Local Government Ch.11

1. The single audit requirement applies to:

All audits of state and local government reporting entities.

Audits to determine efficiency and economy.

Audits following the Single Audit Act of 1984 (with 1996 Amendments) and the revised OMB Circular A-133.

Financial and performance audits, and attestation engagements.

2. An auditor must audit as a major program:

All Type A programs, unless the auditor has identified one as low risk

All Type A programs, including any the auditor considers low-risk programs

All Type B programs

At least 50 percent of all federal funds received

3. A condition whereby the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis is called a(an):

Deficiency.

System design weakness.

Unacceptable reportable condition.

Audit alert item.

4. Under the GASB reporting model, materiality is determined:

For opinion units

At the government-wide level

At the fund level

For governmental and business-type activities and the aggregate discretely presented component units only

5. The auditor's responsibility for required supplementary information (RSI) is:

The same as with the basic financial statements

To perform certain limited procedures to ensure that RSI is fairly presented in relation to the audited financial statements

The same as for all information in the financial section of a comprehensive annual financial report

To render an opinion as to the fairness of the RSI and whether it conforms to generally accepted accounting principles

6. Audits of state and local governments may be performed by all of the following except:

Independent CPAs.

State audit agencies.

Federal grantor agencies.

The Office of Management and Budget (OMB).

7. Under the hierarchy of GAAP for a state and local government, which of the following has the highest level of authority?

AICPA Practice bulletins if specifically made applicable to state and local governments by the AICPA (and cleared by the GASB)

Consensus positions of the GASB Emerging Issues Task Force

Implementation guides ("Qs and As") published by the GASB staff

AICPA Industry Audit and Accounting Guides

8. An auditor would not render an opinion on a(an):

Financial audit of financial statements.

Performance audit.

Audit to determine whether the entity has adhered to specific compliance requirements applicable to a major program.

Audit to determine whether a governmental department's financial information complies with specific state regulatory requirements.

9. The goal of a performance audit is to:

Provide information to improve program operations and facilitate decision making by management

Determine whether government programs and activities are meeting their stated goals and objectives

Determine whether governments are performing their duties in the most economic and efficient manner possible

All of the above

10. Which of the following is a true statement about the relationship between generally accepted government auditing standards (GAGAS) and generally accepted auditing standards (GAAS)?

GAGAS and GAAS provide standards for financial audits, attestation engagements, and performance audits

GAGAS encompasses GAAS and supplement certain GAAS

Single audits must be performed using GAGAS and GAAS

GAGAS are promulgated by the Governmental Accountability Office and GAAS are promulgated by the Governmental Accounting Standards Board

11. 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?

Introductory paragraph.

Opinion paragraph.

Scope paragraph.

Explanatory paragraph.

12. In the auditor's report the financial statement on which the opinion is being expressed are specified in the:

Introductory paragraph.

Opinion paragraph.

Scope paragraph.

Explanatory paragraph.

13. Typical objectives of a performance audit include:

Determining whether financial statements fairly present the entity's operational results.

Judging the appropriateness of an entity's program goals.

Determining whether financial statements fairly present in conformity with GAAP.

Assessing effectiveness and results, economy and efficiency, and internal controls and compliance with laws and regulations.

14. OMB Circular A-133 and the related Compliance Supplement provide guidance for auditors in:

Conducting a financial audit of governmental entities

Conducting financial audits, attestation engagements, and performance audits of governmental entities

Conducting a single audit of a government that has expended more than $500,000 in federal financial assistance

None of the above

15. Threats to independence include all of the following except:

Bias threat.

Familiarity threat.

Undue influence threat.

Management representation threat.

16. An adverse opinion is most likely to be rendered when:

Fund financial statements are presented along with government-wide statements in the basic financial statements

The auditor is not independent of the government being audited

The government issues inaccurate financial statements

17. The GAGAS conceptual framework for independence should be employed:

Annually

At the end of the audit engagement, just prior to issuing the audit report

When taking on a nonaudit service engagement at an audited entity

All of the above

18. Single audits performed pursuant to OMB Circular A-133:

Apply to all entities that receive $500,000 or more in a fiscal year

Results in the same number of reports as a generally accepted government auditing standards (GAGAS or yellow book) audit

Must be performed in accordance with generally accepted government auditing standards

Result in a reporting package that is submitted to the Government Accountability Office

19. The scope paragraph of an independent auditor's report on a financial audit of a local government:

Identifies the statutes the auditor determined to be relevant to the financial activities of the government.

Identifies the financial statements that the auditor has examined.

Identifies all applicable accounting records that were located and examined.

Identifies the standards used in performing the audit.

20. All of the following reports are included in the reporting package resulting from the single audit except:

Financial statements and schedule of expenditures of federal awards.

Summary schedule of prior audit findings.

Report on efficiency and effectiveness.

Corrective action plan.