GAO & DOL

Question 1

audit of employee benefits plans requires…

Answer 1

independence

Question 2

under DOL/GAO rules, independence is impaired under any of the following conditions in regards to employee benefit plans

Answer 2

1. the auditor has direct or material indirect financial interests in the benefit plan
2. acts as the plan’s promotor, underwriter, investment advisor, voting trustee, director, officer or employee
3. maintains the plan’s financial records

Question 3

there are 3 types of independence impairments under GAO independence standards and they are…

Answer 3

1. Personal
2. Organization
3. External

Question 4

during the period of the professional engagement and the date the opinion is rendered…

Answer 4

independence must be maintained

Question 5

what are 2 GAO overreaching principles?

Answer 5

1. auditors must not perform non-audit services that involve performing management functions or making management decisions
2. auditors must not audit their own work or provide non-audit services in situations in which the non-audit services are significant or material to the subject matter of the audit

Question 6

under GAGAS, a government internal audit function can be presumed to be free from organizational impairments to independence for reporting internally if the head of the organization meets all 5 criteria:

Answer 6

1. is accountable to the head of deputy, head of the government entity or to those charged with governance
2. reports the audit results both to the head or deputy head of the government entity and to those charged with governance
3. is located organizationally outside the staff or line-management function of the unit under audit
4. has access to those charged with governance
5. is sufficiently removed from political pressures to conduct audits and report findings, opinions and conclusions objectively without fear of political reprisal

Question 7

DOL rules apply to independence from the plan and…

Answer 7

the plan sponsor

Question 8

when the client takes no action to the instance of fraud…

Answer 8

the auditor should report the fraud outside the entity

Question 9

what is materiality?

Answer 9

a measure of whether a misstatement will influence users of financial information

Question 10

what are the 5 ethical principles of Generally Accepted Government Auditing Standards (GAGAS)?

Answer 10

1. public interest
2. intergrity and objectivity
3. proper use of government information, resources and positions
4. professional behavior
5. independence

Question 11

requirements in addition to GAAS internal control…

Answer 11

scope of testing AND material weaknesses and significant deficiencies identified

Question 12

requirements in addition to GAAS in compliance with laws, regulations and contracts…

Answer 12

scope of testing AND significant noncompliance or fraud identified or suspected

Question 13

what threat is unique to GAO standards?

Answer 13

structural threat

Question 14

what are the two levels of requirements in auditing standards?

Answer 14

1. presumptively mandatory requirement: (indicated by) “should” auditors must comply or document reason for not doing so (ie. INEFFECTIVE)
2. unconditional requirement:
   (indicated by) “must”, “is required”
   auditor must ALWAYS comply to be in accordance with GAAS

Question 15

what is the structural threat?

Answer 15

the auditor’s ability to perform work and report results objectively will be impacted by:
1. the auditor’s placement within a government entity
2. the structure of the auditee

Question 16

GAO’s ethical guidelines apply to those who conduct audits for which two groups?

Answer 16

1. government entities (federal, state, local units)
2. entities that receive government grants

Question 17

independence under DOL applies to which two groups defined as “member”?

Answer 17

1. a partner in the firm
2. all professional employees located in an office of the firm doing all (or almost all) of the audit

Question 18

if DOL’s rules on financial interest and employment ties are not violated, it is permissible for an audit firm to perform:

Answer 18

various non-audit services to a benefit plan that it audits

Question 19

True or False: DOL does not have a conceptual framework

Answer 19

TRUE

Question 20

GAO’s conceptual framework is almost identical to:

Answer 20

AICPA

Question 21

DOL is responsible for:

Answer 21

enforcing audit requirements

Question 22

GAO’s mission is in support of which governing body?

Answer 22

Congress

Question 23

What type of audits do GAO conduct and whom do they report the results?

Answer 23

operational audits;

Congress

Question 24

a non-federal entity that spends more than $50 million a year in federal grants is required to have:

Answer 24

a cognizant agency for audit

Question 25

What is a cognizant agency for audit?

Answer 25

a federal agency that has primary audit responsibilities for a nonfederal entity (the auditee); typically the one that provides the most funding

Question 26

What are the 4 professional behavior standards mentioned by the GAO?

Answer 26

1. avoid conflicts of interest
2. be sensitive to appearances of impropriety
3. put forth an honest effort to meet technical and professional standards
4. comply with all relevant legal, regulatory and professional obligations