Module 3 Competency 4: Auditing

Question 1

Deputy Director for Management was created at OMB in part of which act?

Answer 1

CFO Act of 1990

Question 2

What is the Deputy Director for Management at OMB’s responsibility?

Answer 2

Financial Management within the executive branch of government

Question 3

What is the strategic long term plan devised by the DoD to produce the required auditable financial statements?

Answer 3

FIAR

Question 4

Which wave the of the FIAR strategy occurred in 2013 and entailed completing a mock audit and validated audit readiness of “APPNs Received” for most DoD Organizations?

Answer 4

Wave 1

Question 5

Which wave the of the FIAR strategy included an audit of SBR and FBwT

Answer 5

Wave 2

Question 6

Wave 2 of the FIAR strategy required DoD entities to be audit ready by when?

Answer 6

30 Sept 2014

Question 7

Wave 3 of the FIAR strategy entailed audit of what items?

Answer 7

Mission Critical Assets and E&C Audit

Question 8

Wave 4 of the FIAR strategy required a full financial statement audit to exclude what?

Answer 8

Asset Valuation

Question 9

What was the main challenge found in wave 4: Full Financial Statement Audit of the FIAR strategy?

Answer 9

Obtaining auditable values for large amounts of DoD assets located worldwide

Question 10

What is the main Government Auditing Standards resource?

Answer 10

GAGAS or “Yellow Book”

Question 11

What are the four general standards that apply to all audits and attestation engagements?

Answer 11

1) Auditor Independence
2) Auditor Professional Judgement
3) Audit Competence
4) Quality Control and Assurance

Question 12

What are the two considerations taken when considering auditor independence?

Answer 12

1) Independence of Mind

2) Independence in Appearance

Question 13

The state of mind that permits the performance of an audit without being affected by influences that compromise professional judgment, thereby allowing individuals to act with integrity and exercise objectivity and professional skepticism is known as what?

Answer 13

Independence of Mind

Question 14

The absence of circumstances that would cause a reasonable and informed third party, having knowledge of the relevant information, to reasonably conclude that the integrity, objectivity, or professional skepticism of an audit organization or member of the audit team had been compromised is known as what?

Answer 14

Independence of Appearance

Question 15

What are the seven threats to auditor independence?

Answer 15

1) Self-interest threat
2) Self Review threat
3) Bias Threat
4) Familiarity Threat
5) Undue Influence threat
6) Management Participation Threat
7) Structural Threat

Question 16

Auditor placement with government entity in combination with structure of government entity, will impact organization’s ability to perform work and report results objectively is known as what?

Answer 16

Structural

Question 17

The threat that a financial or other interest will appropriately influence auditor’s judgement is known as what?

Answer 17

Self-Interest

Question 18

The threat that an auditor will, as a result of political, ideological, social, or other convictions take a position that is not objective is known as what?

Answer 18

Bias Threat

Question 19

The threat that an auditor or audit organization that has provided non-audit services will not appropriately evaluate the result of previous judgements made or services performed as part of the non-audit services when forming a judgment significant to an audit is known as what?

Answer 19

Self-Review Threat

Question 20

The threat that aspects of a relationship with management or personnel of an audited entity, such as a close relationship or that of an immediate or close family member, will lead an auditor to take a position that is not object is known as what?

Answer 20

Familiarity Threat

Question 21

The threat that results from an auditor’s taking on the role of management or otherwise performing management functions on behalf of the entity’s undergoing an audit is known as what?

Answer 21

Management Participation

Question 22

The threat that external influences or pressures will impact an auditor’s ability to make independent and objective judgements is known as what?

Answer 22

Undue Influence Threat

Question 23

When considering auditor’s professional judgement, the objective is to obtain _______ assurances that material misstatements or significant inaccuracies will not occur.

Answer 23

Reasonable not absolute

Question 24

Auditors must complete ______ hours of continuing professional education every ________ years with a minimum of _____ hours being completed in any one year of the ______ year periods

Answer 24

80;2;20;2

Question 25

What are the two components of quality control and assurance?

Answer 25

1) Establish a system to provide reasonable assurance

2) Have external peer review

Question 26

How often must you have an external peer review?

Answer 26

At least once every three years

Question 27

What must you address when establishing a system to provide reasonable assurance?

Answer 27

1) Leadership
2) Independence
3) HR
4) Monitoring

Question 28

What provides guidance for auditors to follow when writing audit and attestation engagement reports?

