Question 1

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 required by the federal government for organizations that receive a certain amount of federal funding. The main purpose of these reports is to ensure that the organization is complying with federal regulations and requirements. While other stakeholders may also find these reports useful, the primary user is the federal government.

Question 2

The Sarbanes Oxley Act is intended to improve corporate governance and limit the services accounting firms may provide to their audit clients.

Accepted Answer

The Sarbanes Oxley Act (SOX) was enacted in 2002 after accounting scandals such as Enron and WorldCom. It aims to improve corporate governance by mandating greater financial disclosures, ensuring the independence of auditors, and strengthening penalties for fraud. SOX also limits the services that accounting firms may provide to their audit clients to prevent conflicts of interest.

Question 3

Government financial audits are subject only to GAGAS.

Accepted Answer

Government financial audits must adhere to GAGAS (Generally Accepted Government Auditing Standards) as well as other relevant auditing standards such as GAAS (Generally Accepted Auditing Standards) and PCAOB (Public Company Accounting Oversight Board) standards, depending on the type of audit and the entity being audited.

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 correct. Governmental Auditing Standards identifies these four categories of professional engagements.

Question 5

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

This statement is false. Private not-for-profits that receive over $750,000 in federal grants are required to undergo a single audit in accordance with the Office of Management and Budget (OMB) Uniform Guidance.

Question 6

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 7

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 to a wider audience than just the board or audit committee. The auditor may be required to communicate findings to other stakeholders such as regulatory agencies, the public, or other interested parties.

Question 8

While the Sarbanes-Oxley Act applies to corporations filing with the Securities and Exchange Commission,several provisions of the Act already existed in governmental auditing standards and now are also mandated for not-for-profit organizations.

Accepted Answer

The answer of While the Sarbanes-Oxley Act applies to corporations...

Question 9

If a government failed to report infrastructure assets,the auditor would have to express an adverse opinion on the fund level financial statements.

Accepted Answer

Fund level statements do not record infrastructure assets.

Question 10

Entities that expend $500,000 or less of federal funds are generally required to have a single audit.

Accepted Answer

Entities that expend $750,000 or more of federal funds in a fiscal year are required to have a single audit, not those that expend $500,000 or less.

Question 11

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

Accepted Answer

Governmental attestation engagements are subject to both the Government Auditing Standards (Yellow Book) and the AICPA's attestation standards. This is because they involve attestations related to government programs or activities, which fall under the purview of the Yellow Book, as well as the general requirements for attestation engagements outlined in the AICPA standards.

Question 12

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

Accepted Answer

Governmental auditors are required to report their findings directly to appropriate officials in addition to the board or audit committee, as outlined in various auditing standards and guidelines such as the Yellow Book. This promotes transparency and accountability within government entities.

Question 13

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

Accepted Answer

The use of opinion units allows an auditor to issue different opinions on different statements within the same set of financial statements. This helps to provide a more nuanced and accurate picture of the financial health and performance of the entity being audited.

Question 14

The Government Accountability Office has authority for issuing Generally Accepted Auditing Standards.

Accepted Answer

The Government Accountability Office (GAO) is responsible for establishing Generally Accepted Government Auditing Standards (GAGAS), also known as the Yellow Book, which apply to audits of government organizations, programs, activities, and functions. However, the Generally Accepted Auditing Standards (GAAS) are established by the American Institute of Certified Public Accountants (AICPA) and apply to audits of non-governmental entities.

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

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

Major programs are determined on a risk-based approach not by size. The auditor is required to express an opinion on compliance for major programs, which generally must add up to 50% of the federal funds expended by the auditee. This percentage is reduced to 25% if the auditee is determined by the auditor to be a low-risk auditee.

Question 17

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 indeed intended to provide assurance that federal and state funds are being used in a manner consistent with the agreements and standards established by the federal government.

Question 18

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 Single Audit Act requires that recipients of federal funds comply with certain requirements for internal controls and financial management practices, and mandates annual audits to ensure compliance. The purpose of these audits is to provide assurance to the federal government that federal funds are being properly managed and used in accordance with applicable laws, regulations, and grant agreements.

Question 19

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 does include a report on internal controls, as it is intended to provide both assurance on the expenditure of federal funds and an evaluation of the recipient's internal controls over financial reporting.

Question 20

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.

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

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

The Sarbanes Oxley Act is intended to improve corporate governance and limit the services accounting firms may provide to their audit clients.

Government financial audits are subject only to GAGAS.

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

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.

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 only required to report to the board or audit committee.

While the Sarbanes-Oxley Act applies to corporations filing with the Securities and Exchange Commission,several provisions of the Act already existed in governmental auditing standards and now are also mandated for not-for-profit organizations.

If a government failed to report infrastructure assets,the auditor would have to express an adverse opinion on the fund level financial statements.

Entities that expend $500,000 or less of federal funds are generally required to have a single audit.

Governmental attestation engagements must comply with both the Government Auditing Standards and 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.

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

The Government Accountability Office has authority for issuing Generally Accepted Auditing Standards.

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

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.

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 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.

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.

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