Question 1

Describe the different types of governmental audit and attestation engagements.

Accepted Answer

(a)Financial audits primarily concern providing reasonable assurance about whether financial statements are presented fairly in all material respects in conformity with generally accepted accounting principles or with a comprehensive basis of accounting other than GAAP.
(b)Attestation engagements concern examining,reviewing,or performing agreed upon procedures on a subject matter or an assertion about a subject matter and reporting on the results.… Attestation engagements can cover a broad range of financial or nonfinancial objectives and can be part of a financial audit or other type of engagement.
(c)Performance audits are an objective and systematic examination of evidence to provide an independent assessment of the performance and management of a program against objective criteria or an assessment of best practices and other information. Performance audits provide information to improve program operations and facilitate decision making by parties with responsibility to oversee or initiate corrective action,and improve public accountability.
(d)Nonaudit services consist of gathering,providing,or explaining information requested by decision makers or providing advice or assistance to management officials.

Question 2

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

A) True 
 B)False  True

Question 3

Which of the following is true regarding the Internal Revenue Service's concern regarding tax-exempt organizations?

Accepted Answer

A)  Organizations are charging many of their program expenses to fund-raising. 
B)  Executives of tax-exempt organizations are receiving excessive salaries and benefits. 
C)  Both (a) and (b). 
D)  Neither (a) nor (b). 
A)  Organizations are charging many of their program expenses to fund-raising. 
B)  Executives of tax-exempt organizations are receiving excessive salaries and benefits. 
C)  Both (a) and (b). 
D)  Neither (a) nor (b). B

Question 4

Which of the following is true concerning tax-exempt organizations with unrelated business income?

Accepted Answer

A)  They may deduct the first $1,000 of unrelated business income. 
B)  They must include income from donated merchandise. 
C)  They must include investment income in computing their tax liability. 
D)  None of the above. 
A)  They may deduct the first $1,000 of unrelated business income. 
B)  They must include income from donated merchandise. 
C)  They must include investment income in computing their tax liability. 
D)  None of the above.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

According to GASB,Service Efforts and Accomplishments Reporting is to provide more complete information about a governmental entity's performance.

Accepted Answer

A) True 
 B)False

Question 7

What organization oversees the promulgation of Government Auditing Standards?

Accepted Answer

A)  Government Accountability Office. 
B)  Governmental Accounting Standards Board. 
C)  Public Companies Accounting Oversight Board. 
D)  Government Accounting Oversight Committee. 
A)  Government Accountability Office. 
B)  Governmental Accounting Standards Board. 
C)  Public Companies Accounting Oversight Board. 
D)  Government Accounting Oversight Committee.

Question 8

Assume the mission statement for the Area Homeless Shelter is as follows:
To provide temporary shelter and meals to area homeless and to assist them in obtaining self-sufficiency.
The Shelter has approached you about contributing a substantial amount of money to support their operations. Before contributing your money,you would like to evaluate the Shelter's service efforts and accomplishments. Give an example of Input,Output,Outcome,and Efficiency measures that you might find useful in assessing the Service Efforts and Accomplishments of the Area Homeless Shelter.

Accepted Answer

(a)Input measures - Dollars expended for

Question 9

Which of the following is true regarding the Single Audit Act and its amendments?

Accepted Answer

A)  All governmental entities with expenditures of federal funds in excess of $500,000 must have a single audit, if more than one program exists. 
B)  An audit must be designed to cover 25 percent of federal funds expended, unless the organization is deemed to be low risk. 
C)  Both A and B above. 
D)  Neither A nor B above. 
A)  All governmental entities with expenditures of federal funds in excess of $500,000 must have a single audit, if more than one program exists. 
B)  An audit must be designed to cover 25 percent of federal funds expended, unless the organization is deemed to be low risk. 
C)  Both A and B above. 
D)  Neither A nor B above.

Question 10

Which of the following conditions would exempt income-producing activities from the Unrelated Business Income Tax (UBIT)?

Accepted Answer

A)  Majority of labor is performed by paid employees. 
B)  The business sells donated merchandise. 
C)  The business is carried on regularly but is unrelated to the organization's tax-exempt purpose. 
D)  The business is operated for a profit. 
A)  Majority of labor is performed by paid employees. 
B)  The business sells donated merchandise. 
C)  The business is carried on regularly but is unrelated to the organization's tax-exempt purpose. 
D)  The business is operated for a profit.

Question 11

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

A) True 
 B)False

Question 12

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

A) True 
 B)False

Question 13

What are major programs with respect to the Single Audit Act of 1984 and amendment of 1996?
 Distinguish between Type A and Type B programs.

Accepted Answer

A major program is one that is selected

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

What is the principal advantage of having 501(c)(3)status to an organization that receives substantial support from outside contributors?

Accepted Answer

A)  The organization does not have to pay federal income tax. 
B)  Donors to the organization may deduct their contributions as charitable donations. 
C)  The organization does not have to pay state sales taxes on purchases. 
D)  All of the above. 
A)  The organization does not have to pay federal income tax. 
B)  Donors to the organization may deduct their contributions as charitable donations. 
C)  The organization does not have to pay state sales taxes on purchases. 
D)  All of the above.

Question 16

Which of the following is not a type of governmental audit?