Answer 28

GAO Reporting Standards “Yellow Book”

Question 29

What requires that the Federal Inspector Generals comply with Comptroller General Standards for audit and also

Answer 29

IG act of 1978

Question 30

IG Act of 1978 dictates that DoD IG serves as an

Answer 30

Independent and Objective official in DoD

Question 31

Quality control is achieved through the establishment of

Answer 31

Quality control program based on GAGAS guidance

Question 32

What supplements policy guidance contained in the Yellow book and provides policy designed to maintain the integrity of internal operations for the Office of IG

Answer 32

DoD Audit Handbook

Question 33

To ensure independence, DoD Audit orgs should report directly to who?

Answer 33

Under Secretary of DoD Component

Question 34

What are the four main audit groups within DoD?

Answer 34

1) Office of Assistant IG for Auditing (OIG, DoD)
2) The Army Audit Agency
3) The Naval Audit Service
4) The Air Force Audit Agency

Question 35

In addition to the audit performed by the main audit groups in DoD, who else performs audits in DoD

Answer 35

US GAO

Question 36

GAO is in which branch of government and reports to who?

Answer 36

Legislative; Congress

Question 37

The Comptroller General serves an appointment of how many years?

Answer 37

15 years

Question 38

What are the three types of audits?

Answer 38

1) Financial Audits
2) Performance Audits
3) Attestation Engagement

Question 39

What type of audit’s objectives may, and generally do, differ for each audit and are defined by the audit organization?

Answer 39

Performance Audits

Question 40

In which audit type are objectives are predetermined and not defined by the audit organization?

Answer 40

Financial Audit

Question 41

What type of audit’s objectives are where auditors issue and examination, a review, or an agreed upon procedures report on a subject matter?

Answer 41

Attestation Engagements

Question 42

What type of audit is looking to provide an opinion on whether the financial statements are presented fairly in all material aspects?

Answer 42

Financial Audits

Question 43

What type of audit is looking for common generic objectives to assess the adequacy of performance and, if poor, appraise the consequences and determine the causes and actions that might be taken to improve performance?

Answer 43

Performance Audits

Question 44

An assertion about a subject matter that is the responsibility of another party is conducted in what type of audit?

Answer 44

Attestation Engagement

Question 45

What are the applicable standards to Financial Audits?

Answer 45

1) GAGAS
2) GAAS
3) AICPA Statement on Auditing Standards (SASs)

Question 46

What are the applicable standards to Performance Audits?

Answer 46

GAGAS

Question 47

What are the applicable standards to Attestation Engagements?

Answer 47

1) GAGAS

2) AICPA Standards for Attestation Engagements

Question 48

What are the two “Yellow Book” principles for non-audit services?

Answer 48

1) Should not involve performing management functions or making management decisions
2) Audit Orgs should not audit their own work or provided non-audit services in which situations where the non-audit services are significant or material to subject matters of an audit

Question 49

Audit organizations need to ensure that the __________ are selected for audit coverage.

Answer 49

Most important areas

Question 50

What are the actions audit organizations must take to ensure the most important areas are selected for audit coverage?

Answer 50

1) Consider regulatory and statutory requirements
2) Identify what is consistent with GPRA management plan
3) Identify specific concerns of management and congress regarding key programs
4) Identify High Risk Areas

Question 51

What are the three phases of an audit?

Answer 51

1) Planning
2) Review
3) Report

Question 52

Defining audit objectives and identifying what the audit is intended to accomplish is found in what audit phase?

Answer 52

Planning

Question 53

Obtaining sufficient and appropriate evidence and that computer processed data is valid and reliable when significant to auditor findings occurs in which audit phase?

Answer 53

Review

Question 54

Physical Inventories occur in which audit phase?

Answer 54

Review

Question 55

Defining the Scope occurs in which audit phase?

Answer 55

Planning

Question 56

Designing the methodology occurs in which audit phase?

Answer 56

Planning

Question 57

Sufficiency refers to _____ of evidence and appropriateness refers to ______

Answer 57

quantity; quality

Question 58

In the audit review phases, for performance audits, GAO states that

Answer 58

Auditor must obtain sufficient and appropriate evidence to provide reasonableness for their findings and conclusions

Question 59

Considering materiality and effectiveness of Internal Controls in determining nature, timing and extent of auditing procedures occurs in which audit phase?

Answer 59

Planning

Question 60

Evaluating whether the audited entity has taken appropriate, corrective action to address findings and recommendations from prior audits occurs in which audit phase?

Answer 60

Planning