Question 1

"An unmodified opinion on the financial statements of a local government means that all statements in the comprehensive annual financial report (CAFR)have been audited and conform with GAAP." Do you agree or disagree? Why?

Accepted Answer

The answer of "An unmodified opinion on the financial statements...

Question 2

In audits of state and local government units which of the following sections may not be required in the auditor's report for every audit?

Accepted Answer

A)  Auditor's Opinion section. 
B)  Other Matters section. 
C)  Other Information section 
D)  Auditor's Responsibility section.

Question 3

Which of the following statements regarding audit findings is ?

Accepted Answer

A)  A significant deficiency is a deficiency in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. 
B)  A material weakness is a deficiency in internal control important enough to merit attention by those charged with governance. 
C)  A deficiency exists when the design or operation of a control does not allow management or employees to prevent, or detect and correct misstatements on a timely basis. 
D)  All of the above are true.

Question 4

Cognizant agencies:

Accepted Answer

A)  Are responsible for conducting governmental single audits. 
B)  Are assigned to each nonfederal agency expending more than $50 million of federal funds per year. 
C)  Are also referred to as oversight agencies. 
D)  Are responsible for issuing Government Auditing Standards.

Question 5

A single audit conducted pursuant to the Single Audit Act Amendments of 1996 requires which of the following types of audits?

Accepted Answer

A)  Financial Audit: Yes; Performance Audit: No 
B)  Financial Audit: No; Performance Audit: No 
C)  Financial Audit: No; Performance Audit: Yes 
D)  Financial Audit: Yes; Performance Audit: Yes

Question 6

The U.S.Office of Management and Budget issues generally accepted auditing standards which provide general guidelines for governmental audits and address the minimum responsibilities of the auditor.

Accepted Answer

A) True 
 B)False

Question 7

One of the primary purposes of the Single Audit Act of 1984 (amended in 1996)is to:

Accepted Answer

A)  Detect fraud, waste and abuse in government entities. 
B)  Promote the efficient and effective use of audit resources. 
C)  Make audit activity legal at the federal level. 
D)  Allow federal auditors greater access to government entities receiving federal funds.

Question 8

To help identify threats to independence,generally accepted government auditing standards establish a conceptual framework that requires auditors to identify,evaluate,and apply safeguards to appropriately address threats to independence.

Accepted Answer

A) True 
 B)False

Question 9

Generally accepted government auditing standards (GAGAS)require that auditors conducting a GAGAS audit complete at least 80 hours of continuing professional education (CPE)that directly contributes to the auditor's professional proficiency to perform such audit work.

Accepted Answer

A) True 
 B)False

Question 10

An auditor would not render an opinion on a(an):

Accepted Answer

A)  Financial audit of financial statements. 
B)  Performance audit. 
C)  Audit to determine whether the entity has adhered to specific compliance requirements applicable to a major program. 
D)  Audit to determine whether a governmental department's financial information complies with specific state regulatory requirements.

Question 11

In auditing compliance with laws and regulations as part of a single audit,the auditor must render an opinion on the specific requirements applicable to each program for which the entity receives federal financial assistance.

Accepted Answer

A) True 
 B)False

Question 12

The purpose of an attestation engagement may include all of the following,except:

Accepted Answer

A)  Expressing an opinion on whether the subject matter examined is in conformity with recognized criteria. 
B)  Expressing a conclusion about whether any information came to the attention of the auditor indicating that the subject matter reviewed is not based on recognized criteria. 
C)  Providing an agreed-upon procedure report on an assertion about a subject matter. 
D)  Providing a due diligence report on compliance with laws and regulations.

Question 13

Which of the following best describes the relationship between generally accepted auditing standards (GAAS)and generally accepted government auditing standards (GAGAS)?

Accepted Answer

A)  GAAS apply to independent CPA auditors; GAGAS apply to governmental auditors. 
B)  Audits conducted in conformity with GAGAS may also require the auditor to conform to GAAS. 
C)  Audits done in accordance with GAAS must also be done in accordance with GAGAS. 
D)  Audits of state and local governments always require that the audit be conducted in accordance with both GAAS and GAGAS.

