Exam 26: Internal and Governmental Financial Auditing and Operational Auditing

Operational audits may be performed by internal auditors and government auditors, but not by external auditors.

Which of the following can affect the independence of operational auditors?

A major challenge of operational auditing is in selecting the specific criteria for evaluation whether efficiency and effectiveness have occurred in the client's organization. For example, in financial statement auditing the criteria for consideration is US GAAP or Other Comprehensive Basis of Accounting. There are no such "overriding" objectives in internal auditing. Discuss below sources of specific criteria that could be used by the internal auditor in planning the engagement.

Auditors involved in planning, performing, or reporting on audits under GAGAS must complete ________ hours of continuing professional education in each two-year period.

Which of the following is most correct with regard to the comparison of the financial auditing standards of the Yellow Book with the 10 General Auditing Standards for financial audits?

The two most important qualities for an operational auditor are:

Government auditing standards are included in the Yellow Book.

External financial statement auditors must obtain evidence regarding what attributes of an internal audit department if the external auditors intend to rely on the internal auditor's work?

The auditing standards of the Yellow Book are consistent with the ten generally accepted auditing standards of the AICPA. There are, however, important additions/modifications in the Yellow Book. For example, the Yellow Book recognizes that materiality and risk are lower due to the nature of the government enterprise. Discuss the other additions/modifications.

When a state or local government agency receives federal funds, it is subject to the audit requirements of:

Current professional auditing standards allow external auditors to use internal auditors for direct assistance on external audits.

How do the risk and materiality thresholds change in a government audit compared to a financial statement audit of a public company?

Which of the following is not a similarity between external and internal auditors?

Which of the following operational audits are best described by "deals with one or more of the activities as represented by functions within an organization"?

Which of the following best describes an audit that emphasizes how efficiently and effectively functions interact?

An operational auditor may use "engineered standards" as evaluation criteria.

The "Yellow Book" defines and sets standards for performance audits. Discuss below the purpose of a program audit.

Match seven of the terms (a-o) with the descriptions/definitions provided below (1-7): a. Compliance audit b. Economy and efficiency audit c. Effectiveness d. Efficiency e. Functional audit f. Government Auditing Standards g. Government audit h. Institute of Internal Auditors i. Operational auditing j. Organizational audit k. Program audit l. Single Audit Act m. Special assignment n. IIA Practice Standards o. Statements on Internal Auditing Standards ________ 1. The official title of the Yellow Book. ________ 2. A management request for an operational audit for a specific purpose, such as investigating the possibility of fraud in a division or making recommendations for reducing the cost of a manufactured product. ________ 3. A government audit to determine whether an entity is acquiring, protecting, and using its resources economically and efficiently and whether the entity has complied with laws and regulations concerning such matters. ________ 4. The degree to which the organization's objectives are accomplished. ________ 5. The review of an organization for efficiency and effectiveness. ________ 6. Federal legislation that provides for a single coordinated audit to satisfy the audit requirements of all federal funding agencies. ________ 7. Statements issued by the Internal Auditing Standards Board of the IIA to provide authoritative interpretation of the IIA Practice Standards.

Operational auditing is the review of an organization for efficiency and effectiveness. Discuss what is meant by the terms "effectiveness" and "efficiency."

In addition to an opinion on whether the financial statements are in accordance with GAAP, identify four other reports required by the OMB Circular A-133.