Question 1

The Government Accountability Office has authority for issuing Governmental Auditing Standards.

Accepted Answer

The Government Accountability Office (GAO) has the authority to establish Governmental Auditing Standards (GAS) for auditors of government entities in the United States. These standards are known as the Generally Accepted Government Auditing Standards (GAGAS) or Yellow Book.

Question 2

The Single Audit Act is intended to provide assurance to the federal government that federal funds are protected through a system of internal controls and sound financial management practices.

Accepted Answer

The statement accurately describes the purpose of the Single Audit Act.

Question 3

While the Sarbanes-Oxley Act applies only to corporations filing with the Securities and Exchange Commission,several provisions of the Act already existed in governmental auditing standards,and others are being voluntarily adopted by not-for-profit organizations.

Accepted Answer

The statement correctly states that certain provisions of the Sarbanes-Oxley Act are being voluntarily adopted by not-for-profit organizations, and that some aspects of the Act were already in place in governmental auditing standards.

Question 4

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

Accepted Answer

This statement is true.

Question 5

Government financial audits are subject to both GAAS and GAGAS.

Accepted Answer

Government financial audits are subject to both Generally Accepted Auditing Standards (GAAS) and Generally Accepted Government Auditing Standards (GAGAS). GAAS provides guidance for the audits of financial statements for all types of entities, while GAGAS provides additional guidance and requirements specifically tailored for audits of government entities. Therefore, government financial audits must comply with both sets of standards.

Question 6

The Government Accounting Standards Board has authority for issuing Governmental Auditing Standards,but not auditing standards for private companies and not-for-profits.

Accepted Answer

Government Auditing Standards are issued by the GAO.

Question 7

Governmental attestation engagements must comply with both the Government Auditing Standards and with the AICPA's attestation standards.

Accepted Answer

Governmental attestation engagements must comply with both sets of standards.

Question 8

Entities receiving $ 500,000 or more of federal funds are generally required to have a single audit.

Accepted Answer

The threshold for a single audit requirement is currently set at $750,000 for fiscal years ending on or after December 26, 2014. However, entities may be required to undergo a single audit if they receive less than $750,000 in federal funds but expend a total of $750,000 or more in federal awards and non-federal funds in a fiscal year.

Question 9

The Single Audit Act is intended to provide assurance to the federal government that federal funds have been expended in accordance with laws and regulations,but does not include a report on internal controls.

Accepted Answer

The Single Audit Act requires a report on internal controls as well as compliance with laws and regulations.

Question 10

If a government failed to report infrastructure assets,the auditor could still express an unqualified opinion on the fund level financial statements.

Accepted Answer

In fund level financial statements, infrastructure assets are not typically reported, so their omission would not affect the auditor's ability to express an unqualified opinion.

Question 11

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

Audits conducted under the Single Audit Act are intended to ensure compliance with grant agreements and federal financial management standards.

Question 12

The use of opinion units allows an auditor to issue different opinions on different statements,instead of issuing a single opinion.

Accepted Answer

This statement is true. The use of opinion units allows an auditor to issue different opinions on different statements or items within the financial statements, rather than issuing a single opinion for the entire set of financial statements as a whole. This approach provides greater transparency and clarity for users of the financial statements.

Question 13

The Sarbanes Oxley Act is intended to provide assurance to the federal government that federal funds are protected through a system of internal controls and sound financial management practices.

Accepted Answer

The Sarbanes-Oxley Act is primarily aimed at protecting investors by improving the accuracy and reliability of corporate disclosures in financial statements, not specifically at protecting federal funds.

Question 14

Assuming an auditee is considered low-risk,the auditor is required to express an opinion on compliance on major programs,which must add up to 50 percent of federal funds expended by the auditee.

Accepted Answer

If an auditee is considered low-risk, the auditor is not required to express an opinion on compliance on major programs. However, if the auditor chooses to perform such testing, it must cover at least 20 percent of federal funds expended by the auditee. The requirement to cover 50 percent of federal funds expended only applies to auditees considered high-risk.

