Exam 11: Auditing of Governmental and Not-For-Profit Organizations

Which of the following is not considered an opinion unit requiring a materiality determination associated with a financial statement audit of a state or local government?

An unmodified audit opinion rendered on a governmental unit's basic financial statements means those statements:

What are the benefits to a state or local government of establishing an audit committee?

In evaluating an entity's system of internal controls a significant deficiency is a deficiency in the design or operation of internal controls of such magnitude that the internal control components do not reduce the risk of detection or prevention of material misstatement to an acceptably low level.

The introductory paragraph of the auditor's report should identify the financial statements being audited and,in particular,refer to the audit of the financial statements of each opinion unit.

Explain how federal award programs are selected for audit under the risk-based approach. A." All other programs are identified as "Type B" programs. Second, any low risk Type A programs are identified. This involves auditor judgment after fully considering the factors discussed in Chapter 11. Third, high risk Type B programs are identified. However, the auditor is not expected to perform risk assessments on relatively small federal programs, as defined in Chapter 11. At a minimum, the auditor should audit as major programs all Type A programs not identified as low risk and certain of the high risk Type B programs. The auditor is not required to identify more high-risk Type B programs than one fourth the number of low-risk Type A programs. As many major programs as necessary must be audited to ensure that at least 40% of total federal awards expended are audited.

The single audit requirement applies to:

Answer the following questions relating to the provisions of the Single Audit Act of 1984 and 1996 Amendments. (a)What is a single audit?

In which section of the standard audit report does the auditor inform financial statement users that certain information,such as combining statements or budgetary comparison schedules may not have been subject to the comprehensive audit procedures?

Auditing standards issued by the U.S.General Accountability Office include specific reference to ethical requirements relating to an audit of financial statements,however,auditing standards issued by the Auditing Standards Board do not address ethics.

The goal(s)of a performance audit include(s)assessment of:

Under a single audit:

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

Generally accepted government auditing standards (GAGAS):

Which of the following is a statement about the relationship between generally accepted government auditing standards (GAGAS)and generally accepted auditing standards (GAAS)?

Performance audits are independent assessments of performance against objective criteria.

Generally accepted government auditing standards (GAGAS)apply to financial audits of state and local governments only if they expend $750,000 or more in federal financial assistance.

Generally accepted government auditing standards require the auditor to report on internal control over financial reporting and compliance with laws,regulations,and provisions of contracts or grant agreements.

Governments may engage one auditor to audit the primary government and other auditors to audit certain component units.

The AICPA's Audit and Accounting Guide,State and Local Governments requires auditors to make separate materiality determinations for each opinion unit.