Government Auditing Flashcards
What are the sources of Government Auditing Standards?
GAAS and GAGAS
What does GAGAS includes designing of?
The audit to provide reasonable assurance of detecting material misstatements resulting from noncompliance
What are the audit requirements for federal financial assistance?
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
What are the 2 types of government audits?
Financial and performance
Subjects of attestation agreements could include when dealing with Government Auditing Standards?
Compliance with specified laws, regulations, rules, contracts, or grants and effectiveness of internal control over compliance with specified requirements
What are the 3 objectives of performance audits under GAGAS?
Effectiveness, economy, and efficiency, internal control, and compliance
What are some keys to effectiveness, economy, and efficiency?
Organizational goals and cost benefit or cost effectiveness
What are some keys to internal control?
Objectives are achieved efficiently and compliance with laws
What are some keys for compliance?
Target population has been served
What are some increased management responsibilities identified by GAGAS?
Identification of applicable laws, establishment of internal controls, preparation of supplementary financial reports, and obtaining an audit
What are some increased auditor responsibilities identified by GAGAS?
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
What is an objective of compliance audits?
Obtain sufficient evidence to form an opinion on whether the entity compiled, in all material respects, with the compliance requirements applicable to its programs
GAAS requirements presume that management will in regards to Compliance audits?
Identify government programs and understand and comply with compliance requirements, maintain effective controls, conduct ongoing evaluation and monitoring, and take appropriate corrective action
Risk of material noncompliance is composed of two elements?
Inherent risk of noncompliance and control risk of noncompliance
What is the susceptibility of a compliance requirement to noncompliance that could be material?
Inherent risk of noncompliance
What is the risk that noncompliance with a compliance requirement that could be material will not be prevented or detected?
Control risk of noncompliance
What is the risk that the auditor will not detect material noncompliance that exists?
Detection risk of noncompliance
How can an auditor change the detection risk of noncompliance?
Varing the nature, extent, and timing of audit procedures
Tests of the operating effectiveness of controls may be required if any one of the following conditions exist?
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
What are some required documentation when dealing with noncompliance?
The assessed risk of material noncompliance, responses to the risk assessment, the basis or rationale for materiality levels, and compliance with supplemental requirements
What are the 2 concepts of independence in GAGAS?
Mind and appearance
How often must an organization performing audits with GAGAS have an external peer review?
At least once every 3 years
What are the elements of a finding?
Criteria, condition, cause, and effect or potential effect
What is expectation of a program or operation?
Criteria
What is the situation or status that exists?
Condition
What is the reason for the condition or the deviation from the criteria?
Cause
What is a clear logical link between the condition and the deviation from the criteria?
Effect or potential effect
What are additional GAGAS requirements for reporting on financial audits?
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
Is a Schedule of Findings included in the report?
Yes
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?
Introductory paragraph, scope paragraph, opinion paragraph, disclosure paragraph regarding additional reports for GAGAS, and opinion on additional schedules required by the Single Audit Act
What does the Introductory paragraph state?
Management is responsible
What does the Scope paragraph state?
Audit was performed in accordance with both GAAS and GAGAS
What are 3 factors of content related to government audits that are requirements in a written report on internal control?
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
What is the threat of financial interest?
Self-interest threat
What is a threat that an auditor has provided nonaudit services?
Self-review threat
What is a threat when an auditor has a strong opinion towards the client?
Bias threat
What is a threat of a long-term client which causes lack of professional skepticism?
Familiarity threat
What is a threat due to pressure?
Undue influence threat
What is a threat where CPA acts as management to the client?
Management Participation threat
What is a threat dealing with organization structure?
Structural threat
What are controls designed to eliminate or reduce to an acceptable level threats to independence?
Safeguards
The independence standards require the auditor to document?
Threats to independence, safeguards, consideration, and the auditor’s understanding
How are major programs classified?
Programs that expend $300,000 or more in federal financial assistance
What type of opinions can be used for reportable instances of noncompliance with the requirements governing a major federal financial assistance program?
Qualified or adverse
