A6/M9 GAO and DOL

Question 1

what are the ethical principles GAGAS?

Answer 1

• Serving the public interest: collective well being of community
• integrity: work with an attitude that is objective, fact based, nonpartisan, and nonideological
• objectivity: independence of mind and appearance, maintain an attitude of impartiality, having intellectual honesty, and being free of conflicts of interest
• proper use of government information, resources, and positions
• professional behavior: honest effort in the performance of professional services

Question 2

what must each audit organization performing audits do according to GAGAS?

Answer 2

• Establish and maintain a system of quality control
• have an external peer review at least once every 3 years

Question 3

what are the 3 steps required for GAGAS conceptual framework for independence?

Answer 3

1. identify threats to independence
2. evaluate the significance of the threats identified individually and aggregate level
3. apply safeguards as necessary to eliminate the threats or reduce it to an acceptable level. otherwise, independence is impaired

Question 4

what are the threats to independence?

Answer 4

1. self interest threat
2. self review threat: review your own work from providing nonaudit service or previous judgement
3. bias threat: threat that auditor will not take a position objectively due to political, ideological, social views
4. familiarity threat: close relationship
5. undue influence threat
6. management participation threat: auditor taking on a role of management
7. structural threat: threat that an audit organization’s placement within a government entity, in combination with the structure of the government entity being audited, will impact the audit organization’s ability to perform work and report results objectively

Question 5

what are the management participation threats that impair independence?

Answer 5

• setting policies and strategic direction for audited entity
• directing and accepting responsibility for the actions of the audited entity’s employees
• having custody of an audited entity’s assets

Question 6

what is DOL established for?

Answer 6

established guidelines for determining when a qualified public accountant is independent for the purpose of rendering an opinion on an employee benefit plan under the employee retirement income security act

Question 7

what are the 3 situations that impair the independence of employee benefit plan in DOL?

Answer 7

1. direct and material indirect financial interest
2. connection to plan or plan sponsor as promoter, underwriter, investment advisor, voting trustee, director, officer, or employee
3. an accountant maintains financial records