Question 1

Extensive professional development is necessary for auditors doing governmental audits.

Accepted Answer

Governmental audits are complex and require auditors to have a thorough understanding of regulations, laws, and accounting practices. Therefore, extensive professional development is necessary so auditors can stay up to date on the ever-changing rules and regulations, as well as gain advanced knowledge and skills to perform audits effectively.

Question 2

The Internal Auditing Standards Board issues Statements on Internal Auditing Standards.

Accepted Answer

The Internal Auditing Standards Board does indeed issue Statements on Internal Auditing Standards, which provide guidance and best practices for internal auditors to follow.

Question 3

Under the International Standards for the Professional Practice of Internal Auditing,the performance standards deal with the education requirements of the internal auditor.

Accepted Answer

The performance standards under the International Standards for the Professional Practice of Internal Auditing deal with the nature of internal auditing, the management of the internal audit function, the responsibilities of the internal auditors, and the criteria for evaluating the performance of the internal audit function. They do not address education requirements specifically. However, the attribute standards do cover the competence and professional development requirements of the internal auditors.

Question 4

Which of the following is most correct with regard to the comparison of the financial auditing standards of the Yellow Book with the principles of the AICPA auditing standards?
A)the same as
B)quite different from
C)incompatible with
D)consistent with

Accepted Answer

The financial auditing standards of the Yellow Book are designed to be consistent with the principles of the AICPA auditing standards, allowing auditors to apply both sets of standards cohesively in their work.

Question 5

The auditing standards of the Yellow Book are consistent with the ten generally accepted auditing standards of the AICPA.There are,however,important additions/modifications in the Yellow Book.For example,the Yellow Book recognizes that materiality and risk are lower due to the nature of the government enterprise.Discuss the other additions/modifications.

Accepted Answer

The answer of The auditing standards of the Yellow Book...

Question 6

An audit designed to provide reasonable assurance of detecting material misstatements resulting from noncompliance with provisions of contracts or grant agreements that have a material and direct effect on the financial statements would be called a(n)
A)performance audit.
B)management audit.
C)operational audit.
D)compliance audit.

Accepted Answer

A compliance audit is designed to assess adherence to specific laws, regulations, and contractual provisions. In this case, the audit is focused on detecting material misstatements resulting from noncompliance with provisions of contracts or grant agreements that have a material and direct effect on the financial statements.

Question 7

The correct title of the Yellow Book is
A)Government Auditing Standards.
B)Institute of Internal Auditors (IIA)Practice Standards.
C)Statement of Responsibilities of Internal Auditing.
D)Statement of Standards on Accounting and Review Services.

Accepted Answer

The Yellow Book is the government auditing standards issued by the Comptroller General of the United States. The Institute of Internal Auditors (IIA) Practice Standards, Statement of Responsibilities of Internal Auditing, and Statement of Standards on Accounting and Review Services are different sets of standards issued by other organizations.

Question 8

Professional guidelines for performing internal audits for companies are not as well-defined as for external audits.

Accepted Answer

While there are general principles and standards for internal auditing, specific guidelines may vary between companies and industries. In contrast, external audits are governed by established standards such as those set by the International Auditing and Assurance Standards Board.

Question 9

How do the risk and materiality thresholds change in a government audit compared to a financial statement audit of a public company?

Accepted Answer

The answer of How do the risk and materiality thresholds...

Question 10

In addition to an opinion on whether the financial statements are in accordance with GAAP,identify four other reports required by the OMB Circular A-133/2 CFR 200 subpart F.

Accepted Answer

The answer of In addition to an opinion on whether...

Question 11

The Single Audit Act applies only to audits of state and local governments.

Accepted Answer

The Single Audit Act applies to audits of state and local governments as well as nonprofit organizations that expend a certain amount of federal funds.

Question 12

When a state or local government agency receives federal funds,it is subject to the audit requirements of
A) 
B) 
C) 
D)

Accepted Answer

The answer of When a state or local government agency...

Question 13

Government Auditing Standards recognize that because of public accountability over governmental activities the acceptable tolerable misstatement as compared to commercial businesses may be
A)equal.
B)lower.
C)higher.
D)indeterminable.

Accepted Answer

Governmental activities are subject to greater public scrutiny and accountability, thus, the acceptable tolerable misstatement is typically lower than that for commercial businesses.

Question 14

Government auditing standards are included in the Yellow Book.

Accepted Answer

Government auditing standards, also known as Generally Accepted Government Auditing Standards (GAGAS), are included in the Yellow Book, which is a publication of the U.S. Government Accountability Office (GAO).

