A7 Government Audits

Question 1

Government Accountability Office Requirements

Answer 1

GAO requirements are more comprehensive compared to typical financial audits. These include reporting on ICFR, compliance, documentation, general considerations, & communication with those charged with governance.

Question 2

Government Auditing Standards

Answer 2

Government Auditing Standards (GAS) are published by the GAO, They primarily apply to audits of federal financial assistance & government orgs.

GAS defines 3 types of engagements; financial audits, attest engagements, & performance audits. GAS also requires a written report on IC in every audit. The auditor must also describe the scope of their work (assessment of CR & understanding of IC)

Question 3

Generally Accepted Government Auditing Standards

Answer 3

Generally Accepted Government Auditing Standards (GAGAS) primarily apply to audits of federal assistance & government orgs, but have been adopted by some states for audits of state financial assistance & other government funding.

GAGAS does not require an opinion on internal controls (only a report on compliance & IC)

Question 4

The Yellow Book

Answer 4

Generally Accepted Government Auditing Standards (GAGAS) is also known as the Yellow Book

Question 5

Presumptively Mandatory

Answer 5

Indicates that the requirement must be followed in all cases where the requirement is relevant, except in a rare circumstance in which the auditor determines its necessary to depart from the presumptively mandatory requirement.

“Should” is used to describe this item.

Question 6

Compliance Audit of Government Entities

Answer 6

Compliance audit of a government entiry is to form an opinion on whether that government entity complied with applicable compliance requirements in all material respects.

Question 7

Questioned Costs

Answer 7

These are costs that are questioned by the auditor because of an audit finding, which resulted from a violation or possible violation of a statue, regulation or terms and conditions set by the federal award.

Question Cost Appear on the schedule of findings & questioned cost for federal awards.

Question 8

Purpose of Government Audits

Answer 8

To verify the financial data is presented with accuracy, strong internal controls are in place, funds allocated are used for their designed purpose, and that there is compliance with financial obligations.

Question 9

Performance Audits

Answer 9

These provide objective analysis, findings, & conclusions to assist mgmt in improving program & performance operations reducing costs, facilitating decision making, & contributing to accountability. Key categories of this audit includes effectiveness, economy, efficiency, internal control, prospective analysis & compliance.

Question 10

Institute of Internal Auditors (IIA)

Answer 10

They issue standards on internal audit departments or orgs within government entities that must follow them

Question 11

Government Audit Reports

Answer 11

Government audit report headings include 4 basic categories such as:
Intro Section
ICFR Section
Compliance/Other matters Section
Purpose of Report Section