Deck 20: Auditing Governments and Not-For-Profit Organizations

Question 1

Which single audit report does not include an "opinion"?

A) Report on the schedule of expenditures of federal awards.
B) Report on internal controls over federal financial assistance.
C) Report on financial statements.
D) Report on major federal financial assistance program compliance.

Answer 1

B

Question 2

All of the following represent criteria for determining questioned costs except

A) Unallowable costs.
B) Unreasonable costs.
C) Unquestioned costs.
D) Unapproved costs.

Answer 2

C

Question 3

Questioned costs that may not reflect the actions that a prudent person would take under the circumstances are

A) Unallowable costs.
B) Unreasonable costs.
C) Unapproved costs.
D) Undocumented costs.

Answer 3

B

Question 4

A local government received and expended the following federal financial assistance under several programs during 20X4:
Requirements:
A. Is this government required to have a single audit? Why?
B. If a single audit is performed on the government, what are its Type A programs?
C. Assume that the two largest Type A programs that you identified in Part B of this question were audited as major federal financial assistance programs in one of the past two years and that the audits uncovered no findings or questioned costs. Further assume that each of the Type B programs could reasonably be assessed as high-risk programs. Which programs should be audited as major programs? Why?

Question 5

An auditor is only required to perform a risk assessment on Type B programs that

A) Exceed the larger of $100,000 or three-tenths of 1% of total federal awards expended if the total is less than or equal to $100 million.
B) Exceed the larger of $100,000 or three-tenths of 1% of total federal awards expended if the total is more than $100 million.
C) Exceed the larger of $300,000 or three-hundredths of 1% of total federal awards expended if the total is less that $100 million.
D) Exceed the larger of $300,000 or three-hundredths of 1% of total federal awards expended if the total is more that $100 million.

Question 6

Which of the following is true?

A) A single audit must include a GAAS audit and a GAGAS audit.
B) A single audit must include a GAAS audit, but not a GAGAS audit.
C) A single audit must include a GAGAS audit, but not a GAAS audit.
D) A single audit does not include a GAAS audit or a GAGAS audit.

Question 7

Single audits must comply with all of the following guidance except

A) AICPA generally accepted auditing standards.
B) Generally accepted government auditing standards.
C) OMB Circular A-133.
D) Single audits must comply with all of the above guidance.

Question 8

The scope of a financial audit opinion will generally include all of the following except

A) The note disclosures.
B) The government-wide financial statements.
C) The governmental funds' balance sheet.
D) The statistical section.

Question 9

Which of the following is not an opinion unit?

A) Governmental activities.
B) Internal Service Fund type.
C) Aggregate of all discretely presented component units, aggregate nonmajor governmental funds, aggregate of nonmajor Enterprise Funds; Internal Service Fund type; and aggregate fiduciary fund type.
D) Each major governmental fund.

Question 10

Requirement: Explain the process for identifying major federal programs in a single audit of a government that receives federal financial assistance.

Question 11

Answer the following questions related to the single audit.
1. Explain the concept of a single audit.
2. What is a major federal program? Why does it matter if a federal assistance program is a major program?
3. What is a low-risk auditee, and what is the impact of being a low-risk auditee?

Question 12

A single audit must include all of the following except

A) A financial statement audit.
B) Compliance testing.
C) A performance audit.
D) Internal control evaluation and testing.

Question 13

Which of the following statements concerning the identification of a Type A low-risk program is true?

A) A Type A program can be considered low-risk if it has been audited as a major program in one of the last two years, and the current year had no reportable audit findings.
B) A Type A program is low-risk if it was audited as a major program last year, whether or not there were any reportable audit findings.
C) A Type A program is low-risk if there were no audit findings within the last two years.
D) A Type A program can never be classified as low-risk.

Question 14

Assume that programs that were classified as major federal programs totaled $4,500,000. If the auditee is considered low-risk, the percentage of coverage rule would be satisfied if the total federal awards expended were no more than

A) $4,500,000.
B) $9,000,000.
C) $12,000,000.
D) $18,000,000.

Question 15

If the total of major federal programs was $7,000,000 for an auditee who is not low risk, the percentage of coverage rule would be met if the aggregate of major federal programs were no more than

A) $7,000,000.
B) $14,000,000.
C) $21,000,000.
D) $28,000,000.

Question 16

Generally accepted government auditing standards GAGAS are established by

A) The GASB.
B) The Comptroller General.
C) The AICPA.
D) The FASB.

Question 17

Which of the following is not a reporting unit?

A) Governmental activities.
B) Aggregate nonmajor governmental funds.
C) Aggregate of all discretely presented component units, aggregate nonmajor governmental funds, aggregate nonmajor Enterprise Funds; Internal Service Fund type; and aggregate fiduciary fund type.
D) Agency Funds.

Question 18

Generally accepted governmental auditing standards are issued by the

A) AICPA.
B) U.S. Government Accountability Office.
C) U.S. Office of Management and Budget.
D) U.S. Department of the Treasury.

