Internal and Gov't Audit, Fraud Examination Flashcards
Analyzing proprietary schools’ spending to train students for oversupplied occupations is an example of (blank) auditing
Economy and efficiency or program results, Governmental
Studying the DOD expendable launch vehicle program is an example of a (blank) audit done by a (blank) auditor
Economy and efficiency or program results, Governmental
Reporting on the need for states to consider chemical use reporting requirement data is an example of a (blank) audit done by a (blank) auditor
Economy and efficiency or program results, Governmental
Determining the fair presentation in conformity with GAAP of an advertising agency’s financial statements is an example of a (blank) audit done by a (blank) auditor
Financial statement, Independent CPA
Determining costs of municipal garbage pickup services compared to comparable service subcontracted to a private business is an example of a (blank) audit done by a (blank) auditor
Economy and efficiency, Internal auditors
Auditing a tax shelter partnership’s financing terms is an example of a (blank) audit done by a (blank) auditor
Compliance, IRS auditor
Studying private aircraft manufacturer’s test pilot performance in reporting on results of test flights is an example of a (blank) audit done by a (blank) auditor
Compliance, Internal Auditors
Periodically having U.S. comptroller of currency examine a national bank for solvency is an example of a (blank) audit done by a (blank) auditor
Compliance, Bank examiner
Evaluating the promptness of materials inspection in a manufacturer’s receiving department is an example of a (blank) audit done by a (blank) auditor
Compliance or economy and efficiency, Internal auditors
Rendering a public report on the assumptions and compilation of a revenue forecast by sports stadium complex is an example of a (blank) audit done by a (blank) auditor
Financial statement, Independent CPA
When auditing with “fraud awareness,” auditors should especially notice and follow up employee activities to ensure (blank and blank) are restricted to the cashier to improve accountability
Cash disbursement and bank statement reconciliation
An objective and systematic examination of a program against its objective criteria are known as (blank) audits
Performance
Define Internal Auditing
an independent, objective, assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve effectiveness of risk management, control, and governance processes.
The four audit objectives of an Internal Audit
- Recognizing and analyzing industry, business, and operational risks.
- Improving the economy and efficiency of the operations
- Ensuring compliance with management directives
- Serving as management’s representative
Financial, compliance, operational, governance, QC, environmental, and sustainability are all examples of (blank) audits
internal
To establish an independent and objective internal audit department as well as its scope, authorizations, and reporting requirements, organizations should develop an
audit charter
(Blank) are prepared by internal auditors for internal use by management to evaluate areas of concern or correct errors prior to an external audit
Financial audits
This type of audit provides managers assurance that the info they are using in the decision-making process is relevant and reliable
Financial audit
(Blank) address management’s concern regarding policies, procedures, laws and regulations
Compliance audits
Unfavorable internal audits should include what 5 items about their findings
- Condition – what was found
- Criteria – basis for determining that the condition was improper
- Cause – why did this happen?
- Effect – why is this bad?
- Recommendation – what do you think should be done about this?
The three types of governmental audits performed by the GAO are
Financial Statement Audits
Attestation Engagements
Performance Audits
Examples include: assessing extent goals have been achieved, relative cost and benefits or cost effectiveness of program performance, degree to which program produced intended results or unintended effects, etc.
Studying business operations for the purpose of recommendations regarding efficient use of resources, effective achievement of business objectives, and company policy compliance is a (blank) audit
Operational
(Blank) audits are designed to help provide management with high-quality information for implementation and execution of company strategy and decisions about leadership
Governance
The international organization that governs standards, continuing education, and general rules of conduct for internal auditors is the
IIA (Institute of Internal Auditors)
The IIA issues these standards, broken into three categories
Int’l Standards for the Professional Practice of Internal Auditing
- Attributes (independence and objectivity of auditors and org.)
- Performance (quality)
- Implementation (specific standards for specific types of engagements)
The IIA administers what certification program
CIA (certified internal auditor)
Define governmental auditing
services performed in an effort to hold the government accountable and transparent to the public regarding the linking of resources to related program results
the accounting, auditing, and investigative agency of the federal government.
Governmental Accountability Office (GAO)
Three types of governmental audits performed by the GAO:
Financial Statement, Attestation Engagements, Performance Audits (assessing achievement of goals, relative cost benefits/cost effectiveness of programs, degree of which programs produced intended results)
Definition of performance audit
provide assurance on economy, efficiency, and program results and therefore require special consideration with regard to procedures performed
Generally Accepted Governmental Auditing Standards that guide governmental audits are also referred to as
GAGAS, the Yellow Book
What three additional rules are included in GAGAS (beyond GAAS)
1.Single Audit Act of 1984
- OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
- AICPA Audit and Accounting Guide, “Audits of State and Local Governments”
GAGAS requires which report in addition to those required by GAAS
A report on the entity’s compliance with laws and regulations is also issued.
(in addition to F/S and intern control risk assessment)
Who is covered under the Single Audit Act of 1984
entities who receive specified levels of financial assistance from the federal government
The Single Audit Act of 1984 and Amendments of 1996 allow
organizations to obtain a single audit, on which all agencies can rely (F/S in accordance with GAAP, internal controls are in compliance w/ laws and regs, whether compliance have a material effect on F/S and the federal asst. program
The Single Audit Act established an annual audit requirements for entities expending $(blank) or more of federal funds
$750,000
IIA standards specifically reference the need for internal audit to do these two things with respect to fraud
- evaluate how fraud risk is managed
- evaluate the potential for fraud
The chain of custody is the crucial link of the evidence to the suspect called the (Blank) of evidence by attorneys and judges.
relevance
A typical white collar criminal is
generally acting alone and socially conforming
The responsibility for setting the tone at the top rests with
upper management
Regarding issues related to fraud, governmental auditors are required to
know applicable laws and regulations
design the audit to detect abuse and illegal acts
prepare written reports regarding indications of illegal acts
To aid in management decision making, internal auditors perform (blank) audits
governance