Question 15

Because they spend all their time within one company,internal auditors have much greater knowledge about the company's operations and internal controls then external auditors.

Accepted Answer

Internal auditors are employed by the company and focus solely on evaluating and improving its operations and internal controls. They have insider access to information and are better positioned to identify potential risks and weaknesses within the company. External auditors, on the other hand, are hired by the company from outside and are responsible for providing an objective assessment of the company's financial statements and compliance. They may have limited knowledge about the company's internal operations and controls.

Question 16

The primary source of authoritative literature for doing government audits is the
A)Purple Book.
B)Yellow Book.
C)Green Book.
D)Red Book.

Accepted Answer

The Yellow Book, officially titled Generally Accepted Government Auditing Standards (GAGAS), is the primary source of authoritative literature for doing government audits. The Purple Book (International Framework for Assurance Engagements) is focused on international assurance engagements, the Green Book (Standards for Internal Control in the Federal Government) is specific to control standards for the federal government, and the Red Book (Standards for Financial Institution Examinations) is specific to financial institution audits.

Question 17

The Single Audit Act requires that an audit be conducted for recipients who receive total federal funds in any fiscal year of more than
A)$1,000,000.
B)$750,000.
C)$500,000.
D)$100,000.

Accepted Answer

The Single Audit Act requires that an audit be conducted for recipients who receive total federal funds in any fiscal year of more than $750,000.

Question 18

Auditors involved in planning,performing,or reporting on audits under Generally Accepted Government Auditing Standards (GAGAS)must complete ________ hours of continuing professional education in each two-year period.
A)20
B)40
C)60
D)80

Accepted Answer

The answer of Auditors involved in planning,performing,or reporting on audits...

Question 19

An audit conducted in accordance with the Yellow Book must include an audit report that states the audit was performed in accordance with
A)Generally Accepted Auditing Standards (GAAS).
B)Generally Accepted Government Auditing Standards (GAGAS).
C)Generally Accepted Standards on Auditing (GASA).
D)Statements on Auditing Standards (SAS).

Accepted Answer

The Yellow Book requires that auditors performing an audit in accordance with it must state in their audit report that the audit was performed in accordance with Generally Accepted Government Auditing Standards (GAGAS), which are the standards set by the U.S. Government Accountability Office (GAO) for audits of government entities, programs, activities and functions. Therefore, choice B is the correct answer.

Question 20

The formal name of the Yellow Book is Government Auditing Standards.

Accepted Answer

The Yellow Book is the commonly used name for the Government Auditing Standards, which are issued by the Government Accountability Office (GAO) of the United States.

Quiz 26: Internal and Governmental Financial Auditing and Operational Auditing

Extensive professional development is necessary for auditors doing governmental audits.

The Internal Auditing Standards Board issues Statements on Internal Auditing Standards.

Under the International Standards for the Professional Practice of Internal Auditing,the performance standards deal with the education requirements of the internal auditor.

Which of the following is most correct with regard to the comparison of the financial auditing standards of the Yellow Book with the principles of the AICPA auditing standards?

An audit designed to provide reasonable assurance of detecting material misstatements resulting from noncompliance with provisions of contracts or grant agreements that have a material and direct effect on the financial statements would be called a(n)

The correct title of the Yellow Book is

Professional guidelines for performing internal audits for companies are not as well-defined as for external audits.

How do the risk and materiality thresholds change in a government audit compared to a financial statement audit of a public company?

In addition to an opinion on whether the financial statements are in accordance with GAAP,identify four other reports required by the OMB Circular A-133/2 CFR 200 subpart F.

The Single Audit Act applies only to audits of state and local governments.

When a state or local government agency receives federal funds,it is subject to the audit requirements of

Government Auditing Standards recognize that because of public accountability over governmental activities the acceptable tolerable misstatement as compared to commercial businesses may be

Government auditing standards are included in the Yellow Book.

Because they spend all their time within one company,internal auditors have much greater knowledge about the company's operations and internal controls then external auditors.

The primary source of authoritative literature for doing government audits is the

The Single Audit Act requires that an audit be conducted for recipients who receive total federal funds in any fiscal year of more than

Auditors involved in planning,performing,or reporting on audits under Generally Accepted Government Auditing Standards (GAGAS) must complete ________ hours of continuing professional education in each two-year period.

An audit conducted in accordance with the Yellow Book must include an audit report that states the audit was performed in accordance with

The formal name of the Yellow Book is Government Auditing Standards.