Types of Engagements - Government Audits
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CPA Auditing and Attestation (AUD) › Types of Engagements - Government Audits
Government Accounting Standards
Require a written report on internal control
Require a written report on compliance with applicable laws and regulations
May require a duty to report fraud
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.
Governmental audits fall under standards developed by:
AICPA
PCAOB
GAGAS
None of the answer choices are correct
Explanation
Governmental auditing standards are developed by the General Accounting Office who publishes Generally Accepted Governmental Audit Standards.
One of the most notable attributes of governmental audits is that ______.
They are the most difficult type of audit
A written report on internal control must be prepared
They demand the highest level of assurance
They ensure absolute assurance
Explanation
This point about governmental audits is heavily tested and the other options are not true about governmental audits.
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
A
B
Both
Neither
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.
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:
The report on the performance audit
A separate report
A letter to the government funding agency
The notes to the financial statements
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.
The Single Audit Act of 1984
Requires on government audit per year
Requires one audit firm direct the audits of a state or local government agencies
Applies to Federal funding over \$750,000
Applies to State funding over \$750,000
Explanation
The single audit act of 1984 requires audits of federal funds received over a threshold of \$750,000.