Question: Choose the best answer 1 Under the hierarchy of GAAP

Choose the best answer.
1. Under the hierarchy of GAAP for a state and local government, which of the following has the highest level of authority?
a. AICPA Practice bulletins if specifically made applicable to state and local governments by the AICPA (and cleared by the GASB).
b. Consensus positions of the GASB Emerging Issues Task Force.
c. Implementation guides (“Qs and As”) published by the GASB staff.
d. AICPA Industry Audit and Accounting Guides.
2. An adverse opinion is most likely to be rendered when:
a. Fund financial statements are presented along with government-wide statements in the basic financial statements.
b. There is a violation of generally accepted accounting principles that does not cause the basic financial statements to be materially misstated.
c. The auditor is not independent of the government being audited.
d. The government issues inaccurate financial statements.
3. Which of the following is a true statement about the relationship between generally accepted government auditing standards (GAGAS) and generally accepted auditing standards (GAAS)?
a. GAGAS and GAAS provide standards for financial audits, attestation engagements, and performance audits.
b. GAGAS encompass GAAS and supplement certain GAAS.
c. Single audits must be performed using GAGAS and GAAS.
d. GAGAS are promulgated by the Government Accountability Office and
GAAS are promulgated by the Governmental Accounting Standards Board.
4. The GAGAS conceptual framework for independence should be employed:
a. Annually.
b. At the end of the audit engagement, just prior to issuing the audit report.
c. When taking on a nonaudit service engagement at an audited entity.
d. All of the above.
5. The goal of a performance audit is to:
a. Provide information to improve program operations and facilitate decision making by management.
b. Determine whether government programs and activities are meeting their stated goals and objectives.
c. Determine whether governments are performing their duties in the most economic and efficient manner possible.
d. All of the above.
6. Under the GASB reporting model, materiality is determined:
a. For opinion units.
b. At the government-wide level.
c. At the fund level.
d. For governmental and business-type activities and the aggregate discretely presented component units only.
7. Single audits performed pursuant to OMB Circular A–133:
a. Apply to all entities that receive $500,000 or more in a fiscal year.
b. Result in the same number of reports as a generally accepted government auditing standards (GAGAS or yellow book) audit.
c. Must be performed in accordance with generally accepted government auditing standards.
d. Result in a reporting package that is submitted to the Government Accountability Office.
8. An auditor must audit as a major program:
a. All Type A programs, unless the auditor has identified one as low risk.
b. AllTypeAprograms,includinganytheauditorconsiderslow-riskprograms.
c. All Type B programs.
d. At least 50 percent of all federal funds received.
9. OMB Circular A–133 and the related Compliance Supplement provide guidance for auditors in:
a. Conducting a financial audit of governmental entities.
b. Conducting financial audits, attestation engagements, and performance audits of governmental entities.
c. Conducting a single audit of a government that has expended more than $500,000 in federal financial assistance.
d. None of the above.
10. The auditor’s responsibility for required supplementary information (RSI) is:
a. The same as with the basic financial statements.
b. To perform certain limited procedures to ensure that RSI is fairly presented in relation to the audited financial statements.
c. The same as for all information in the financial section of a comprehensive annual financial report.
d. To render an opinion as to the fairness of the RSI and whether it conforms to generally accepted accounting principles.

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