TEST 3 STUDY GUIDE
Student: ___________________________________________________________________________ 1. An audit of a government, conducted in accordance with generally accepted auditing standards (GAAS), includes
A. A determination of efficiency and effectiveness.
B. An examination of financial statements and underlying records for conformance with generally accepted accounting principles (GAAP). C. Tests for compliance with laws and regulations.
D. Both B and C.
2. Audits of state and local governments may be performed by
A. Independent CPAs.
B. State audit agencies.
C. Federal grantor agencies.
D. All of the above.
3. In the auditor's report the financial statements on which the opinion is being expressed are specified in the
A. Scope paragraph.
B. Opinion paragraph.
C. Opening paragraph.
D. Explanatory paragraph.
4. In audits of state and local government units which of the following paragraphs may not be required in the auditor's report for every audit?
A. Explanatory paragraph.
B. Scope paragraph.
C. Opening paragraph.
D. Opinion paragraph.
5. Government Auditing Standards (GAS) issued by the U.S. Comptroller General apply to
A. Financial statement audits of federal organizations made by the Government Accountability Office. B. Financial statement audits of federal programs made by state auditors. C. Financial statements of federal grants made by independent CPAs. D. All of the above.
6. The single audit concept refers to
A. All audits of state and local government reporting entities. B. Audits to determine efficiency and economy.
*C. Audits following the Single Audit Act of 1984 (with 1996 Amendments) and the revised OMB Circular A-133. D. Financial and performance audits, and attestation engagements.
7. One of the primary purposes of the Single Audit Act of 1984 (amended in 1996) is to
A. Detect fraud, waste and abuse in government entities.
B. To promote the efficient and effective use of audit resources by consolidating audit activity into one organization-wide audit. C. Make audit activity legal at the federal level.
D. Allow federal auditors greater access to government entities receiving federal funds.
8. Which of the following statements concerning the Single Audit Act of 1984 (with 1996 Amendments) is correct?
A. Only those entities receiving over $500,000 a year in federal financial assistance are required to have a single audit. B. The Single Audit Act only applies if an entity has high risk programs. C. The single audit is optional for all entities receiving federal awards. D. Those entities expending under $500,000 a year in federal awards are exempt from single audit requirements.
9. An internal control structure that is so weak that it does not reduce the risk of material noncompliance to an acceptably low level is called a (an)
*A. Material weakness and reportable condition.
B. System design deficiency.
C. Unacceptable reportable condition.
D. Audit alert item.
10. Which of the following statements best describes the phrase "generally accepted auditing standards?"
A. They set forth a measure of the quality of the performance of audit procedures. B. They define the nature and extent of the auditor's responsibilities in conducting audits. C. They provide detailed guidance to the auditor with respect to planning the audit and writing the audit report. D. They set forth the policies and procedures for conducting an audit.
11. A typical objective of a performance audit is for the auditor to
A. Determine whether the financial statements fairly present the entity's operational results. B. Judge the appropriateness of an entity's program goals.
C. Make recommendations for improving performance.
D. Attest to whether the financial statements are prepared in accordance with generally accepted accounting principles.
12. The scope paragraph of an independent auditor's report on a financial audit of a local...
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