Question 1

Performance audits,as defined in the GAO's Governmental Auditing Standards

Accepted Answer

Performance audits provide assurance or conclusions based on an evaluation of evidence regarding program effectiveness, economy, and efficiency; internal control compliance, and prospective analyses. They focus on assessing the performance of government programs and activities, and making recommendations for improvement. Options A and B describe financial audits, which focus on providing an auditor's opinion on whether the financial statements are fairly presented and in compliance with accounting principles and applicable laws and regulations. Option D is incorrect because performance audits can be conducted by both internal and external auditors.

Question 2

Which of the following would be considered Category (b)GAAP for state and local government auditees?

Accepted Answer

The answer of Which of the following would be considered...

Question 3

Which of the following kinds of information is not included within the scope of a financial statement audit of a state or local government?

Accepted Answer

Management's discussion and analysis (MD&A) is not within the scope of a financial statement audit of a state or local government, as it is considered supplementary information and not part of the basic financial statements. The other options (A, C, D) are all included in the scope of the audit.

Question 4

Typical objectives of a performance audit include

Accepted Answer

The objectives of a performance audit typically involve assessing effectiveness and results, economy and efficiency, and internal controls and compliance with laws and regulations. Options A and C are specific to financial audits, while option B focuses on the appropriateness of an entity's program goals and may not be the primary objective of a performance audit.

Question 5

An auditor would not render an opinion on a(an)

Accepted Answer

An auditor would not render an opinion on a performance audit because it involves evaluating the effectiveness, efficiency, and economy of an organization's programs or activities, rather than its financial statements or compliance with specific requirements. The other options listed can all be the subject of an auditor's opinion.

Question 6

A significant deficiency of such magnitude that internal control components do not reduce the risk of detection or prevention of material misstatement to an acceptably low level is called a(an)

Accepted Answer

A significant deficiency that is so serious that internal controls cannot mitigate the risk to an acceptable level is referred to as a material weakness. However, if internal controls can reduce the risk to an acceptable level, but not to the desired level, it is referred to as a significant deficiency. Therefore, option A, Material weakness and significant deficiency, best describes the scenario described in the question. The other options are not appropriate definitions of the given scenario.

Question 7

All of the following reports are included in the reporting package resulting from the single audit except

Accepted Answer

The report on efficiency and effectiveness is not included in the reporting package resulting from the single audit. The other reports listed are typically included in the package.

Question 8

An unqualified audit opinion rendered on a governmental unit's general purpose external financial statements means those statements

Accepted Answer

An unqualified audit opinion means that the financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of the entity in conformity with generally accepted accounting principles (GAAP). Therefore, option C is the correct answer. Option A is incorrect because an unqualified opinion means the financial statements do not contain any departures from GAAP that are significant enough to require a qualified or adverse opinion. Option B is incorrect because the audit opinion is based on the qualifications of the auditor, not the financial statements. Option D is incorrect because an unqualified opinion does not certify the financial statements as free from error.

Question 9

In which paragraph of the standard audit report does the auditor communicate to the user that certain combining fund information in the financial statements is not part of the basic financial statements,but that such information has been subjected to auditing procedures and,in his or her opinion,is fairly presented in all material respects in relation to the basic financial statements?

Accepted Answer

The answer of In which paragraph of the standard audit...

Question 10

A common reason why a government might receive a "qualified opinion" from the external auditors is

Accepted Answer

A qualified opinion is given when the external auditor encounters a situation that does not comply with accounting principles, but the situation is not significant enough to cause a misstatement in the financial statements. This could be due to a variety of reasons such as a misapplication of an accounting principle or an incomplete financial record.

Question 11

Which of the following is the highest in the hierarchy of generally accepted accounting principles according to AICPA Statement of Auditing Standard No.69,as amended by SAS No.91,for the federal government entities?

Accepted Answer

According to AICPA Statement of Auditing Standard No.69, as amended by SAS No.91, for the federal government entities, the highest in the hierarchy of generally accepted accounting principles are FASAB statements. GASB statements are applicable to state and local governments, whereas AICPA Audit and Accounting Guides and FASB Emerging Issues Task Force Reports are not considered authoritative sources of GAAP.

Question 12

Which of the following is not a requirement imposed on auditors by the AICPA risk assessment standards to enhance auditors' application of the audit risk model?

Accepted Answer

The AICPA risk assessment standards do not require auditors to utilize the same audit program used for the prior year's audit of a given client. Rather, auditors are required to conduct a more rigorous assessment of risk of material misstatement, obtain a more in-depth understanding of the entity and its environment, including its internal control, and improve the link between the assessment of risk and the nature, timing, and extent of any further procedures performed.

Question 13

Which of the following is not a required audit report for a single audit?

Accepted Answer

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

Question 14

Which of the following best describes the relationship between generally accepted auditing standards (GAAS)and generally accepted government auditing standards (GAGAS)?

Accepted Answer

GAGAS is a set of requirements for auditors conducting audits of government entities, and it includes many of the same principles as GAAS. However, GAGAS has additional requirements specific to audits of government entities, such as performance audits and audits of federal programs. Therefore, audits conducted in conformity with GAGAS may also require the auditor to conform to GAAS.

Question 15

Which of the following is not one of the types of opinions an auditor may render in accordance with generally accepted auditing standards?

Accepted Answer

"Satisfactory" is not a type of opinion an auditor may render in accordance with generally accepted auditing standards. The possible types of opinions are: unqualified, qualified, adverse, or disclaimer.

Question 16

Which of the following statements concerning the Single Audit Act of 1984 (with 1996 Amendments)is correct?

Accepted Answer

The Single Audit Act of 1984 (with 1996 Amendments) requires organizations that expend $750,000 or more in federal awards to have a single audit. Therefore, those entities expending under $500,000 a year in federal awards are exempt from single audit requirements. Choice A is incorrect because the threshold for a single audit is $750,000, not $500,000. Choice C is incorrect because the Single Audit Act applies to all federal programs, not just high-risk programs. Choice D is incorrect because the single audit is mandatory for organizations that meet the expenditure threshold.

Question 17

A single audit conducted pursuant to the Single Audit Act Amendments of 1996 requires which of the following types of audits?

Accepted Answer

A single audit includes a financial audit component but does not require a performance audit. It focuses on financial statements and federal awards.

Question 18

Attestation engagements include

Accepted Answer

Attestation engagements can provide various levels of assurance on internal control, compliance, MD&A presentation, and reliability of performance measures. Therefore, option C is the correct choice. Option A relates to a performance audit, option B relates to a review engagement, and option D relates to an audit engagement.

Question 19

Generally accepted government auditing standards (GAGAS)

Accepted Answer

GAGAS establishes more standards that are broader in scope than GAAS, as they include additional requirements for government audits, such as performance audits and compliance with laws and regulations.

Question 20

One of the primary purposes of the Single Audit Act of 1984 (amended in 1996)is to

Accepted Answer

The primary purpose of the Single Audit Act of 1984 (amended in 1996) is to promote the efficient and effective use of audit resources by consolidating audit activity into one organization-wide audit. This act was designed to reduce duplication of efforts, increase accountability, and provide assurance that federal funds are being used properly. The act requires that state and local governments and nonprofit organizations that receive federal funds must undergo a single audit that covers all federal funding received by the entity. The goal is to streamline the auditing process and reduce the burden on auditees and auditors alike. The act also requires auditors to report on internal controls and compliance with laws and regulations related to the use of federal funds.

Quiz 12: Budgeting and Performance Measurement