M7-Government Audits

Question 1

The scope of the auditor’s testing of internal controls is required to be included in the auditor’s report on internal controls and compliance with laws and regulations in accordance with Government Auditing Standards (the Yellow Book). (true or false)

Answer 1

true

Question 2

An auditor’s reporting requirements under Generally Accepted Government Auditing Standards (GAGAS or the Yellow Book) are expanded to include reports on the audited entity’s compliance with laws, rules, and regulations that have a material impact on the financial statements and on internal controls over financial reporting. (true or false)

Answer 2

true

Question 3

Generally Accepted Government Auditing Standards primarily apply to audits of federal assistance and government organizations but have been adopted by some states for audits of state financial assistance and other governmental funding. (true or false)

Answer 3

true

Question 4

When reporting under Government Auditing Standards, the auditor should consider whether any noted deficiencies in such internal controls should be reported to specific legislative and regulatory bodies. (true or false)

Answer 4

true

Question 5

A concurrent opinion on the financial statements taken as a whole is not a required part of the auditor’s report. (true or false)

Answer 5

true

Question 6

The auditor should obtain written representation that management has responsibility for understanding and complying with compliance requirements. (true or false)

Answer 6

true

Question 7

Per Government Auditing Standards, audit documentation should contain sufficient information so that supplementary oral explanations are not required. (true or false)

Answer 7

true

Question 8

Government Auditing Standards require that the auditor issue a written report on internal control in all audits. As part of this reporting requirement, the auditor must describe the scope of the auditor’s work in obtaining an understanding of internal control and his or her assessment of control risk. (true or false)

Answer 8

true

Question 9

The report on the audit of the financial statements should describe the scope of the auditor’s testing of compliance with laws and regulations and internal control over financial reporting, and should either present the results of those tests or refer to a separate report. (true or false)

Answer 9

true

Question 10

The report on the audit of financial statements should describe the scope of the auditor’s testing of compliance with laws and regulations and internal control over financial reporting, and present the results of those tests. (true or false)

Answer 10

true

Question 11

The audit opinion states that the audit was conducted in order to express an opinion on compliance but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. (true or false)

Answer 11

true

Question 12

An objective of a compliance audit of a governmental entity is to form an opinion on whether that government complied with applicable compliance requirements in all material respects, and then to report at the level specified by the governmental audit requirement. (true or false)

Answer 12

true

Question 13

Government Audit Standards define 3 types of engagements:

Answer 13

• financial audits
• attestation engagements
• performance audits