Question 1

Churches must file a Form 990.

Accepted Answer

Churches and related associations are exempt from filing Form 990.

Question 2

Entities that are tax-exempt under IRS Section 501c3 with gross receipts less than $ 500,000 and total assets less than $ 2.5 million may file Form 990-EZ

Accepted Answer

Form 990EZ is shorter than Form 990 and is available to tax-exempt not-for-profit s with annual gross receipts under $200,000 and total assets of less than $500,000.

Question 3

Assuming an auditee is not considered low-risk, the auditor is required to express an opinion on compliance on major programs, which must add up to 90 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 4

Governmental units and many not-for-profit organizations are subject to Government Auditing Standards in addition to the Statements on Auditing Standards, issued by the American Institute of Certified Public Accountants AICPA.

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.

Question 5

The Taxpayer Bill of Rights requires to provide copies, upon request, of the three most recent annual form 990s.

Accepted Answer

The Taxpayer Bill of Rights called for increased public disclosures of . are required to provide copies, upon request, of the three most recent annual form 990s.

Question 6

Government Auditing Standards are issued by the U.S. Government Accountability Office GAO.

Accepted Answer

Government Auditing Standards are issued by the U.S. Government Accountability Office GAO.

Question 7

are required to pay tax at the corporate rate on the income generated from any trade or business activities unrelated to the entity's tax-exempt purposes.

Accepted Answer

are required to pay tax at the corporate rate on the income generated from any trade or business activities unrelated to the entity's tax-exempt purposes.

Question 8

are required to disclose the compensation of its officers, directors, trustees, highest paid employees and independent contractors in the Form 990.

Accepted Answer

Compensations schedules are required. The schedules list the compensation of officers, directors, trustees, highest paid employees as well as highest paid independent contractors.

Question 9

Entities that are tax-exempt under Section 501c3 of the Internal Revenue Code do not have to pay income taxes, even if some of their activities compete with commercial enterprises.

Accepted Answer

are required to pay tax at the corporate rate on the income generated from any trade or business activities unrelated to the entity's tax-exempt purposes. The purpose of this requirement is to eliminate advantages that have over profit-making organizations.

Question 10

A disclaimer of opinion is the appropriate audit opinion when the auditor is not independent.

Accepted Answer

A disclaimer of opinion is appropriate if the auditor is not satisfied that the financial statements are fairly presented because of a severe scope limitation. It is also appropriate if the auditor is not independent as defined by the Code of Professional Conduct. In a disclaimer, the auditor states that no opinion is being expressed.

Question 11

The purpose of the Unrelated Business Income Tax is to eliminate advantages that have over commercial enterprises providing goods or services for sale.

Accepted Answer

are required to pay tax at the corporate rate on the income generated from any trade or business activities unrelated to the entity's tax-exempt purposes. The purpose of this requirement is to eliminate advantages that have over profit-making organizations.

Question 12

Governmental Audit Reports may include a report describing instances of fraud or illegal acts.

Accepted Answer

The auditor is required to prepare up to five reports: A report containing an opinion on the financial statements, a report discussing the evaluation and testing of internal control and compliance with laws and regulations, a report discussing significant deficiencies in internal controls, a report describing instances of fraud, illegal acts, or other material noncompliance and a report containing the views of responsible officials of the audited organization regarding any reported significant deficiencies.

Question 13

Entities that are tax-exempt under IRS Section 501c3 with gross receipts less than $500,000 may file Form 990-N electronic postcard.

Accepted Answer

Form 990-N, the electronic postcard, is available for tax-exempt not-for-profits with annual gross receipts of $50,000 or less. It requires only eight pieces of information.

Question 14

Government Auditing Standards do not apply to audits conducted to satisfy the requirements of the Single Audit Act as well as other governmental audits

Accepted Answer

Financial audits of state and local governments and not-for-profit organizations must comply with the AICPA's generally accepted auditing standards for fieldwork and reporting as well as Government Auditing Standards. The Government Auditing Standards are issued by the U.S. Government Accountability Office GAO and apply to audits conducted to satisfy the requirement of the Single Audit Act as well as other governmental audits.

Question 15

Beginning in 2012, entities that are tax-exempt under IRS Section 501c3 with gross receipts less than $75,000 may file Form 990-N electronic postcard.

Accepted Answer

Form 990-N, the electronic postcard, is available for tax-exempt not-for-profits with annual gross receipts of $50,000 or less. It requires only eight pieces of information.

Question 16

In a disclaimer of opinion, the auditor states that no opinion is being expressed.

Accepted Answer

A disclaimer of opinion is appropriate if the auditor is not satisfied that the financial statements are fairly presented because of a severe scope limitation. It is also appropriate if the auditor is not independent as defined by the Code of Professional Conduct. In a disclaimer, the auditor states that no opinion is being expressed.

Question 17

The classification of Net Assets in the Form 990 for are consistent with FASB standards for not-for-profit organizations.

Accepted Answer

The financial information required by Form 990 is very similar to that required under FASB standards for private not-for-profits except that cash a flow statement are notes and not required.

Question 18

Government Auditing Standards identify four categories of professional engagements: financial audits, performance audits, and nonaudit services but not attestation engagements.

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 19

Assuming an auditee is not 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 20

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 25 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.

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

Churches must file a Form 990.

Entities that are tax-exempt under IRS Section 501c3 with gross receipts less than $ 500,000 and total assets less than $ 2.5 million may file Form 990-EZ

Assuming an auditee is not considered low-risk, the auditor is required to express an opinion on compliance on major programs, which must add up to 90 percent of federal funds expended by the auditee.

Governmental units and many not-for-profit organizations are subject to Government Auditing Standards in addition to the Statements on Auditing Standards, issued by the American Institute of Certified Public Accountants AICPA.

The Taxpayer Bill of Rights requires to provide copies, upon request, of the three most recent annual form 990s.

Government Auditing Standards are issued by the U.S. Government Accountability Office GAO.

are required to pay tax at the corporate rate on the income generated from any trade or business activities unrelated to the entity's tax-exempt purposes.

are required to disclose the compensation of its officers, directors, trustees, highest paid employees and independent contractors in the Form 990.

Entities that are tax-exempt under Section 501c3 of the Internal Revenue Code do not have to pay income taxes, even if some of their activities compete with commercial enterprises.

A disclaimer of opinion is the appropriate audit opinion when the auditor is not independent.

The purpose of the Unrelated Business Income Tax is to eliminate advantages that have over commercial enterprises providing goods or services for sale.

Governmental Audit Reports may include a report describing instances of fraud or illegal acts.

Entities that are tax-exempt under IRS Section 501c3 with gross receipts less than $500,000 may file Form 990-N electronic postcard.

Government Auditing Standards do not apply to audits conducted to satisfy the requirements of the Single Audit Act as well as other governmental audits

Beginning in 2012, entities that are tax-exempt under IRS Section 501c3 with gross receipts less than $75,000 may file Form 990-N electronic postcard.

In a disclaimer of opinion, the auditor states that no opinion is being expressed.

The classification of Net Assets in the Form 990 for are consistent with FASB standards for not-for-profit organizations.

Government Auditing Standards identify four categories of professional engagements: financial audits, performance audits, and nonaudit services but not attestation engagements.

Assuming an auditee is not 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.

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 25 percent of federal funds expended by the auditee.