Several questions come up 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. You assign one of the firm's managers to be in charge of the audit's field work. The manager recently returned from a two-week professional education course in Partnership and S-Corporation taxation. She took the course to satisfy her state's biannual 80-hour CPE requirement. She took no other CPE courses in the past two years. Why might her appointment be in violation of Government Auditing Standards?

2. 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?

3. 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?

4. 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 grand 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?

Answer rating: 100% (QA)

Answer 1 Government Auditing Standard Government Auditing Standards normally alluded to as the Yello... View the full answer