Question 19

A government is required to have a single audit for any year in which it expends federal awards of

A) At least $100,000.
B) At least $300,000.
C) At least $500,000
D) At least 25% of its total expenditures.

Question 20

An auditor must audit as a major program

A) All Type A programs unless the auditor has identified one as low risk.
B) All Type A programs.
C) All Type B programs.
D) At least two programs in each audit cycle.

Question 21

Which of the following could not be an independent auditor for governmental entities?

A) Public auditors.
B) Officials of a government other than the one being examined.
C) Officials of the government being examined even if they are a part of government's management assuming they meet certain prescribed criteria.
D) Officials of the government being examined that are separately elected.

Question 22

For basic financial statements of a local government to be presented fairly in all material respects, the basic financial statements must include an opinion unit for:

A) Governmental activities in the government-wide financial statements.
B) All funds in the special revenue fund type reported together as a unit.
C) Investment trust funds as a unit apart from other fiduciary funds.
D) All agency funds reported together as a unit.

Question 23

For governments that expend less than $3 million of federal awards during a year, each federal program for which it expended $300,000 or more is

A) Always treated as a major federal program.
B) Treated as a major federal program if it is a high risk Type B program.
C) Treated as a major federal program if it has not been audited as a major program in either of the two previous years.
D) Treated as a major federal program only if needed to meet the 50% test.

Question 24

Which of the following categories is not a threat to an auditor's independence?

A) The auditor has done the work that is being audited.
B) The auditor lacks any vested interest in the results of the audit.
C) The auditor has become too close to the audited organization over time.
D) The auditor makes management decisions.

Question 25

For a government that has less than $100 million in total federal awards expended, an auditor must perform a risk assessment on a federal program classified as a Type B program

A) If program has not been assessed in last three years.
B) Every two years.
C) If federal awards expended under the program exceed $100,000.
D) If federal awards expended under the program exceed $300,000.

Question 26

Auditors are responsible for

A) Preparing a government's financial statements and related notes to the financial statements.
B) Reporting on financial and other economic events, transactions, and balances.
C) Maintaining a government's internal control system.
D) Collecting sufficient objective data to allow them to express an opinion on the accuracy and reliability of management's assertions regarding a government's financial statements.

Question 27

Audit reports that meet the requirements of the Single Audit Act and OMB Circular A-133 need not include

A) An opinion on the financial statements.
B) An opinion on the schedule of expenditures of federal awards.
C) A report on internal controls.
D) A report on management's discussion and analysis.

Question 28

A nonfederal entity is required to have either a Program-Specific Audit or a Single Audit if they

A) Received $300,000 or more in federal awards.
B) Expended $300,000 or more in federal awards.
C) Received $500,000 or more in federal awards.
D) Expended $500,000 or more in federal awards.

Question 29

Which of the following is not an auditee responsibility

A) Prepare appropriate financial statements.
B) Insure the audit covers the auditee's entire operations.
C) Comply with laws, regulations, and the provisions of contracts related to each of the federal programs.
D) Take corrective action on audit findings.

Question 30

A federal program that a government classifies as a Type A program

A) Must be treated as a major program.
B) Cannot normally be treated as a low-risk program in three consecutive years.
C) Can usually be treated as a low-risk program in more than three consecutive years.
D) May be treated as a low-risk program for an indefinite number of consecutive years.

Question 31

A data collection form

A) Is used in detailed testing of major federal program compliance.
B) Is used to summarize the results of a single audit.
C) Is completed by the cognizant agency.
D) Is not necessary unless the single audit report does not include a schedule of findings and questioned costs.

Question 32

In order for a government to have a program-specific audit, which of the following must be met?

A) Expend less than $300,000 of federal awards.
B) Expend federal awards under only one federal program.
C) Have low-risk programs.
D) Have a combination of high-risk and low-risk programs.

Question 33

To complete an audit in conformity with generally accepted governmental auditing standards, the auditor should

A) Audit the financial statements following generally accepted auditing standards.
B) Obtain an understanding of the internal controls over major federal financial assistance programs.
C) Audit the schedule of expenditures of federal awards.
D) Audit management's discussion and analysis and the statistical section since both include information from the basic financial statements.

Question 34

With respect to illegal acts, an auditor should

A) Design procedures to find illegal acts.
B) Alert appropriate law enforcement officials regarding any material illegal acts found while conducting the audit.
C) Report any illegal acts discovered during the audit.
D) Not be responsible to discover illegal acts.

Question 35

A material weakness in internal control is a significant deficiency, or combination of significant deficiencies, that results

A) From a material misstatement in the financial statements.
B) In more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected.
C) In a material misstatement of the financial statements.
D) In a government having a qualified audit opinion on their financial statements.

Question 36

When reporting on internal control deficiencies, an auditor need not report

A) Significant deficiencies.
B) Material weaknesses.
C) Possible deficiencies.
D) Immaterial differences.