Question 1

A determination of cost savings is most likely to be an objective of a:
A)regularity audit.
B)compliance audit.
C)performance audit.
D)financial audit.

Accepted Answer

A performance audit focuses on evaluating the effectiveness and efficiency of an organization's operations, programs, or activities. In this context, a determination of cost savings is a commonly defined objective. Therefore, choice C, performance audit, is the best choice. The other options - regularity audit, compliance audit, and financial audit - may touch on cost savings, but it is not their primary objective.

Question 2

What problem arises if the relationship between cause and effect is not determined in a performance audit?
A)The impact on the financial report cannot be determined.
B)The audit cannot proceed.
C)The criteria cannot be established.
D)A recommendation cannot be made to address the cause of the problem.

Accepted Answer

If the relationship between cause and effect is not determined in a performance audit, it will be difficult to make a recommendation to address the cause of the problem. This will hinder the process of improving the efficiency and effectiveness of the audited entity. Therefore, option D is the correct choice. The other options are incorrect because the audit can proceed even if the relationship between cause and effect is not determined, as alternative audit procedures can be used. Also, establishing criteria does not necessarily depend on determining the relationship between cause and effect, and the impact on the financial report can still be determined even if the relationship between cause and effect is not established.

Question 3

The Auditor-General is appointed by:
A)the Governor-General.
B)the Parliament.
C)the Public Service Board.
D)the Minister of Finance.

Accepted Answer

The Auditor-General is appointed by the Governor-General, acting on the advice of the Prime Minister or the executive government. This ensures the independence of the Auditor-General from the entities they audit.

Question 4

What is the main concern of performance auditing?
A)Compliance with relevant laws and regulations.
B)Probity.
C)Financial report attest auditing.
D)Efficiency, economy and effectiveness.

Accepted Answer

Performance auditing focuses on evaluating the efficiency, economy, and effectiveness of an organization's programs, activities, and operations. This type of audit is concerned with determining whether the organization is achieving its objectives and goals in an efficient and effective manner while maintaining economic operations. Compliance with laws and regulations, probity, and financial report attest auditing are important audit concerns but not the main focus of performance auditing.

Question 5

Which of the following statements best describes the term 'outcomes' in a performance audit?
A)Number of units produced.
B)Service provided by a particular government program.
C)Consequences for the community of the government program.
D)Economy and efficiency of resources used in achieving outputs.

Accepted Answer

Outcomes refer to the consequences or impacts of a government program or service on the community or intended beneficiaries. It focuses on the effectiveness and relevance of a program rather than just the quantity of outputs or resources used to produce them.

Question 6

The Auditor-General is ultimately responsible to:
A)the Public Accounts Committee.
B)the Parliament.
C)the Public Service Board.
D)the Minister of Finance.

Accepted Answer

The Auditor-General is ultimately responsible to the Parliament, which includes both the House of Representatives and the Senate. This responsibility is enshrined in legislation, as the Auditor-General Act 1997 specifies that the Auditor-General is accountable to the Parliament for the performance of his or her functions and the exercise of his or her powers. While the Auditor-General does provide reports to parliamentary committees such as the Public Accounts Committee, his or her ultimate accountability is to the Parliament as a whole. The Auditor-General is not responsible to the Public Service Board or the Minister of Finance.

Question 7

In reporting performance audit findings, why does an auditor evaluate evidence against criteria?
A)To ensure reasonable criteria have been established.
B)To develop conclusions relative to the audit objectives.
C)To develop the audit scope.
D)To determine risk.

Accepted Answer

Evaluating evidence against criteria allows the auditor to develop conclusions relative to the audit objectives. The criteria serve as a benchmark for evaluating the evidence and the auditor can determine whether the audited entity is meeting the established criteria. This helps the auditor in developing an opinion about the audited entity's performance, and whether there are any areas that require improvement.

Question 8

The proposed annual expenditures of the Commonwealth Government are authorised by:
A)the Auditor-General.
B)the Treasurer.
C)the Department of Finance.
D)the Parliament.

Accepted Answer

The proposed annual expenditures of the Commonwealth Government are authorised by the Parliament through the appropriation bills, which detail the funding amounts for each government department and agency. The Parliament must approve these bills before the funds can be allocated and spent by the government.

Question 9

Which of the following objectives would not be a primary purpose of a performance audit?
A)A means of assurance that internal controls are functioning as planned.
B)A measure of management performance in meeting organisation goals.
C)Providing the results of internal examinations of financial and accounting matters to a company's top-level management.
D)An aid to the external auditor who is conducting the examination of the financial report.

Accepted Answer

Performance audits focus on evaluating the efficiency, effectiveness, and economy of operations, not on aiding external auditors with financial report examinations.

Question 10

Which of the following statements concerning auditing in the public sector is correct?
A)The Auditor-General only conducts financial report audits in the public sector.
B)Private sector auditors may conduct audits in the public sector as delegates of the Auditor-General.
C)The Auditor-General is appointed by the government.
D)None of the options listed here are correct.

Accepted Answer

Private sector auditors can indeed conduct audits in the public sector as delegates of the Auditor-General. This allows for flexibility and the utilization of specialized expertise from the private sector in public audits.

Question 11

Governmental auditing often extends beyond examinations leading to the expression of an opinion on the fairness of financial presentation, and includes audits of efficiency and effectiveness, and:
A)internal control.
B)evaluation.
C)accuracy.
D)compliance.

Accepted Answer

Governmental auditing includes audits of compliance to ensure that the entity is following laws, regulations, and policies. This is important for maintaining accountability and the proper use of government resources. While audits of efficiency and effectiveness, internal control, and accuracy may also be conducted, the question specifically asks for the element that is included in governmental auditing in addition to an opinion on financial presentation.