Question 14

Typical objectives of a performance audit include:

Accepted Answer

A)  Determining whether financial statements fairly present the entity's operational results. 
B)  Judging the appropriateness of an entity's program goals. 
C)  Determining whether financial statements fairly present in conformity with GAAP. 
D)  Assessing effectiveness and results, economy and efficiency, and internal controls.

Question 15

Only state and local governments and their component units must have single audits; colleges and universities and other not-for-profit organizations that expend federal financial awards are not required to have single audits.

Accepted Answer

A) True 
 B)False

Question 16

When compared to generally accepted auditing standards (GAAS),generally accepted government auditing standards (GAGAS)include additional General Standard requirements for financial audits related to all of the following except:

Accepted Answer

A)  Independence. 
B)  Quality control and assurance. 
C)  Audit opinions 
D)  Competence.

Question 17

In order for users of financial statements to have the assurance that the statements have been prepared in conformity with accounting and financial reporting standards established by authoritative bodies,and that all material facts have been disclosed,the statements should be accompanied by the report of an independent auditor.

Accepted Answer

A) True 
 B)False

Question 18

When conducting a single audit:

Accepted Answer

A)  All federal grant programs must be audited. 
B)  All major programs must be audited. 
C)  At a minimum, all Type A major programs not identified as low risk and certain high-risk Type B programs must be considered for audit. 
D)  All programs not identified as low risk must be audited.

Question 19

Guidelines for grant accounting and reporting is contained within Uniform Administrative Requirements,Cost Principles,and Audit Requirements for Federal Awards,issued by the AICPA.

Accepted Answer

A) True 
 B)False

Question 20

Governments and not-for-profit entities may be subject to each of the following levels of audit except:

Accepted Answer

A)  Requirements under AICPA generally accepted auditing standards. 
B)  Requirements under GAO generally accepted governmental auditing standards. 
C)  Requirements under OMB compliance standards. 
D)  Requirements under the Single Audit Act.

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

"An unmodified opinion on the financial statements of a local government means that all statements in the comprehensive annual financial report (CAFR)have been audited and conform with GAAP." Do you agree or disagree? Why?

In audits of state and local government units which of the following sections may not be required in the auditor's report for every audit?

Which of the following statements regarding audit findings is ?

Cognizant agencies:

A single audit conducted pursuant to the Single Audit Act Amendments of 1996 requires which of the following types of audits?

The U.S.Office of Management and Budget issues generally accepted auditing standards which provide general guidelines for governmental audits and address the minimum responsibilities of the auditor.

One of the primary purposes of the Single Audit Act of 1984 (amended in 1996) is to:

To help identify threats to independence,generally accepted government auditing standards establish a conceptual framework that requires auditors to identify,evaluate,and apply safeguards to appropriately address threats to independence.

Generally accepted government auditing standards (GAGAS)require that auditors conducting a GAGAS audit complete at least 80 hours of continuing professional education (CPE)that directly contributes to the auditor's professional proficiency to perform such audit work.

An auditor would not render an opinion on a(an) :

In auditing compliance with laws and regulations as part of a single audit,the auditor must render an opinion on the specific requirements applicable to each program for which the entity receives federal financial assistance.

The purpose of an attestation engagement may include all of the following,except:

Which of the following best describes the relationship between generally accepted auditing standards (GAAS) and generally accepted government auditing standards (GAGAS) ?

Typical objectives of a performance audit include:

Only state and local governments and their component units must have single audits; colleges and universities and other not-for-profit organizations that expend federal financial awards are not required to have single audits.

When compared to generally accepted auditing standards (GAAS) ,generally accepted government auditing standards (GAGAS) include additional General Standard requirements for financial audits related to all of the following except:

When conducting a single audit:

Guidelines for grant accounting and reporting is contained within Uniform Administrative Requirements,Cost Principles,and Audit Requirements for Federal Awards,issued by the AICPA.

Governments and not-for-profit entities may be subject to each of the following levels of audit except: