SU 20: Government Audits Flashcards
1.) A statement that the audit was conducted in accordance with GAAS and with GAS issued by the US General Comptroller.
a. A, appropriate. The second paragraph of the report should indicate that the audit was conducted in accordance with both GAAS and GAS
2.) A statement that the auditor’s procedures included tests of compliance
a. A, appropriate. The report should state that the auditor has “performed test of XYZ’s compliance with certain laws, regs, contracts, and grants”
3.) A statement that management is responsible for compliance with law, regs, contracts, and grants
a. A, appropriate. The report states that management is responsible is for compliance with law, regs, contracts and grants
4.) A statement that the standards require the auditor to plan and to perform the audit to detect all instances of noncompliance with applicable laws and regs
a. C, inappropriate because the auditor is required to plan and perform the audit to detect instances of noncompliance having a direct material effect on the f/s, not all instances of noncompliance. The report should state that those standard require that we plan and perform our audit to obtain reasonable assurance about whether the f/s are free of material misstatement
5.) A statement that the auditor’s objective was to provide an opinion on compliance with the provisions of laws and regs equivalent of that to expressed on the f/s
a. C, inappropriate because the report does not express an opinion. The report should describe the scope of testing of compliance with laws and regulations and present the results of those tests, including fraud, illegal acts, and other material noncompliance. It need not express an opinion. However, reporting the scope of testing includes reporting whether the tests provided sufficient appropriate evidence to support an opinion and wether the auditor is providing such an opinion
6.) A statement of negative assurance that, with respect to items tested, nothing came to the auditor’s attention that caused the auditor to believe that the entity had not complied, in all material respects, with the provisions of laws, regs, contracts, and grants
a. B, Inappropriate because no assurance should be provided. No assurance on compliance, either positive or negative, need be expressed under GAS
7.) A statement that the report is intended only for the information of specific legislative or regulatory bodies and that this restriction is intended to limit the distribution of the report
a. C, inappropriate because the report is silent as to limiting its distribution. The report states that is not intended for use by non-informed parties, but it does not limit the distribution of the report
1.) Auditors are deterred from acting objectively by employees of the audited entity
a. B, external impairment. Auditors deterred form acting objectively by employees of the audited entity
2.) Auditors should not provide non-audit services that involve performing management functions of the audited entity
a. A, personal impairment. Auditors should not provide non-audit services that involve performing management functions of the audited entity
3.) Auditors are pressured to reduce professional skepticism by an oversight agency of the audited entity
a. B, external impairment. Auditors pressured to reduce professional skepticism by an oversight agency of the audited entity
4.) The impairment that parallels requirements by the AICPA
a. A, Personal impairment. The impairment parallels requirements by the AICPA
5.) Auditor should not have a direct financial interest in the client
a. A, personal impairment. Auditors should not have a direct financial interest in the client
6.) The should be mentally unbiased
a. A, personal impairment. Auditor should be mentally unbiased
7.) The head of internal auditing does not report results to the head or deputy of the government entity
a. C, Organizational impairment.
8.) The audit organization should audit its own work
a. A, personal impairment
