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AUD > AUD-Lesson 8_Govt_Gradual > Flashcards

AUD-Lesson 8_Govt_Gradual Flashcards

1
Q

What is a GAS audit in Accordance with GAGAS?

A

An audit that applies to certain organizations that receive federal financial assistance.

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2
Q

What is required in a GAS audit in Accordance with GAGAS?

A
  1. GAAS Audit (Financial Statements)
  2. Opinion on Financial Statements
  3. Report on Internal Control
  4. Report on Compliance with laws and regulations Must include description of material instances on non-compliance
    a. GAAS
    b. GAGAS (Quality Control)
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3
Q

What is the other term for Generally Accepted Government Auditing Standards (GAGAS)?

A

Yellow Book

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4
Q

How is independence evaluated under GAGAS?

A

By applying the framework that is outlined in the Yellow book?

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5
Q

What are the facts or circumstances that threaten independence in GAGAS, as outlined in the Yellow Book?

A

Self-Interest (Financial or other interest)

Self-review (Auditor reviews estimates and judgments in which he/she participated)

Bias (auditor is not objective due to relationships or beliefs)

Familiarity (Occurs when an auditor has worked with a client so long, that the client knows what is emphasized by the auditor)

Undue Influence (When parties separate from client may try to influence or pressure the auditor)

Management Participation (When auditor takes on the role of management or performs management functions)

Structural (Auditor is connected to entity in such a way that it may impair the auditor’s ability to remain objective)

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6
Q

How is the threat to independence from the performance of non-attest services evaluated?

A

The auditor will determine if service was prohited

  • Yes: Independence is impaired, auditor can’t perform engagement
  • No: Auditor will consider magnitude of threats
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7
Q

What are the prohibited non-attest services?

A

Management responsibilities

Certain accounting functions without obtaining management approval

Internal audit assistance

(DIM) Design, Implementation, and Maintenance of internal control

IT services

Valuation of services that information on F/S

Specific additional services such as

  • non-tax disbursements
  • benefit plan administration
  • investment advisory or management
  • corporate finance
  • executive or employee personnel
  • business risk consulting
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8
Q

What are the safeguards that can be instituted to address against threats of independence?

A

Consulting with other auditors, regulators, or other independent third paties
Dislosing nature and extent of services that count potentially impair independence to governance
Using an outside auditor to participate in the audit by performing or reperforming parts of work

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9
Q

What policies or procedures can clients design to create safeguards?

A

Requiring appointment of the auditor to be approved by parties who are not part of management
Establish procedures for selected providers of non-audit services to enhance objectivity
Oversight of the auditor’s services by governance

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10
Q

How is the audit handled if safeguards are insufficient?

A

If safeguards are sufficient, the auditor may proceed with the engagement.
If they are insufficient, the auditor’s judgement is impaired and may not perform the engagement

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11
Q

What is the quality control standard?

A

A standard the requires the auditor to participate in an external quality review program such as those provided by the AICPA, PCAOB or other agencies.

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12
Q

What kind of entity is subject to the Single Audit Act?

A

Non-federal entities receiving federal financial assistance.

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13
Q

What does the Single Audit Act require in the report?

A

Whenever an entity receives more than $750k in federal assistance in a single year.

  1. GAAS Audit (Financial Statements)
  2. Opinion on Financial Statements
  3. Report on Internal Control
  4. Report on Compliance with laws and regulations Must include description of material instances on non-
    compliance
  5. Report on scope of audit testing on I/C
    a. Compliance with major programs (opinion)
    b. I/C Report with Major Programs
  6. Report of Schedule of expenditures of federal awards
    -Non Major - limited assruance
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14
Q

What is the informal name for the Single Audit Act?

A

Title 2 of the Code of Federal Regulations.

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15
Q

What three opinions must be issued in a Single Audit Act Audit?

A

Opinion on internal control
Opinion on complaince with laws and regulations applicable to each major program
Opinion on scedule of expenditures of federal awards

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16
Q

How is the materiality level decided with a Single Audit Act Audit?

A

The materiality level is set at the level of each major program rather than the overall financial statements

17
Q

What are the three types of governmental audits?

A
  1. Audits in accordance with GAAS
  2. GAS Audits in accordance with GAGAS
  3. GAS Audits of non-Federal entitties receiving federal financial assistance (CFR) (Formally SAA)
18
Q

What is positive assurance and what is negative assurance?

A 
Positive assurance (An opinion) is given to the things that are tested
Negative assurance (No opinion) is given to the things that are not tested
19
Q

What happens in the report if there is non-compliance?

A

The report is qualified, or an adverse is given, and the non-complaince is described

20
Q

Who is responsible for identifying all laws and regulations that have a direct and material effect on financial statements?

A

Management. The management representation letter must include an assertion by management that has identified all such laws and regulations.

21
Q

What opinion is issued if there are material weaknesses, noncompliance, or misstatements in the schedule of expenditures of federal awards?

A

A quailfied or adverse opinion is issued.

22
Q

What is the purpose of a performance audit?

A

To determine the economy, efficiency, and effectiveness of the organization in achieving its goals.

23
Q

What is covered in the performance audit report?

A

Auditor’s findings
Identification of potential noncompliance
Views of relevant officials on auditor’s findings
Scope of work of I/C and any deficiencies in I/C that are significant
Report fraud or abuse

24
Q

What is required for a auditee to be consider low risk for a reduced coverage audit?

A

Unmodified opinion on expenditures of federal awards
No material weaknesses
non going concern modification
No federal program audit findings in preceding two audits of Type A programs that were classified as material weaknesses or modifications to the compliance opinion.

25
Q

What ares of internal controls should be communicated to entity officials?

A

Significant Deficiencies

Material Weaknesses

AUD (31 decks)

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