You are an audit accountant and you boss asks you the followingquestions
answer For financial audits, generally accepted governmentauditing standards (GAGAS) incorporate AICPA standards. GAGASprescribe additional requirements for reporting on Laws,Regulations, Reporting on Contracts, and Grants InternalControl
Yes No
No No
No Yes
Yes Yes
When reporting on an entityâs internal control over financialreporting in compliance with generally accepted government auditingstandards, an auditor should issue a written report that includesa
Statement of positive assurance that the results of testsindicate that internal control either can, or cannot, be relied onto reduce control risk to an acceptable level.
Statement of negative assurance that nothing came to theauditorâs attention that caused the auditor to believe significantdeficiencies were present.
Description of the scope of the auditorâs testing of internalcontrol.
Description of the material weaknesses and the strengths thatthe auditor can rely on in reducing the extent of substantivetesting.
Reporting standards for financial audits under GovernmentAuditing Standards differ from reporting standards undergenerally accepted auditing standards in that GovernmentAuditing Standards require the auditor to
Present the results of the auditorâs tests of economy andefficiency regarding the use of the entityâs resources.
Describe the scope of the auditorâs tests of compliance withlaws and regulations.
Provide negative assurance that the auditor discoveredno transactions that were indicative of illegalacts.
Provide positive assurance that the entityâs audit committee isadequately informed about the effects of any illegal acts.
An auditor determines that a client who received a federal grantfraudulently reported information to the federal government. Theclientâs management refuses to acknowledge the fraud. Which of thefollowing parties should the auditor contact first?
The recipients of the clientâs services.
The state attorney generalâs office.
The agency that provided the grant.
The state accountancy board.
You are an audit accountant and you boss asks you the followingquestions
answer For financial audits, generally accepted governmentauditing standards (GAGAS) incorporate AICPA standards. GAGASprescribe additional requirements for reporting on Laws,Regulations, Reporting on Contracts, and Grants InternalControl
Yes No
No No
No Yes
Yes Yes
When reporting on an entityâs internal control over financialreporting in compliance with generally accepted government auditingstandards, an auditor should issue a written report that includesa
Statement of positive assurance that the results of testsindicate that internal control either can, or cannot, be relied onto reduce control risk to an acceptable level.
Statement of negative assurance that nothing came to theauditorâs attention that caused the auditor to believe significantdeficiencies were present.
Description of the scope of the auditorâs testing of internalcontrol.
Description of the material weaknesses and the strengths thatthe auditor can rely on in reducing the extent of substantivetesting.
Reporting standards for financial audits under GovernmentAuditing Standards differ from reporting standards undergenerally accepted auditing standards in that GovernmentAuditing Standards require the auditor to
Present the results of the auditorâs tests of economy andefficiency regarding the use of the entityâs resources.
Describe the scope of the auditorâs tests of compliance withlaws and regulations.
Provide negative assurance that the auditor discoveredno transactions that were indicative of illegalacts.
Provide positive assurance that the entityâs audit committee isadequately informed about the effects of any illegal acts.
An auditor determines that a client who received a federal grantfraudulently reported information to the federal government. Theclientâs management refuses to acknowledge the fraud. Which of thefollowing parties should the auditor contact first?
The recipients of the clientâs services.
The state attorney generalâs office.
The agency that provided the grant.
The state accountancy board.
