cpa audit review ch 20 review 1

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Joens1313
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cpa audit review ch 20 review 1
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2014-11-10 14:51:02
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cpa audit review 20
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cpa audit review ch 20 review 1
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  1. The -------------------------- establishes audit requirements for recipients of federal financial assistance. The act requires that audits of such entities be in accordance with Government Auditing Standards issued by the GAO. ------------------------- and the related Compliance Supplement also apply. The act and the circular state certain requirements that exceed those of the GAO.
    Single Audit Act, OMB Circular A-133
  2. Which of the following statements is a requirement applicable to financial statement audits in accordance with Government Auditing Standards?  

    An auditor should assess whether the entity has reportable measures of economy and efficiency that are valid and reliable.  

    An auditor should determine the extent to which the entity’s programs achieve the desired level of results.  

    An auditor should report on the scope of the auditor’s testing of internal control over financial reporting.

    An auditor should briefly describe in the auditor’s report the method of statistical sampling used in performing tests of controls and substantive tests.
    An auditor should report on the scope of the auditor’s testing of internal control over financial reporting. 

    The report on financial statements (or separate reports) should describe the scope of the auditor’s testing of internal control over financial reporting and compliance with laws and regulations and grant or contract provisions. Auditors also should state whether their tests provided sufficient appropriate evidence for opinions on the effectiveness of internal control and compliance.
  3. The Single Audit Act is intended to be the definitive legislation concerning the audit of federal awards administered by nonfederal entities. Which of the following statements is a false statement about the act?  

    The act requires federal auditors to rely on single audit findings, to base any supplemental auditing on them, and to pay any additional auditing costs.  

    Audit reporting should cover an opinion on the fairness of the financial statements, a report on internal control, and a report on compliance with grant requirements.

    The single audit concept changes the focus from individual grants to grant recipients.

    The auditor must designate one of the grant providers as a cognizant agency to act as a liaison between the auditee and the federal agencies providing funds.
    The auditor must designate one of the grant providers as a cognizant agency to act as a liaison between the auditee and the federal agencies providing funds.  

    .A recipient expending more than $50 million per year in federal awards must have a cognizant agency for audit. The designated agency is the federal awarding agency that provides the predominant amount of direct funding, unless the OMB specifies another cognizant agency or the cognizant agency reassigns cognizance to another federal awarding agency. The cognizant agency overseeing the audit process acts as a liaison among the auditor, the auditee, and the granting agencies. Guidance for the application of the Single Audit Act is provided in OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Generally accepted governmental auditing standards (GAGAS) and generally accepted auditing standards (GAAS) apply when appropriate.
  4. Financial audits of certain governmental entities are required to be performed in accordance with generally accepted government auditing standards (GAGAS) as issued in Government Auditing Standards. These standards do not require, as part of an auditor’s report, the inclusion of  

    Sampling methods used to test the controls designed to detect fraud whether or not material fraud is found.

    A description of the scope of testing of internal control over financial reporting.  

    The significant deficiencies, with identification of material weaknesses.

    A statement as to whether the tests performed provide sufficient appropriate evidence to support an opinion on internal control over financial reporting.
    Sampling methods used to test the controls designed to detect fraud whether or not material fraud is found.  

    The Government Accountability Office (GAO) issues Government Auditing Standards (the Yellow Book). GAGAS apply to financial audits, attestation engagements, and performance audits. GAGAS for financial audits incorporate by reference the AICPA’s Statements on Auditing Standards (SAS) and also state requirements. However, they do not require that the report identify specific sampling techniques used to test the controls. Nevertheless, when presenting material fraud, auditors might consider the report contents standards for performance audits that pertain to, among other things, methodology. Thus, if sampling significantly supports the findings, the auditor might describe the sample design and state why it was chosen.
  5. Under Government Auditing Standards, the report on a financial statement audit should  

    State whether the evidence supports an opinion on internal control.  

    Include a statement providing negative assurance on internal control.  

    State that the auditor is not aware of any material modifications that must be made to internal control.

    Express an opinion on internal control.
    State whether the evidence supports an opinion on internal control. 

    The report (or separate reports) on financial statements should describe the scope of the auditor’s testing of internal control over financial reporting and compliance with laws and regulations and grant or contract provisions. The report also should (1) state whether the tests provided sufficient appropriate evidence to support opinions on internal control and on compliance and (2) include significant deficiencies and material weaknesses in internal control. But an opinion on internal control is not expressed unless sufficient appropriate evidence is obtained.

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