Matt Gunlock, CPA, is performing an audit of the City of Ryan in accordance with generally accepted
Question:
a. Must Matt be concerned with the city's compliance with laws and regulations? Explain.
b. How should Matt decide on the nature and extent of the tests of compliance that should be performed in the audit?
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Step by Step Answer:
a Yes Violations of laws and regulations may have a material effect on the Citys financial statements Therefore Matt must perform tests of compliance with those laws regulations contracts and grants that have a direct and material effect on the amounts in the financial statements b Matt should first identify the laws regulations contracts and grants that may have a direct effect on the Citys financial statements by performing procedures such as 1 Discussing laws and regulations with management program and grant administrators and government auditors 2 Reviewing relevant grant and loan agreements and 3 Reviewing minutes of the city councils meetings Once he has an understanding of the important requirements he should assess the risks that financial statement ...View the full answer
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Related Book For 
Principles of Auditing and Other Assurance Services
ISBN: 978-0078025617
19th edition
Authors: Ray Whittington, Kurt Pany
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