Types of Audits and Other Services

Question 1

The SCO conducts several types of engagement services with varying audit objectives, name each type

Answer 1

Financial Audits

Performance Audits

Attestation Engagements

Single Audit Act

Non-Audit Services

Question 2

Financial Statement Audits

Answer 2

Financial statement audits provide reasonable assurance about the whether the financial statements of an audited entity present fairly the financial position.

Financial statement audits convey results through an opinion.

Other type of financial audits with different objectives and assurances are:

• Special reports for elements, accounts, or items of a financial statement
• Interim financial information
• Letters for underwriters and other requesting parties
• Reports on the processing of transactions by service organizations
• Auditing compliance with regulations relating to federal reward expenditures with or as a by-product of a financial statement audit

Question 3

Performance Audits

Answer 3

A Performance audit provides assurances or conclusions

• program effectiveness and results
• economy and efficiency
• I/C
• compliance with legal requirements.

Performance audits do not express an opinion

Question 4

Attestation Engagements

Answer 4

Attestation engagements can cover financial or non-financial objectives and may provide different levels of assurances.

Attestation engagements have specific SSAE’s to follow.

Attestation engagements can include:

• examinations
• reviews
• agreed-upon procedures

Question 5

Single Audits

Answer 5

Amendments of 1996 requires state and local governmental units that receive a certain amount of federal financial assistance to obtain an independent single audit of all federal funds received. This replaces separate grant audits. OMB A-133 provides guidelines for these engagements. The single audit must be conducted in accordance with GAS. The objectives are to:

• Financial Statements and Schedule of Expenditures of Federal Awards are presented fairly with GAAP.
• Perform procedures to obtain an understanding of internal control over federal programs.
• Determine if auditee has complied with laws, regulations, and provisions within the contracts or grant agreements.

Question 6

Non-audit Services

Answer 6

Non-Audit services are not covered by governmental audit standards. These services differ since auditors may perform task requested by management that support the entities operations. They provide information without verification, analysis, or evaluation of the information or data. Therefore, the work does not provide a basis for conclusions, recommendations, or opinions. May or may not result in a report. Audit organizations have to watch for personally, externally, or organizationally impairs independence. Task may include:

• Developing or implementing accounting systems
• Determining account balances
• Developing internal control systems
• Establishing capitalization criteria
• Processing payroll
• Posting transactions
• Evaluating assets
• Designing or implementing IT systems

Question 7

List the type of Attestation Engagements and provide examples.

Answer 7

TYPE - what is provided

Examinations - opinion

Reviews - negative assurance

Agreed-Upon Procedures - special format

EXAMPLES

Prospective financial or performance information

Entity’s internal control over financial reporting

Entity’s compliance with laws, rules, policies, contracts, grants

Quality, condition, or valuation of inventory

Allowability and reasonableness of proposed contract amounts that are based on detail costs

Incurred final contract costs are supported with required evidence and in compliance with contract terms

Accuracy and reliability of reported performance measures

Specific procedures performed on a subject matter