Ch. 11 Governmental Accounting

An additional auditing standard imposed by GAGAS when compared to GAAS is The auditor must pinpoint the criteria, condition, cause, and effect of findings to the extent that these elements are relevant and necessary to achieve the audit objectives. The auditor must perform procedures aimed at identifying waste and abuse. The auditor must report noncompliance with laws and regulations to the appropriate officials immediately. The auditor must complete 80 hours of CPE related to government auditing biennially.

The auditor must pinpoint the criteria, condition, cause, and effect of findings to the extent that these elements are relevant and necessary to achieve the audit objectives.

As executive director of a small not-for-profit, Paula Pascal has engaged an auditor to assess the cash receipts process for donations. The objective is to obtain recommendations, rather than an opinion or conclusion. This type of engagement is called An attestation engagement. A performance audit. An operational audit. A general audit.

A performance audit.

An auditor must audit as a major program All Type A programs, unless the auditor has identified one as low risk. All Type A programs, including those the auditor considers low-risk programs. One-fourth of all Type B programs. At least 40 percent of all federal funds received.

All Type A programs, unless the auditor has identified one as low risk.

Under the hierarchy of GAAP for a state and local government, which of the following has the highest level of authority? AICPA literature if specifically made applicable to state and local governments by the AICPA (and cleared by the GASB). GASB Technical Bulletins. GASB Implementation Guides. All of the given items have equal authority.

All of the given items have equal authority.

When evaluating nonaudit services that may impact auditor independence, each of the following routine services is acceptable under GAGAS except Deciding which of an outside third party's recommendations to implement. Educating the audited entity on matters within the technical expertise of the auditors. Providing information to the audited entity on best practices and benchmarking studies. Providing advice to the audited entity on routine business matters.

Deciding which of an outside third party's recommendations to implement.

Under the GASB reporting model, materiality is determined For opinion units. At the government-wide level. At the fund level. For governmental and business-type activities and the aggregate discretely presented component units only.

For opinion units.

Using the risk-based approach for selecting major programs for audit during a single audit, an auditor Classifies low-risk Type A programs as those programs with awards less than $750,000. Classifies Type A programs as those that exceed 25 percent (0.25) of the $750,000 threshold. Must audit all Type A and Type B programs. Must audit at least 40 percent of total federal awards expended unless the auditee is classified as low risk.

Must audit at least 40 percent of total federal awards expended unless the auditee is classified as low risk.

The GAGAS conceptual framework for independence should be employed Annually. At the end of the audit engagement, just prior to issuing the audit report. Prior to accepting a nonaudit service engagement at an audited entity. All of the choices are correct.

Prior to accepting a nonaudit service engagement at an audited entity.

Supplementary information presented with government financial statements Is awarded the same audit procedures as basic financial statement information. Receives different audit attention when deemed required supplementary information rather than other information. Receives an in-relation-to audit opinion. Is always outside the responsibility of the auditor.

Receives different audit attention when deemed required supplementary information rather than other information.

Dan Cole is the head of the county's Division of Animal Control. The division receives funding from both the state and federal governments and is required to have its audit under GAGAS. You and Dan were fraternity brothers at All State University, and your families often celebrate holidays and special occasions together. Dan has asked your audit firm to perform the division's financial audit this year. What should you do? Contact the state board of accountancy for authorization to accept the audit. Decline the audit because you want to avoid any perceived independence issues. Accept the audit but disclose your relationship in the engagement letter and audit report. Refer to the ethics and independence guidance in GAGAS before making a decision to accept the engagement.

Refer to the ethics and independence guidance in GAGAS before making a decision to accept the engagement.

Single audits performed pursuant to OMB's Uniform Guidance Apply to all entities that receive $750,000 or more of federal funds in a fiscal year. Apply to not-for-profit organizations only. Require the auditor to use generally accepted government auditing standards when conducting the audit. Are triggered when federal funds are expended that are associated with a grant.

Require the auditor to use generally accepted government auditing standards when conducting the audit.

The reporting package for a single audit consists of all of the following except a Schedule of expenditures of federal awards. Summary schedule of prior audit findings. SFAC data collection form. Corrective action plan.

SFAC data collection form.

A government audit opinion is expressed for All CAFR content. The government-wide financial statements. Specified opinion units. All fund financial statements.

Specified opinion units.