Question 1

The Single Audit Act is intended to provide assurance to the federal government that federal funds have been expended in accordance with laws and regulations, but does not include a report on internal controls.

Accepted Answer

The single audit provides assurance to the federal government that federal funds are expended in accordance with grant agreements and with financial management and other standards promulgated by the federal government. Governmental auditing standards require auditors to report deficiencies in the design or operation of internal controls.

Question 2

The Sarbanes Oxley Act is intended to improve corporate governance and limit the services accounting firms may provide to their audit clients.

Accepted Answer

The Sarbanes Oxley Act is intended to improve corporate governance and limit the services accounting firms may provide to their audit clients.

Question 3

In a governmental audit the auditor is only required to report to the board or audit committee.

Accepted Answer

The auditor is required to report directly to appropriate officials, such as funding agencies or legislative bodies, as well as to the organization's board or audit committee.

Question 4

Governments and other nonprofits receiving federal funds follow Governmental Auditing Standards and do not have to comply with AICPA Statements of Auditing Standards.

Accepted Answer

Governmental units and many not-for-profit organizations are subject to Government Auditing Standards which are issued by the U.S. Government Accountability Office GAO in addition to the Statements on Auditing Standards, issued by the American Institute of Certified Public Accountants AICPA.
Government Auditing Standards, published in a document commonly known as the Yellow Book, incorporate the AICPA standards and provide extensions that are necessary due to the unique nature of public entities.

Question 5

The Government Accounting Standards Board has authority for issuing Governmental Auditing Standards, but not auditing standards for private companies and not-for-profits.

Accepted Answer

Government Auditing Standards are issued by the GAO.

Question 6

Governmental attestation engagements must comply with both the Government Auditing Standards and with the AICPA's attestation standards.

Accepted Answer

Governmental attestation engagements must comply with both the Government Auditing Standards and with the AICPA's attestation standards.

Question 7

Assuming an auditee is considered low-risk, the auditor is required to express an opinion on compliance on major programs, which must add up to 50 percent of federal funds expended by the auditee.

Accepted Answer

Major programs are determined on a risk-based approach not by size. The auditor is required to express an opinion on compliance for major programs, which generally must add up to 50% of the federal funds expended by the auditee. This percentage is reduced to 25% if the auditee is determined by the auditor to be a low-risk auditee.

Question 8

While the principal users of corporate audit reports are investors and creditors, the main user of Single Audit reports is the federal government.

Accepted Answer

The main objective of the single audit process is to create a mechanism whereby those auditors conducting the regular financial audits of state and local governments and not-for-profit organizations can provide assurance to the federal government that federal funds are expended in accordance with grant agreements and with financial management and other standards promulgated by the federal government.

Question 9

Governmental attestation engagements must comply with the Government Auditing Standards but are exempt from compliance with the AICPA's attestation standards.

Accepted Answer

Governmental attestation engagements must comply with both the Government Auditing Standards and with the AICPA's attestation standards.

Question 10

If a government failed to report infrastructure assets, the auditor would have to express an adverse opinion on the fund level financial statements.

Accepted Answer

Fund level statements do not record infrastructure assets.

Question 11

The use of opinion units allows an auditor to issue different opinions on different statements, instead of issuing a single opinion.

Accepted Answer

In any audit engagement, the auditor must determine a level of materiality. This determination is then used to plan, perform, and evaluate the results of audit procedures. Because of the various levels of reporting by governments government-wide, fund-type and individual fund), separate materiality evaluations are needed for the different levels of reporting. Opinion units allow the auditor to give different opinions on components of the reporting entity.

Question 12

In a governmental audit, the auditor is required to report directly to appropriate officials in addition to the board or audit committee.

Accepted Answer

The auditor is required to report directly to appropriate officials, such as funding agencies or legislative bodies, as well as to the organization's board or audit committee.

Question 13

The Government Accountability Office has authority for issuing Generally Accepted Auditing Standards.

Accepted Answer

The auditing standards issued by the AICPA are known as Generally Accepted Auditing Standards GAAS.

Question 14

Governmental Auditing Standards identifies four categories of professional engagements: financial audits, performance audits, attestation engagements, and non-audit services.

Accepted Answer

The four categories of professional engagements identified by the Government Auditing Standards are Financial audits, Attestation Engagements, Performance Audits and Nonaudit Services.

Question 15

Entities that expend $500,000 or more of federal funds are generally required to have a single audit.

Accepted Answer

Entities that expend $750,000 or more in federal awards in a fiscal year have either a single audit when several grantors are involved or a program-specific audit usually when only one grantor is involved.

Question 16

The purpose of audits conducted under the Single Audit Act is to provide assurance that federal and state funds are expended in accordance with grant agreements, and with financial management and other standards promulgated by the federal government.

Accepted Answer

The main objective of the single audit process is to create a mechanism whereby those auditors conducting the regular financial audits of state and local governments and not-for-profit organizations can provide assurance to the federal government that federal funds are expended in accordance with grant agreements and with financial management and other standards promulgated by the federal government.

Question 17

Government financial audits are subject only to GAGAS.

Accepted Answer

Governmental units and many not-for-profit organizations are subject to Government Auditing Standards which are issued by the U.S. Government Accountability office GAO in addition to the Statements on Auditing Standards, issued by the American Institute of Certified Public Accountants AICPA. The standards issued by the AICPA are known as GAAS Generally Accepted Auditing Standards and the standards issued by the GAO are known as GAGAS Generally accepted Government Auditing Standards.

Question 18

The Single Audit Act is intended to provide assurance to the federal government that federal funds are protected through a system of internal controls and sound financial management practices.

Accepted Answer

The Single Audit Act is intended to provide assurance to the federal government that federal funds are protected through a system of internal controls and sound financial management practices.

Question 19

While the Sarbanes-Oxley Act applies to corporations filing with the Securities and Exchange Commission, several provisions of the Act already existed in governmental auditing standards.

Accepted Answer

Several provisions of the act already existed in governmental auditing standards. In particular, auditors are to report deficiencies in the design or operation of internal controls. Also, GAO standards for independence prohibit auditors from performing many nonaudit services.

Question 20

The single audit requirements apply only to state and local governments. Private not-for-profits do not have to comply with these requirements, even if they receive federal grants.

Accepted Answer

The main objective of the single audit process is to create a mechanism whereby those auditors conducting the regular financial audits of state and local governments and not-for-profit organizations can provide assurance to the federal government that federal funds are expended in accordance with grant agreements and with financial management and other standards promulgated by the federal government.

Quiz 13: Auditing, Tax-exempt Organizations, and Evaluating Performance

The Single Audit Act is intended to provide assurance to the federal government that federal funds have been expended in accordance with laws and regulations, but does not include a report on internal controls.

The Sarbanes Oxley Act is intended to improve corporate governance and limit the services accounting firms may provide to their audit clients.

In a governmental audit the auditor is only required to report to the board or audit committee.

Governments and other nonprofits receiving federal funds follow Governmental Auditing Standards and do not have to comply with AICPA Statements of Auditing Standards.

The Government Accounting Standards Board has authority for issuing Governmental Auditing Standards, but not auditing standards for private companies and not-for-profits.

Governmental attestation engagements must comply with both the Government Auditing Standards and with the AICPA's attestation standards.

Assuming an auditee is considered low-risk, the auditor is required to express an opinion on compliance on major programs, which must add up to 50 percent of federal funds expended by the auditee.

While the principal users of corporate audit reports are investors and creditors, the main user of Single Audit reports is the federal government.

Governmental attestation engagements must comply with the Government Auditing Standards but are exempt from compliance with the AICPA's attestation standards.

If a government failed to report infrastructure assets, the auditor would have to express an adverse opinion on the fund level financial statements.

The use of opinion units allows an auditor to issue different opinions on different statements, instead of issuing a single opinion.

In a governmental audit, the auditor is required to report directly to appropriate officials in addition to the board or audit committee.

The Government Accountability Office has authority for issuing Generally Accepted Auditing Standards.

Governmental Auditing Standards identifies four categories of professional engagements: financial audits, performance audits, attestation engagements, and non-audit services.

Entities that expend $500,000 or more of federal funds are generally required to have a single audit.

The purpose of audits conducted under the Single Audit Act is to provide assurance that federal and state funds are expended in accordance with grant agreements, and with financial management and other standards promulgated by the federal government.

Government financial audits are subject only to GAGAS.

The Single Audit Act is intended to provide assurance to the federal government that federal funds are protected through a system of internal controls and sound financial management practices.

While the Sarbanes-Oxley Act applies to corporations filing with the Securities and Exchange Commission, several provisions of the Act already existed in governmental auditing standards.

The single audit requirements apply only to state and local governments. Private not-for-profits do not have to comply with these requirements, even if they receive federal grants.