Question 12

A typical objective of a performance audit is for the auditor to:
A)determine whether the financial report presents the entity's operations fairly.
B)evaluate the feasibility of attaining the entity's operational objectives.
C)make recommendations for improving efficiency, effectiveness and economy.
D)report on the entity's relative success in attaining profit maximisation.

Accepted Answer

The objective of a performance audit is to evaluate whether an entity is operating efficiently, effectively and economically. The auditor's role is to identify areas of improvement and make recommendations for changes to enhance the organization's performance. Therefore, option C, which states that the auditor's objective is to make recommendations for improving efficiency, effectiveness, and economy, is the best choice.

Question 13

Which of the following statements best describes the term 'efficiency'?
A)A reduction in costs through better contracting.
B)Clarifying objectives and policies.
C)Greater outputs from the inputs.
D)Rationalisation of facilities.

Accepted Answer

Efficiency refers to achieving greater outputs from the inputs, i.e., producing more with the same or fewer resources. A reduction in costs through better contracting (A) and rationalisation of facilities (D) can be means to achieve efficiency, but they do not represent the concept itself. Clarifying objectives and policies (B) can support efficiency, but it is not a direct synonym.

Question 14

Governmental auditing includes:
A)financial report auditing.
B)performance auditing.
C)compliance auditing.
D)All of the given answers are correct.

Accepted Answer

Governmental auditing includes financial report auditing, performance auditing, and compliance auditing. Therefore, all the given options are correct.

Question 15

Government activities may be carried out through:
A)government departments.
B)statutory authorities.
C)companies.
D)All of the given answers are correct.

Accepted Answer

Government activities can be carried out through various means, including government departments, statutory authorities, and even companies established or owned by the government. Therefore, all of the given answers are correct.

Question 16

Which of the following can be considered an example of a performance indicator for effectiveness?
A)A reduction in the number and severity of injuries, resulting from a road safety program.
B)The number of patients treated in a health clinic.
C)A decline in caseloads for social workers.
D)The costs of a job training program for long-term unemployed, per person placed in permanent employment.

Accepted Answer

A reduction in the number and severity of injuries indicates that the road safety program is effective in achieving its objective of reducing accidents and injuries. Therefore, it can be considered a performance indicator for effectiveness. The other options do not necessarily measure effectiveness, but rather activity (B), efficiency (D), or workload (C).

Question 17

Public sector entities are required to prepare financial reports based on:
A)cash accounting.
B)accrual accounting.
C)fund accounting.
D)All of the given answers are correct.

Accepted Answer

Public sector entities are required to prepare financial reports based on accrual accounting. This method provides a more accurate representation of the entity's financial position and performance than cash accounting or fund accounting.

Question 18

Which of the following statements concerning AASB 1052 'Disaggregated Disclosures' is not correct?
A)AASB 1052 requires that where local governments are required to use fund accounting for grant purposes, they do not need to prepare general-purpose financial reports.
B)AASB 1052 deems each local government to be a reporting entity.
C)AASB 1052 requires local governments to use accrual accounting.
D)AASB 1052 requires each local government to prepare general-purpose financial reports.

Accepted Answer

AASB 1052 requires each local government to prepare general-purpose financial reports. Therefore, statement A is not correct. B, C, and D are all correct statements regarding AASB 1052.

Question 19

Peer reviews of public sector audit offices are normally directed by:
A)the Prime Minister/Premier.
B)the Treasurer/Minister for Finance.
C)public accounts committees.
D)specific legislative requirements.

Accepted Answer

Peer reviews of public sector audit offices are usually directed by specific legislative requirements, such as those found in the International Standards of Supreme Audit Institutions (ISSAI) or in national audit laws. These requirements outline the principles and objectives of the review and set out the process for conducting the review. The purpose of these legislative requirements is to ensure that public sector audit offices maintain high standards of performance and independence in their work. The Prime Minister/Premier, the Treasurer/Minister for Finance, and public accounts committees may have a role in overseeing the audit office, but they would not typically be the primary driver of peer reviews.

Question 20

Why is it important to establish performance audit criteria?
A)They are a basis for communication with management.
B)They indicate the scope of the performance audit.
C)They are a basis for developing audit programs and questionnaires.
D)All of the given answers are correct.

Accepted Answer

All of the given choices are correct. Establishing performance audit criteria is important as they serve as a basis for communication with management, indicating the scope of the performance audit, and developing audit programs and questionnaires.

Quiz 15: Audit and Assurance Services in the Public Sector

A determination of cost savings is most likely to be an objective of a:

What problem arises if the relationship between cause and effect is not determined in a performance audit?

The Auditor-General is appointed by:

What is the main concern of performance auditing?

Which of the following statements best describes the term 'outcomes' in a performance audit?

The Auditor-General is ultimately responsible to:

In reporting performance audit findings, why does an auditor evaluate evidence against criteria?

The proposed annual expenditures of the Commonwealth Government are authorised by:

Which of the following objectives would not be a primary purpose of a performance audit?

Which of the following statements concerning auditing in the public sector is correct?

Governmental auditing often extends beyond examinations leading to the expression of an opinion on the fairness of financial presentation, and includes audits of efficiency and effectiveness, and:

A typical objective of a performance audit is for the auditor to:

Which of the following statements best describes the term 'efficiency'?

Governmental auditing includes:

Government activities may be carried out through:

Which of the following can be considered an example of a performance indicator for effectiveness?

Public sector entities are required to prepare financial reports based on:

Which of the following statements concerning AASB 1052 'Disaggregated Disclosures' is not correct?

Peer reviews of public sector audit offices are normally directed by:

Why is it important to establish performance audit criteria?