1. Under the Single Audit Act, the required report on compliance and on internal control over financial reporting

a. Is based on the audit requirements of the GAOs Government Auditing Standards.

b. Need not be issued if the auditors do not identify internal control deficiencies or instances of noncompliance.

c. Must be countersigned by the inspector general of the cognizant agency.

d. Should describe the scope of the auditors testing.

2. Which of the following is NOT included in the general requirements for which the auditor must test compliance with federal regulations?

a. Matching funds.

b. Drug-free workplace

c. Political activity

d. Prevailing wage.

3. A significant difference between not-for-profit organizations and businesses with regard to investments in capital (fixed) assets is that

a. Not-for-profits generally do not invest in capital assets.

b. Unlike businesses, not-for-profits do not discount projected future cash flows when evaluating the benefit-cost of an asset acquisition.

c. Unlike businesses, not-for-profits do not include the estimated salvage value of a capital asset in considering whether or not to acquire it.

d. When considering the merit of asset acquisitions, maximizing future cash flows is not the principal objective of a not-for-profit.

4. The Single Audit Act distinguishes between major and nonmajor federal programs. One factor that distinguishes a major from a nonmajor program is inherent risk. Which of the following is NOT a characteristic of inherent risk?

a. Significant prior audit findings.

b. Significant violation of the terms of a specific grant due to a misunderstanding of the requirements.

c. Weakness in the entity's internal controls.

d. Lack of oversight by federal agencies.