Question

Multiple Choice Questions
Identify the best answer for each of the following:
1. A financial audit for a governmental entity may
a. Be primarily concerned with providing reasonable assurance that financial statements are in conformity with GAAP.
b. Be primarily concerned with providing reasonable assurance that financial statements are in conformity with a comprehensive basis of accounting other than GAAP.
c. Provide for differing levels of assurance and entail various scopes of work.
d. Be focused on items a, b, or c.
e. Be focused on items a and b only.

2. For which of the following functions is the management of a governmental entity not primarily responsible?
a. Recording financial and other economic events
b. Reporting financial and other economic events
c. Asserting that management has complied with the law
d. Ensuring that internal controls are adequate and functioning properly
e. Management is primarily responsible for all of the above functions.

3. Which of the following statements regarding generally accepted auditing standards is false?
a. The AICPA’s auditing standards apply only to private sector audits since public sector audits have their own unique standards.
b. Generally accepted government audit standards (GAGAS) are established by the Government Accountability Office.
c. The AICPA auditing standards are adopted and incorporated into GAGAS.
d. If GAGAS is being applied, the audit report must include a statement that indicates the audit was conducted in accordance with GAGAS.
e. The AICPA Audit and Accounting Guides have specific recommended procedures that are applicable to governmental audits.

4. Which of the following is not a characteristic of GAGAS?
a. An auditor must make written reports on tests of compliance.
b. Specific continuing professional educational requirements for auditors of state and local governments.
c. Independence standards that do not limit nonaudit-related work.
d. Additional supplemental standards for governmental audits.
e. All of the above are characteristic of governmental audits.

5. The minimum audit scope that should be accepted by external auditors of state and local governmental entities, as per the GASB, is
a. The government-wide financial statements.
b. The basic financial statements.
c. The fund financial statements.
d. The combining and individual fund financial statements.
e. The primary government.

6. Who is assigned by the OMB to oversee implementation of the Single Audit of states and local governments that expend more than $50 million of federal financial assistance annually?
a. External independent auditors
b. Federal cognizant agencies
c. AICPA
d. Government Accountability Office
e. Auditor General of the United States Department of Treasury

7. Which of the following is not a topic area OMB Circular A-133 identifies as being a specific responsibility of the auditor?
a. Financial statements
b. Internal control
c. Fraud identification
d. Data collection form
e. Compliance
f. All of the above are cited as being specific auditor responsibilities.

8. The Schedule of Findings and Questioned Costs would potentially include all of the following except
a. Information on the type of report the auditor issued on the financial statements of the auditee, but only if a qualified or adverse opinion was rendered.
b. Information on the type of report the auditor issued on the financial statements of the
auditee, regardless of the opinion rendered.
c. The dollar threshold used to distinguish between Type A and Type B programs.
d. A statement regarding significant deficiencies in internal control, if applicable.
e. Items b and d.
f. Items a and d.

9. Which of the following statements regarding an auditor’s engagement is false?
a. Audit agreements should be formalized in a written audit contract.
b. GAGAS require audit services to be formally bid.
c. The auditor engaged for the financial audit may not be the auditor engaged for the entity’s single audit.
d. Audit contracts should specify how unexpected problems, such as the discovery of fraud, will be handled.
e. Audit contracts should specify how materiality will be evaluated.

10. Which of the following statements regarding the Single Audit approach is true?
a. Grantor agencies have the right to require additional work above and beyond Single Audit requirements, but only when fraud is suspected.
b. Grantor agencies have the right to require additional work above and beyond Single Audit requirements, but only if the grant exceeds $500,000 in a given fiscal year.
c. Grantor agencies have the right to require additional work above and beyond Single Audit requirements, but at the cost of the grantor agency.
d. Grantor agencies have the right to require additional work above and beyond the Single Audit requirements and the additional costs are borne by the grantee.
e. Grantor agencies do not have the right to require audit work above and beyond the Single Audit requirements.



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  • CreatedOctober 25, 2014
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