Accepted Answer

A)  Attestation engagements. 
B)  Consulting engagements. 
C)  Financial audits. 
D)  Performance audits. 
A)  Attestation engagements. 
B)  Consulting engagements. 
C)  Financial audits. 
D)  Performance audits.

Question 17

To qualify for tax-exempt status,an organization must do all of the following except:

Accepted Answer

A)  Have an Employer's Identification Number. 
B)  Be organized as a corporation, trust, or association. 
C)  Complete IRS form 1023. 
D)  Receive most of its income from contributions rather than by providing goods or services. 
A)  Have an Employer's Identification Number. 
B)  Be organized as a corporation, trust, or association. 
C)  Complete IRS form 1023. 
D)  Receive most of its income from contributions rather than by providing goods or services.

Question 18

If an auditee is not considered low-risk,what percent of federal funds expended are auditors required to express an opinion on?

Accepted Answer

A)  25%. 
B)  50%. 
C)  70%. 
D)  100%. 
A)  25%. 
B)  50%. 
C)  70%. 
D)  100%.

Question 19

Service Efforts and Accomplishments Reporting is mandatory for government organizations.

Accepted Answer

A) True 
 B)False

Question 20

To compute the debt service to total expenditures,one would need to look in the CAFR for the:

Accepted Answer

A)  Government-wide Statement of Net Position. 
B)  Proprietary funds Statement of Revenues, Expenses, and Changes in Fund Net Position. 
C)  Governmental fund-basis statements. 
D)  Enterprise fund Statement of Cash Flows. 
A)  Government-wide Statement of Net Position. 
B)  Proprietary funds Statement of Revenues, Expenses, and Changes in Fund Net Position. 
C)  Governmental fund-basis statements. 
D)  Enterprise fund Statement of Cash Flows.

Describe the different types of governmental audit and attestation engagements.

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.

Which of the following is true regarding the Internal Revenue Service's concern regarding tax-exempt organizations?

Which of the following is true concerning tax-exempt organizations with unrelated business income?

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

According to GASB,Service Efforts and Accomplishments Reporting is to provide more complete information about a governmental entity's performance.

What organization oversees the promulgation of Government Auditing Standards?

Which of the following is true regarding the Single Audit Act and its amendments?

Which of the following conditions would exempt income-producing activities from the Unrelated Business Income Tax (UBIT)?

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.

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.

What are major programs with respect to the Single Audit Act of 1984 and amendment of 1996? Distinguish between Type A and Type B programs.

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

What is the principal advantage of having 501(c)(3)status to an organization that receives substantial support from outside contributors?

Which of the following is not a type of governmental audit?

To qualify for tax-exempt status,an organization must do all of the following except:

If an auditee is not considered low-risk,what percent of federal funds expended are auditors required to express an opinion on?

Service Efforts and Accomplishments Reporting is mandatory for government organizations.

To compute the debt service to total expenditures,one would need to look in the CAFR for the:

Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Organizations

Overview of Financial Reporting for State and Local Governments

Modified Accrual Accounting: Including the Role of Fund Balances and Budgetary Authority

Accounting for the General and Special Revenue Funds

Accounting for Other Governmental Fund Types: Capital Projects, Debt Service, and Permanent

Proprietary Funds

Fiduciary Funds, Inter-fund Transactions

Government-Wide Statements: Capital Assets; Long-Term Debt

Accounting for Special-Purpose Entities Including Public Colleges and Universities

Accounting for Private Not-For-Profit Organizations

College and University Accounting Private Institutions

Accounting for Hospitals and Other Health Care Providers

Financial Reporting by the Federal Government

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Exam 13: Auditing, Tax-Exempt Organizations, and Evaluating Performance

Describe the different types of governmental audit and attestation engagements.

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.

Which of the following is true regarding the Internal Revenue Service's concern regarding tax-exempt organizations?

Which of the following is true concerning tax-exempt organizations with unrelated business income?

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

According to GASB,Service Efforts and Accomplishments Reporting is to provide more complete information about a governmental entity's performance.

What organization oversees the promulgation of Government Auditing Standards?

Which of the following is true regarding the Single Audit Act and its amendments?

Which of the following conditions would exempt income-producing activities from the Unrelated Business Income Tax (UBIT)?

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.

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.

What are major programs with respect to the Single Audit Act of 1984 and amendment of 1996? Distinguish between Type A and Type B programs.

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

What is the principal advantage of having 501(c)(3)status to an organization that receives substantial support from outside contributors?

Which of the following is not a type of governmental audit?

To qualify for tax-exempt status,an organization must do all of the following except:

If an auditee is not considered low-risk,what percent of federal funds expended are auditors required to express an opinion on?

Service Efforts and Accomplishments Reporting is mandatory for government organizations.

To compute the debt service to total expenditures,one would need to look in the CAFR for the:

Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Organizations

Overview of Financial Reporting for State and Local Governments

Modified Accrual Accounting: Including the Role of Fund Balances and Budgetary Authority

Accounting for the General and Special Revenue Funds

Accounting for Other Governmental Fund Types: Capital Projects, Debt Service, and Permanent

Proprietary Funds

Fiduciary Funds, Inter-fund Transactions

Government-Wide Statements: Capital Assets; Long-Term Debt

Accounting for Special-Purpose Entities Including Public Colleges and Universities

Accounting for Private Not-For-Profit Organizations

College and University Accounting Private Institutions

Accounting for Hospitals and Other Health Care Providers

Financial Reporting by the Federal Government

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