Question 1

Governmental Audit Reports may include a report describing instances of fraud or illegal acts.

Accepted Answer

A) True 
 B)False

Question 2

A measure of performance that expresses how much an organization expends in raising a dollar of donations is:

Accepted Answer

A)  Fund-raising efficiency. 
B)  Program expense ratio. 
C)  Working capital ratio. 
D)  None of the above.

Question 3

Entities that are tax-exempt under IRS Section 501c3 with gross receipts less than $500,000 may file Form 990-N electronic postcard.

Accepted Answer

A) True 
 B)False

Question 4

The highest bond rating assigned by Moody's is:

Accepted Answer

A)  A+ 
B)  Aa 
C)  Auditing requirements of governmental and not-for-profit organizations 
D)  Auditing requirements of governmental and not-for-profit organizations+

Question 5

The purpose of audits conducted under the Single Audit Act is to provide assurance that federal and state funds are expended in accordance with grant agreements, and with financial management and other standards promulgated by the federal government.

Accepted Answer

A) True 
 B)False

Question 6

In a governmental audit the auditor is only required to report to the board or audit committee.

Accepted Answer

A) True 
 B)False

Question 7

The Single Audit Act intends that auditors conducting regular financial audits of state and local governments and not-for-profits organizations provide assurance to the federal government that:

Accepted Answer

A)  Federal funds have been expended in accordance with laws and regulations. 
B)  Federal funds are protected through a system of internal controls and sound financial management practices. 
C)  Both A and B above. 
D)  Neither A nor B above.

Question 8

Service efforts are measures of costs and other resources dedicated to a program or service.

Accepted Answer

A) True 
 B)False

Question 9

The Taxpayer Bill of Rights requires to provide copies, upon request, of the three most recent annual form 990s.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not correct with respect to Service Efforts and Accomplishments SEA reporting? A) The fundamental problem is that government and not-for-profit effectiveness cannot be expressed solely in financial terms. B) Ratio analysis is sufficient to illustrate program efficiency and effectiveness. C) Effectiveness in nonbusiness organizations must be measured in terms of the quality of the service provided or the extent to which an organization fulfills its mission. D) To demonstrate effectiveness, many governments and not-for-profits report nonfinancial information in addition to their financial statements.

Accepted Answer

The answer of Which of the following is not correct...

Question 11

Governmental Auditing Standards identifies four categories of professional engagements: financial audits, performance audits, attestation engagements, and non-audit services.

Accepted Answer

A) True 
 B)False

Question 12

Debt service coverage can only be directly measured from proprietary fund statements since cash flow statements are not prepared for governmental funds or at the government-wide level.

Accepted Answer

A) True 
 B)False

Question 13

Currently, a single audit is required for organizations receiving what amount of federal funds?

Accepted Answer

A)  > $100,000. 
B)  > $375,000. 
C)  > $500,000. 
D)  > $750,000.

Question 14

Section 501c3, exempt organizations are prohibited from supporting political candidates or campaigning to influence legislation.

Accepted Answer

A) True 
 B)False

Question 15

List four sources of income that are not subject to the unrelated business income tax.

Accepted Answer

The answer of List four sources of income that are...

Question 16

Which of the following is not true regarding the Single Audit Act and its amendments?

Accepted Answer

A)  Governments and not-for-profit organizations that exceed $50 million in federal awards are normally assigned a cognizant agency to provide guidance. 
B)  Smaller entities report to oversight agencies, typically the agency providing more funding than any other agency. 
C)  The auditor is not required to test internal controls to gain an understanding of internal controls. 
D)  All of the above are true.

Question 17

Under the terms of the Single Audit Act and its amendments, what percentage of major program expenditures must be selected for audit?

Accepted Answer

A)  100%; or 25% if organization is deemed to be Low Risk Auditee. 
B)  100%; or 50% if organization is deemed to be Low Risk Auditee. 
C)  50%; or 0% if organization is deemed to be Low Risk Auditee. 
D)  50%; or 25% if organization is deemed to be Low Risk Auditee.

Question 18

Which type of audit opinion is appropriate if an auditor is not deemed to be independent?

Accepted Answer

A)  Adverse. 
B)  Disclaimer of opinion. 
C)  Qualified. 
D)  Unmodified.

Question 19

Governmental units and many not-for-profit organizations are subject to Government Auditing Standards in addition to the Statements on Auditing Standards, issued by the American Institute of Certified Public Accountants AICPA.

Accepted Answer

A) True 
 B)False

Question 20

To apply for tax-exempt status, a non-profit organization must file:

Accepted Answer

A)  IRS Form 501c3. 
B)  IRS Form 990. 
C)  IRS Form 1023. 
D)  None of the above.

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

Governmental Audit Reports may include a report describing instances of fraud or illegal acts.

A measure of performance that expresses how much an organization expends in raising a dollar of donations is:

Entities that are tax-exempt under IRS Section 501c3 with gross receipts less than $500,000 may file Form 990-N electronic postcard.

The highest bond rating assigned by Moody's is:

The purpose of audits conducted under the Single Audit Act is to provide assurance that federal and state funds are expended in accordance with grant agreements, and with financial management and other standards promulgated by the federal government.

In a governmental audit the auditor is only required to report to the board or audit committee.

The Single Audit Act intends that auditors conducting regular financial audits of state and local governments and not-for-profits organizations provide assurance to the federal government that:

Service efforts are measures of costs and other resources dedicated to a program or service.

The Taxpayer Bill of Rights requires to provide copies, upon request, of the three most recent annual form 990s.

Governmental Auditing Standards identifies four categories of professional engagements: financial audits, performance audits, attestation engagements, and non-audit services.

Debt service coverage can only be directly measured from proprietary fund statements since cash flow statements are not prepared for governmental funds or at the government-wide level.

Currently, a single audit is required for organizations receiving what amount of federal funds?

Section 501c3, exempt organizations are prohibited from supporting political candidates or campaigning to influence legislation.

List four sources of income that are not subject to the unrelated business income tax.

Which of the following is not true regarding the Single Audit Act and its amendments?

Under the terms of the Single Audit Act and its amendments, what percentage of major program expenditures must be selected for audit?

Which type of audit opinion is appropriate if an auditor is not deemed to be independent?

Governmental units and many not-for-profit organizations are subject to Government Auditing Standards in addition to the Statements on Auditing Standards, issued by the American Institute of Certified Public Accountants AICPA.

To apply for tax-exempt status, a non-profit organization must file: