Module 3 Competency 4: Auditing Flashcards
Deputy Director for Management was created at OMB in part of which act?
CFO Act of 1990
What is the Deputy Director for Management at OMB’s responsibility?
Financial Management within the executive branch of government
What is the strategic long term plan devised by the DoD to produce the required auditable financial statements?
FIAR
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?
Wave 1
Which wave the of the FIAR strategy included an audit of SBR and FBwT
Wave 2
Wave 2 of the FIAR strategy required DoD entities to be audit ready by when?
30 Sept 2014
Wave 3 of the FIAR strategy entailed audit of what items?
Mission Critical Assets and E&C Audit
Wave 4 of the FIAR strategy required a full financial statement audit to exclude what?
Asset Valuation
What was the main challenge found in wave 4: Full Financial Statement Audit of the FIAR strategy?
Obtaining auditable values for large amounts of DoD assets located worldwide
What is the main Government Auditing Standards resource?
GAGAS or “Yellow Book”
What are the four general standards that apply to all audits and attestation engagements?
1) Auditor Independence
2) Auditor Professional Judgement
3) Audit Competence
4) Quality Control and Assurance
What are the two considerations taken when considering auditor independence?
1) Independence of Mind
2) Independence in Appearance
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?
Independence of Mind
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?
Independence of Appearance
What are the seven threats to auditor independence?
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
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?
Structural
The threat that a financial or other interest will appropriately influence auditor’s judgement is known as what?
Self-Interest
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?
Bias Threat
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?
Self-Review Threat
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?
Familiarity Threat
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?
Management Participation
The threat that external influences or pressures will impact an auditor’s ability to make independent and objective judgements is known as what?
Undue Influence Threat
When considering auditor’s professional judgement, the objective is to obtain _______ assurances that material misstatements or significant inaccuracies will not occur.
Reasonable not absolute
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
80;2;20;2
What are the two components of quality control and assurance?
1) Establish a system to provide reasonable assurance
2) Have external peer review
How often must you have an external peer review?
At least once every three years
What must you address when establishing a system to provide reasonable assurance?
1) Leadership
2) Independence
3) HR
4) Monitoring
What provides guidance for auditors to follow when writing audit and attestation engagement reports?
GAO Reporting Standards “Yellow Book”
What requires that the Federal Inspector Generals comply with Comptroller General Standards for audit and also
IG act of 1978
IG Act of 1978 dictates that DoD IG serves as an
Independent and Objective official in DoD
Quality control is achieved through the establishment of
Quality control program based on GAGAS guidance
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
DoD Audit Handbook
To ensure independence, DoD Audit orgs should report directly to who?
Under Secretary of DoD Component
What are the four main audit groups within DoD?
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
In addition to the audit performed by the main audit groups in DoD, who else performs audits in DoD
US GAO
GAO is in which branch of government and reports to who?
Legislative; Congress
The Comptroller General serves an appointment of how many years?
15 years
What are the three types of audits?
1) Financial Audits
2) Performance Audits
3) Attestation Engagement
What type of audit’s objectives may, and generally do, differ for each audit and are defined by the audit organization?
Performance Audits
In which audit type are objectives are predetermined and not defined by the audit organization?
Financial Audit
What type of audit’s objectives are where auditors issue and examination, a review, or an agreed upon procedures report on a subject matter?
Attestation Engagements
What type of audit is looking to provide an opinion on whether the financial statements are presented fairly in all material aspects?
Financial Audits
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?
Performance Audits
An assertion about a subject matter that is the responsibility of another party is conducted in what type of audit?
Attestation Engagement
What are the applicable standards to Financial Audits?
1) GAGAS
2) GAAS
3) AICPA Statement on Auditing Standards (SASs)
What are the applicable standards to Performance Audits?
GAGAS
What are the applicable standards to Attestation Engagements?
1) GAGAS
2) AICPA Standards for Attestation Engagements
What are the two “Yellow Book” principles for non-audit services?
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
Audit organizations need to ensure that the __________ are selected for audit coverage.
Most important areas
What are the actions audit organizations must take to ensure the most important areas are selected for audit coverage?
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
What are the three phases of an audit?
1) Planning
2) Review
3) Report
Defining audit objectives and identifying what the audit is intended to accomplish is found in what audit phase?
Planning
Obtaining sufficient and appropriate evidence and that computer processed data is valid and reliable when significant to auditor findings occurs in which audit phase?
Review
Physical Inventories occur in which audit phase?
Review
Defining the Scope occurs in which audit phase?
Planning
Designing the methodology occurs in which audit phase?
Planning
Sufficiency refers to _____ of evidence and appropriateness refers to ______
quantity; quality
In the audit review phases, for performance audits, GAO states that
Auditor must obtain sufficient and appropriate evidence to provide reasonableness for their findings and conclusions
Considering materiality and effectiveness of Internal Controls in determining nature, timing and extent of auditing procedures occurs in which audit phase?
Planning
Evaluating whether the audited entity has taken appropriate, corrective action to address findings and recommendations from prior audits occurs in which audit phase?
Planning