Question 15

Governments and other nonprofits receiving federal funds follow Governmental Auditing Standards and do not have to comply with AICPA Statements of Auditing Standards.

Accepted Answer

Governmental units and many not-for-profit organizations are subject to Government Auditing Standards which are issued by the U.S. Government Accountability Office GAO in addition to the Statements on Auditing Standards, issued by the American Institute of Certified Public Accountants AICPA.
Government Auditing Standards, published in a document commonly known as the Yellow Book, incorporate the AICPA standards and provide extensions that are necessary due to the unique nature of public entities.

Question 16

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

Accepted Answer

In a governmental audit, the auditor is required to report their findings to a wider audience, including the governing body, management, and in some cases, the public. This responsibility is outlined in auditing standards and regulatory requirements.

Question 17

The single audit requirements apply only to state and local governments.Private not-for-profits do not have to comply with these requirements,even if they receive federal grants.

Accepted Answer

Private not-for-profits that receive federal grants are subject to the single audit requirements under the Office of Management and Budget (OMB) Uniform Guidance.

Question 18

While the principal users of corporate audit reports are investors and creditors,the main user of Single Audit reports is the federal government.

Accepted Answer

Single Audit reports are conducted on organizations that receive federal funding, and the primary user of these reports is the federal government to ensure that the organizations are using the funds appropriately and in compliance with federal regulations.

Question 19

Governmental attestation engagements must comply with the Government Auditing Standards but are exempt from compliance with the AICPA's attestation standards.

Accepted Answer

Governmental attestation engagements must comply with both the Government Auditing Standards and with the AICPA's attestation standards.

Question 20

In a governmental audit the auditor is required to report directly to appropriate officials in addition to the board or audit committee.

Accepted Answer

In a governmental audit, the auditor is required to report directly to appropriate officials such as the legislative body, governor, or other executive officials in addition to the board or audit committee. This is to ensure that the audit findings and recommendations are communicated and acted upon at the highest level of government.

Quiz 13: Auditing, Tax-Exempt Organizations, and Evaluating Performance

The Government Accountability Office has authority for issuing Governmental Auditing Standards.

The Single Audit Act is intended to provide assurance to the federal government that federal funds are protected through a system of internal controls and sound financial management practices.

While the Sarbanes-Oxley Act applies only to corporations filing with the Securities and Exchange Commission,several provisions of the Act already existed in governmental auditing standards,and others are being voluntarily adopted by not-for-profit organizations.

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

Government financial audits are subject to both GAAS and GAGAS.

The Government Accounting Standards Board has authority for issuing Governmental Auditing Standards,but not auditing standards for private companies and not-for-profits.

Governmental attestation engagements must comply with both the Government Auditing Standards and with the AICPA's attestation standards.

Entities receiving $ 500,000 or more of federal funds are generally required to have a single audit.

The Single Audit Act is intended to provide assurance to the federal government that federal funds have been expended in accordance with laws and regulations,but does not include a report on internal controls.

If a government failed to report infrastructure assets,the auditor could still express an unqualified opinion on the fund level financial statements.

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.

The use of opinion units allows an auditor to issue different opinions on different statements,instead of issuing a single opinion.

The Sarbanes Oxley Act is intended to provide assurance to the federal government that federal funds are protected through a system of internal controls and sound financial management practices.

Assuming an auditee is considered low-risk,the auditor is required to express an opinion on compliance on major programs,which must add up to 50 percent of federal funds expended by the auditee.

Governments and other nonprofits receiving federal funds follow Governmental Auditing Standards and do not have to comply with AICPA Statements of Auditing Standards.

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

The single audit requirements apply only to state and local governments.Private not-for-profits do not have to comply with these requirements,even if they receive federal grants.

While the principal users of corporate audit reports are investors and creditors,the main user of Single Audit reports is the federal government.

Governmental attestation engagements must comply with the Government Auditing Standards but are exempt from compliance with the AICPA's attestation standards.

In a governmental audit the auditor is required to report directly to appropriate officials in addition to the board or audit committee.