Several questions arise while you are serving as a partner of the CPA firm engaged to perform the annual audit of the Shady Pines School District. The district receives approximately $1.7 million per year in federal assistance. This includes $550,000 in annual grants to conduct an experimental high school science enrichment program. The program has been in existence for three years.

1. Soon after the audit staff began the engagement, the school district's chief financial officer called to complain that the auditors were making inquiries of the district's employees as to the political activities of district administrators. Those matters, he asserted, were clearly beyond the scope of a financial engagement. How would you respond?
2. After completing the financial audit for the district, the school board requested that the firm conduct a performance audit of the science enrichment program. In what way would the performance audit differ conceptually from the financial engagement?
3. Assuming you have been able to establish that the primary objective of the science enrichment program is to encourage students to enter vocational fields related to science. The grant funds may be used to pay for teachers' training, curriculum development projects, equipment and texts, and extracurricular activities related to science.
   • What would be the purpose of preparing a schedule showing how the grant funds were disbursed?
   • How would you recommend the auditors gain an understanding of the internal controls over program expenditures?
   • Inasmuch as the program has been in existence for only three years, how might you assess whether the program has fulfilled its objectives?