In reporting under Government Auditing Standards, an auditormost likely would be required to communicate managementâsmisappropriation of assets directly to a federal inspector generalwhen the fraudulent activities are
Accompanied by fraudulent financial reporting that results inmaterial misstatements of asset balances.
Reported to the entityâs governing body and the governing bodyfails to make a required report to the federal inspectorgeneral.
Concealed by management by circumventing specific internalcontrols designed to safeguard those assets.
Perpetrated by several levels of management in a scheme that islikely to continue in future years.
Although the scope of audits of recipients of federal awards inaccordance with federal audit regulations varies, audits under theSingle Audit Act generally have which of the following elements incommon?
The auditor should obtain written management representationsthat the recipientâs internal auditors will report their findingsobjectively, without fear of political repercussion.
The auditor is required to express both positive and negativeassurance that fraudulent acts that could have a material effect onthe recipientâs financial statements are disclosed to the inspectorgeneral.
The auditor is to determine whether the federal financialassistance has been administered in accordance with applicable lawsand regulations.
The materiality levels are lower and are determined by thegovernment entities that provided the federal awards to therecipient.
In reporting under Government Auditing Standards, an auditormost likely would be required to communicate managementâsmisappropriation of assets directly to a federal inspector generalwhen the fraudulent activities are
Accompanied by fraudulent financial reporting that results inmaterial misstatements of asset balances.
Reported to the entityâs governing body and the governing bodyfails to make a required report to the federal inspectorgeneral.
Concealed by management by circumventing specific internalcontrols designed to safeguard those assets.
Perpetrated by several levels of management in a scheme that islikely to continue in future years.
Although the scope of audits of recipients of federal awards inaccordance with federal audit regulations varies, audits under theSingle Audit Act generally have which of the following elements incommon?
The auditor should obtain written management representationsthat the recipientâs internal auditors will report their findingsobjectively, without fear of political repercussion.
The auditor is required to express both positive and negativeassurance that fraudulent acts that could have a material effect onthe recipientâs financial statements are disclosed to the inspectorgeneral.
The auditor is to determine whether the federal financialassistance has been administered in accordance with applicable lawsand regulations.
The materiality levels are lower and are determined by thegovernment entities that provided the federal awards to therecipient.
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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. |