Question 1

Government auditing standards are included in the Yellow Book.

Accepted Answer

Government auditing standards are commonly known as the Yellow Book which is issued by the Comptroller General of the United States.

Question 2

Governmental 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 Auditing Standards recognize that because of the public accountability over governmental activities, the acceptable tolerable misstatement as compared to commercial businesses may be lower. This means that the accuracy and precision required in governmental audits are higher than those required in commercial business audits.

Question 3

The correct title of the Yellow Book is:
A) Government Auditing Standards.
B) 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 a nickname for Government Auditing Standards, which are issued by the Government Accountability Office (GAO).

Question 4

Which of the following is not one of the major differences between financial and operational auditing?
A) The financial audit is oriented to the past, but an operational audit concerns performance for the future.
B) The financial audit report has widespread distribution, but the operational audit report has limited distribution.
C) Financial audits deal with the information on the financial statements, but operational audits are concerned with the information in the ledgers.
D) Financial audits are limited to matters that directly affect the fairness of the financial statement presentation, but operational audits cover any aspect of efficiency and effectiveness.

Accepted Answer

The statement that financial audits are concerned with the information on the financial statements, but operational audits are concerned with the information in the ledgers is incorrect. Financial audits also review information in the ledgers to ensure that the financial statements accurately reflect the organization's financial position. Operational audits, on the other hand, focus on the effectiveness and efficiency of the organization's operations and processes, rather than just on financial information.

Question 5

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.

Accepted Answer

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

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 specifically designed to detect noncompliance with laws, regulations, and provisions of contracts or grant agreements that have a material and direct effect on the financial statements. This type of audit provides reasonable assurance that material misstatements resulting from noncompliance are detected. Performance audits, management audits, and operational audits have different objectives and focus on different aspects of an organization's operations.

Question 7

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

Accepted Answer

The Yellow Book is another name for Government Auditing Standards, which are established by the Government Accountability Office (GAO) and used by auditors conducting audits of government organizations, programs, activities, and functions.

Question 8

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 employees of the company and typically have a deeper understanding of the company's operations, processes, and internal controls compared to external auditors who are independent and are only involved in specific audit engagements.

Question 9

The Single Audit Act requires that an audit be conducted for recipients who receive total federal funds in any fiscal year of:
A) $1,000,000 or more.
B) $500,000 or more.
C) $300,000 or more.
D) $100,000 or more.

Accepted Answer

The Single Audit Act requires that an audit be conducted for recipients who receive total federal funds in any fiscal year of $500,000 or more.

Question 10

An audit conducted in accordance with the Yellow Book must include an audit report that states the audit was performed in accordance with:
A) GAAS.
B) GAGAS.
C) GASA.
D) SAS.

Accepted Answer

The Yellow Book provides standards and guidance for auditors conducting audits of government entities and entities that receive government awards. According to the Yellow Book, an audit conducted in accordance with its standards must include an audit report that states the audit was performed in accordance with Generally Accepted Government Auditing Standards (GAGAS), also known as the Yellow Book standards. Therefore, the correct answer is B - GAGAS.

Question 11

Extensive professional development is necessary for auditors doing governmental audits.

Accepted Answer

Governmental audits involve complex and ever-changing regulations and procedures, making professional development essential for auditors to maintain their knowledge and skills. As a result, continuing education and training are required to stay abreast of new developments and maintain competencies.

Question 12

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 consistent with the principles of the AICPA auditing standards, but they may have additional requirements specific to the auditing process of government entities.

Question 13

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 14

Which one of the following is not a major difference between operational and financial auditing?
A) Purpose of the audit
B) Distribution of the report
C) Testing the effectiveness of internal controls
D) Inclusion of nonfinancial areas

Accepted Answer

The answer of Which one of the following is not...

Question 15

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 16

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 17

The "Red Book" specifies all auditing standards issued by the U.S.General Accounting Office.

Accepted Answer

The "Red Book" specifies all auditing standards issued by the U.S. Government Accountability Office (formerly known as the General Accounting Office).

Question 18

Auditors involved in planning,performing,or reporting on audits under 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

Which of the following is not a difference between operational auditing and financial auditing?
A) Both must be performed by a CPA.
B) Operational audit reports are usually of a restricted distribution while financial audit reports are widely distributed.
C) Operational audits often cover non-financial issues while financial audits do not.
D) None of the above is a difference.

Accepted Answer

Both operational and financial auditing must be performed by a CPA, so this is not a difference between the two types of audits. B and C are both differences between operational and financial auditing.

Question 20

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 known as Generally Accepted Government Auditing Standards (GAGAS), is the primary source of authoritative literature for doing government audits. The other books listed are not specifically related to government auditing.

Quiz 26: Internal and Governmental Financial Auditing and Operational Auditing

Government auditing standards are included in the Yellow Book.

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

The correct title of the Yellow Book is:

Which of the following is not one of the major differences between financial and operational auditing?

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.

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 formal name of the Yellow Book is Government Auditing Standards.

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

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

Extensive professional development is necessary for auditors doing governmental audits.

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?

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

Which one of the following is not a major difference between operational and financial auditing?

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

The "Red Book" specifies all auditing standards issued by the U.S.General Accounting Office.

Auditors involved in planning,performing,or reporting on audits under GAGAS must complete ________ hours of continuing professional education in each two-year period.

Which of the following is not a difference between operational auditing and financial auditing?

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