’s report
When are auditors required to report to external entities of an audit?
1) mgmt unwilling to take corrective action with regard to illegal acts, fraud, or material noncompliance
2) specific requirement imposed by grantor that requires any discovery of illegal acts, fraud, or material noncompliance reported to other grantors
In a performance audit if certain important info is excluded from audit report because it is confidential or sensitive, what should the auditor do?
disclose in the report that certain info has been omitted and reasons that make omission necessary
What does the audit opinion state in relation to IC over compliance?
it states that the audit was conducted in order to express an opinion on compliance but not for the purpose of expressing an opinion on effectiveness of IC over compliance
