AUD 5.7 - Government Audits

Question 1

What are the sources of standards for governmental audits?

Answer 1

Generally accepted auditing standards GAAS and Government auditing standards GAGAS (yellow book)

Question 2

GAGAS contain standards or audits of:

Answer 2

Government organizations
Government assistance

Question 3

What are unconditional requirements?
What are presumptively mandatory requirements?

Answer 3

1. Auditor must comply
2. Auditor should comply

Question 4

Types of government audits include:

Answer 4

Financial audits
Attestation engagements
Performance audits

Question 5

Under government financial audits, what standards are the audits performed in accordance with?

Answer 5

GAAS and GAGAS

Question 6

Under government attestation engagements, what standards are the engagements performed in accordance with?

Answer 6

GAGAS and AICPAs standards for examinations, reviews, and agreed-upon procedures (SSAE)

Question 7

These engagements provide objective analysis, finings, and conclusions to assist management to improve program performance and operations, reduce costs, facilitate decision making by parties with responsibility to oversee or initiate corrective action, and contribute to public accountability:

Answer 7

Performance audits

Question 8

Key categories of performance audits include:

Answer 8

Effective’s, economy, end efficiency
Internal control
Compliance
Prospective analysis

Question 9

Examples of the effectiveness, economy, and efficiency objective under performance audits include:

Answer 9

Achievement of legislative, regulatory, or organizational goals
Evaluation of cost benefit or cost effectiveness
Validity or reliability of performance measures

Question 10

Examples of the internal control objective under performance audits include:

Answer 10

Organizational missions, goals, an objectives
Resources are used in compliance with laws
Security over computerized systems
Disaster plans for computerized systems are adequate

Question 11

Examples of the compliance objective under performance audits include:

Answer 11

Compliance criteria established by laws have been met
Appropriate target population has been served

Question 12

Examples of the prospective analysis objective under performance audits include:

Answer 12

Provide analysis or conclusions about information that is based on assumptions about events that may occur in the future, along with possible actions that the entity may take

Question 13

The elements of a finding include:

Answer 13

Criteria
Conditions
Cause
Effect or potential effect

Question 14

How does the GAGAS requirement for reporting on internal control over financial reporting differ from the audit of internal control in accordance with AICPA?

Answer 14

GAGAS does not require that the auditor express an opinion on internal controls

Question 15

Audit organizations should distribute auditors reports on governmental audits to:

Answer 15

Those charges with governance
Audited entity officials
Oversight bodies or those who require or arrange for the audits
Officials with oversight authority

Question 16

GAGAS auditors should consider reducing materiality thresholds in response to:

Answer 16

Public accountability issues
Various legal and regulatory requirements
Visibility and sensitivity of government programs

Question 17

For the financial statement audit of a government program, the audit report is the same as a standard nonissuer report, EXCEPT FOR THE FOLLOWING:

Answer 17

1. The auditors responsibility paragraph should include “conducted in accordance with US GAAS and Government Auditing Standards”
2. An other-matter paragraph should be added to the end of the report referencing in the GAGAS (yellow book) report

Question 18

GAGAS differs from GAAS in regards to written communications. What is the difference?

Answer 18

GAAS required written communication only when significant deficiencies are noted
GAGAS require a written report on the auditors understanding of internal control and the assessment of control risk in all audits

Question 19

What does the written report of internal control over financial reporting (required for all GAGAS audits) include?

Answer 19

1. The assertion that evaluating compliance with laws, rules, and regulations with a direct and material effect on the financial statements is part of developing an opinion on financial statements
2. The assertion that specific controls lasting to financial reportin are considered
3. An indication that either no weaknesses were found or that significant deficiencies were found, and an indication whether those deficiencies were material