CPA Auditing and Attestation (AUD) : Types of Engagements - Government Audits

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Example Questions

Example Question #103 : Cpa Auditing And Attestation (Aud)

Government Accounting Standards

Possible Answers:

May require a duty to report fraud

Require a written report on internal control

Require a written report on compliance with applicable laws and regulations

All of the answer choices are correct

Correct answer:

All of the answer choices are correct

Explanation:

Under GASB standards the auditor is required to report on internal control.  The written report is also required to establish compliance with applicable laws and regulations and may require a duty to report fraud.

Example Question #104 : Cpa Auditing And Attestation (Aud)

The Single Audit Act of 1984

Possible Answers:

Requires one audit firm direct the audits of a state or local government agencies

Requires on government audit per year

Applies to State funding over $750,000

Applies to Federal funding over $750,000

Correct answer:

Applies to Federal funding over $750,000

Explanation:

The single audit act of 1984 requires audits of federal funds received over a threshold of $750,000.

Example Question #105 : Cpa Auditing And Attestation (Aud)

Governmental audits fall under standards developed by:

Possible Answers:

PCAOB

AICPA

None of the answer choices are correct

GAGAS

Correct answer:

GAGAS

Explanation:

Governmental auditing standards are developed by the General Accounting Office who publishes Generally Accepted Governmental Audit Standards.

Example Question #106 : Cpa Auditing And Attestation (Aud)

When auditing the financial statements of a governmental entity, the auditor is required to report on A) Noteworthy accomplishments of the program B) The scope of the auditor's testing of internal controls

Possible Answers:

A

B

Neither

Both

Correct answer:

B

Explanation:

When auditing the financial statements of a governmental entity in accordance with GAS, the auditor is required to report on the scope of the auditor's testing of internal control but not on noteworthy accomplishments.

Example Question #107 : Cpa Auditing And Attestation (Aud)

An enterprise engaged a CPA to audit its financial statements in accordance with GAS because of the provisions of government grant funding agreements. Under these circumstances, the CPA is required to report on the enterprise's internal controls either in the report on the financial statements or in:

Possible Answers:

The report on the performance audit

A letter to the government funding agency

The notes to the financial statements

A separate report

Correct answer:

A separate report

Explanation:

The report on the audit of the financial statements should describe the scope of the auditor's testing of compliance with laws and regulations and internal control over financial reporting and should either present the results of those tests or refer to a separate report containing that info.

Example Question #108 : Cpa Auditing And Attestation (Aud)

One of the most notable attributes of governmental audits is that ______.

Possible Answers:

They ensure absolute assurance

They are the most difficult type of audit

A written report on internal control must be prepared

They demand the highest level of assurance

Correct answer:

A written report on internal control must be prepared

Explanation:

This point about governmental audits is heavily tested and the other options are not true about governmental audits.

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