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Related questions
2-30 | 2â30. Multiple Choice Questions | |||||||
Select the best answer for each of the following items and give reasons for your choice. | ||||||||
A | a. Which of the following organizations can revoke the right of an individual to practice as a | |||||||
CPA? | ||||||||
(1) The Public Company Accounting Oversight Board. | ||||||||
(2) The American Institute of Certifi ed Public Accountants. | ||||||||
(3) The Securities and Exchange Commission. | ||||||||
(4) The applicable state board of accountancy. | ||||||||
B | b. The AICPA over time has played an important role in standards setting. Which of the following | |||||||
standards are currently established by the AICPA? | ||||||||
(1) Accounting standards applicable to nonpublic companies. | ||||||||
(2) Auditing standards applicable to audits of nonpublic companies. | ||||||||
(3) Quality control standards applicable to audits of public companies. | ||||||||
(4) Standards for reviews of the interim fi nancial information issued by public companies. | ||||||||
C | c. Which of the following does the FASB consider a source of nonauthoritative guidance for | |||||||
use when there is no authoritative guidance available? | ||||||||
(1) The FASB Codifi cation. | ||||||||
(2) FASB Concepts Statements. | ||||||||
(3) SEC Rules. | ||||||||
(4) SEC Interpretive Releases | ||||||||
D | d. Financial statement audits performed under PCAOB requirements are designed to provide | |||||||
which type(s) of assurance with respect to the detection of material misstatements due to | ||||||||
errors or fraud? | ||||||||
Reasonable | Absolute | |||||||
1 | Yes | Yes | ||||||
2 | Yes | No | ||||||
3 | No | Yes | ||||||
4 | No | No | ||||||
E | e. A basic objective of a CPA fi rm is to provide professional services that conform with professional | |||||||
standards. Reasonable assurance of achieving this basic objective is provided through: | ||||||||
(1) Compliance with generally accepted reporting standards. | ||||||||
(2) A system of quality control. | ||||||||
(3) A system of peer review. | ||||||||
(4) Continuing professional education. | ||||||||
F | f. Which of the following is not explicitly included in a standard report for a nonpublic | |||||||
company? | ||||||||
(1) The CPAâs opinion that the fi nancial statements comply with generally accepted | ||||||||
accounting principles. | ||||||||
(2) That generally accepted auditing standards were followed during the audit. | ||||||||
(3) That internal control of the client was satisfactory. | ||||||||
(4) An identifi cation of the fi nancial statements audited. | ||||||||
G | g. The general group of the 10 PCAOB Auditing Standards requires that: | |||||||
(1) The auditors maintain an independent mental attitude. | ||||||||
(2) The audit be conducted in conformity with generally accepted accounting | ||||||||
principles. | ||||||||
(3) Assistants, if any, be properly supervised. | ||||||||
(4) The auditors obtain an understanding of internal control. | ||||||||
H | h. Which AICPA quality control standard would most likely be satisfi ed when a CPA fi rm | |||||||
maintains records indicating which partners or employees of the fi rm were previously | ||||||||
employed by the CPA fi rmâs clients? | ||||||||
(1) Professional relationship. | ||||||||
(2) Engagement performance. | ||||||||
(3) Relevant ethical requirements. | ||||||||
(4) Monitoring. | ||||||||
I | i. An audit provides reasonable assurance of detecting material: | |||||||
Fraudulent Financial | Misappropriation | |||||||
Reporting | of Assets | |||||||
1 | Yes | Yes | ||||||
2 | Yes | No | ||||||
3 | No | Yes | ||||||
4 | No | No | ||||||
J | j. Which of the following is not included in an integrated audit report on the fi nancial statements | |||||||
of a public company? | ||||||||
(1) The report states that the audit was performed in accordance with AICPA standards. | ||||||||
(2) The report indicates that the fi nancial statements are the responsibility of management. | ||||||||
(3) The report indicates that the auditors have also audited the effectiveness of the companyâs | ||||||||
internal control. | ||||||||
(4) The report is signed in the name of the CPA fi rm. | ||||||||
K | k. Audit fi rms that are subject to inspections by the PCAOB staff include: | |||||||
(1) All audit fi rms. | ||||||||
(2) Audit fi rms that are registered with the SEC. | ||||||||
(3) Audit fi rms that are registered with the PCAOB. | ||||||||
(4) Audit fi rms that are registered with a state board of accountancy. | ||||||||
L | l. Which of the following is not a difference noted when comparing the AICPA audit report | |||||||
to the international audit report? | ||||||||
(1) The international audit report may use the phrase âtrue and fair view.â | ||||||||
(2) The international audit report may be signed using the personal name of the audit | ||||||||
partner, the audit fi rm, or both. | ||||||||
(3) The international audit report requires inclusion of the city of the CPA fi rm offi ce that | ||||||||
performed the audit. | ||||||||
(4) The international audit report includes an opinion on internal control. |