Government Auditing

Question 1

What are the sources of Government Auditing Standards?

Answer 1

GAAS and GAGAS

Question 2

What does GAGAS includes designing of?

Answer 2

The audit to provide reasonable assurance of detecting material misstatements resulting from noncompliance

Question 3

What are the audit requirements for federal financial assistance?

Answer 3

Expanded internal control documentation and testing requirements, expanded reporting to include formal written reports on the consideration of internal control and the assessment of control risk, expanded reporting to include whether the federal financial assistance has been administered in accordance with applicable laws and regulations, and application of single audit standards to federal financial assistance

Question 4

What are the 2 types of government audits?

Answer 4

Financial and performance

Question 5

Subjects of attestation agreements could include when dealing with Government Auditing Standards?

Answer 5

Compliance with specified laws, regulations, rules, contracts, or grants and effectiveness of internal control over compliance with specified requirements

Question 6

What are the 3 objectives of performance audits under GAGAS?

Answer 6

Effectiveness, economy, and efficiency, internal control, and compliance

Question 7

What are some keys to effectiveness, economy, and efficiency?

Answer 7

Organizational goals and cost benefit or cost effectiveness

Question 8

What are some keys to internal control?

Answer 8

Objectives are achieved efficiently and compliance with laws

Question 9

What are some keys for compliance?

Answer 9

Target population has been served

Question 10

What are some increased management responsibilities identified by GAGAS?

Answer 10

Identification of applicable laws, establishment of internal controls, preparation of supplementary financial reports, and obtaining an audit

Question 11

What are some increased auditor responsibilities identified by GAGAS?

Answer 11

Obtaining reasonable assurance that the financial statements are free of material misstatements resulting from violations of laws and regulations that have a direct and material effect on the determination of financial statement amounts and assessing whether management has identified laws and regulations that have a direct and material effect on the determination of amounts in the entity’s financial statements

Question 12

What is an objective of compliance audits?

Answer 12

Obtain sufficient evidence to form an opinion on whether the entity compiled, in all material respects, with the compliance requirements applicable to its programs

Question 13

GAAS requirements presume that management will in regards to Compliance audits?

Answer 13

Identify government programs and understand and comply with compliance requirements, maintain effective controls, conduct ongoing evaluation and monitoring, and take appropriate corrective action

Question 14

Risk of material noncompliance is composed of two elements?

Answer 14

Inherent risk of noncompliance and control risk of noncompliance

Question 15

What is the susceptibility of a compliance requirement to noncompliance that could be material?

Answer 15

Inherent risk of noncompliance

Question 16

What is the risk that noncompliance with a compliance requirement that could be material will not be prevented or detected?

Answer 16

Control risk of noncompliance

Question 17

What is the risk that the auditor will not detect material noncompliance that exists?

Answer 17

Detection risk of noncompliance

Question 18

How can an auditor change the detection risk of noncompliance?

Answer 18

Varing the nature, extent, and timing of audit procedures

Question 19

Tests of the operating effectiveness of controls may be required if any one of the following conditions exist?

Answer 19

The risk assessment includes an expectation of the operating effectiveness of controls over compliance, substantive procedures do not provide enough evidence to support a conclusion, and test of controls are required by the applicable governmental audit requirements

Question 20

What are some required documentation when dealing with noncompliance?

Answer 20

The assessed risk of material noncompliance, responses to the risk assessment, the basis or rationale for materiality levels, and compliance with supplemental requirements

Question 21

What are the 2 concepts of independence in GAGAS?

Answer 21

Mind and appearance

Question 22

How often must an organization performing audits with GAGAS have an external peer review?

Answer 22

At least once every 3 years

Question 23

What are the elements of a finding?

Answer 23

Criteria, condition, cause, and effect or potential effect

Question 24

What is expectation of a program or operation?

Answer 24

Criteria

Question 25

What is the situation or status that exists?

Answer 25

Condition

Question 26

What is the reason for the condition or the deviation from the criteria?

Answer 26

Cause

Question 27

What is a clear logical link between the condition and the deviation from the criteria?

Answer 27

Effect or potential effect

Question 28

What are additional GAGAS requirements for reporting on financial audits?

Answer 28

Statement in the auditor’s report that they complied with GAGAS, Report on internal control and compliance with provisions of laws, regulations, contracts and grant agreements

Question 29

Is a Schedule of Findings included in the report?

Answer 29

Yes

Question 30

The required features of an opinion on financial statements and supplementary schedule of federal awards prepared in accordance with GAAS and GAGAS would include the following?

Answer 30

Introductory paragraph, scope paragraph, opinion paragraph, disclosure paragraph regarding additional reports for GAGAS, and opinion on additional schedules required by the Single Audit Act

Question 31

What does the Introductory paragraph state?

Answer 31

Management is responsible

Question 32

What does the Scope paragraph state?

Answer 32

Audit was performed in accordance with both GAAS and GAGAS

Question 33

What are 3 factors of content related to government audits that are requirements in a written report on internal control?

Answer 33

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 the financial statements, specific controls relating to financial reporting are considered, and an indication either no weaknesses were found or that significant deficiencies were found, and an indication whether those deficiencies were material

Question 34

What is the threat of financial interest?

Answer 34

Self-interest threat

Question 35

What is a threat that an auditor has provided nonaudit services?

Answer 35

Self-review threat

Question 36

What is a threat when an auditor has a strong opinion towards the client?

Answer 36

Bias threat

Question 37

What is a threat of a long-term client which causes lack of professional skepticism?

Answer 37

Familiarity threat

Question 38

What is a threat due to pressure?

Answer 38

Undue influence threat

Question 39

What is a threat where CPA acts as management to the client?

Answer 39

Management Participation threat

Question 40

What is a threat dealing with organization structure?

Answer 40

Structural threat

Question 41

What are controls designed to eliminate or reduce to an acceptable level threats to independence?

Answer 41

Safeguards

Question 42

The independence standards require the auditor to document?

Answer 42

Threats to independence, safeguards, consideration, and the auditor’s understanding

Question 43

How are major programs classified?

Answer 43

Programs that expend $300,000 or more in federal financial assistance

Question 44

What type of opinions can be used for reportable instances of noncompliance with the requirements governing a major federal financial assistance program?

Answer 44

Qualified or adverse