Question

1. In an audit in accordance with generally accepted auditing standards, the auditors must test compliance with those laws and regulations that:

Have a direct and material effect on the financial statements.

Have a direct and material effect on major federal programs.

Have a material direct or indirect effect on the financial statements.

Have a material effect on major or non-major programs.

2. Which of the following types of audits is designed to determine that an organization has complied with the specific requirements of major financial assistance programs?

An audit in accordance with Government Auditing Standards.

A single audit.

An audit in accordance with generally accepted auditing standards.

An operational audit.

3. For the highest degree of independence, the director of internal auditing should report directly to:

The controller.

The audit committee of the board of directors.

The executive vice-president.

The chief accountant.

4. The GAO standards of reporting for governmental financial audits incorporate the AICPA standards of reporting and prescribe supplemental standards to satisfy the unique needs of governmental audits. Which of the following is a supplemental reporting standard for audits in accordance with Government Auditing Standards?

A report on the entity's internal control.

Material indications of illegal acts should be reported in a document with distribution restricted to senior officials of the entity audited.

Instances of abuse, fraud, mismanagement, and waste should be reported to the organization with legal oversight authority over the entity audited.

All privileged and confidential information discovered should be reported to the senior officials of the organization that arranged for the audit.

Please answer all for a good rating!

Answer 1

1) Solution: Have a direct and material effect on the financial statements.

Explanation: As per generally accepted auditing standards the auditors is required to test the compliance with those laws and regulations that directly impacts on the financial statements.

2) Solution: A single audit.

Explanation: A single audit is designed to determine that company has complied with the specific needs of main programs in financial assistance.

3) Solution: The audit committee of the board of directors

Explanation: The director of internal auditing for the highest degree of independence directly reports to audit committee of the board of directors

4) Solution: A report on the entity's internal control

Explanation: According to the Government Auditing Standards the report on the entity's internal control acts as a a supplemental reporting standard