28) The single audit requirement applies to:
A) All audits of state and local government reporting entities.
B) Financial audits of all not-for-profit entities.
C) Most audits of state and local governments expending federal grant funds.
D) Only those governments and not-for-profit entities that are audited by a federal audit agency.
29) 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) Promote the efficient and effective use of audit resources.
C) Make audit activity legal at the federal level.
D) Allow federal auditors greater access to government entities receiving federal funds.
30) Which of the following statements concerning the Single Audit Act of 1984 (with 1996
amendments) is correct?
A) Only those entities receiving over $750,000 a year in federal financial assistance are required to
have a single audit.
B) Those entities expending under $750,000 a year in federal awards may be exempt from single
audit requirements.
C) The Single Audit Act only applies if an entity has high risk programs.
D) The single audit is optional for all entities receiving federal awards.
31) Threats to independence include all of the following except:
A) Bias threat.
B) Familiarity threat.
C) Undue influence threat.
D) Management representation threat.
32) Typical objectives of a performance audit include:
A) Determining whether financial statements fairly present the entity’s operational results.
B) Judging the appropriateness of an entity’s program goals.
C) Determining whether financial statements fairly present in conformity with GAAP.
D) Assessing effectiveness and results, economy and efficiency, and internal controls.
33) The purpose of an attestation engagement may include all of the following, except:
A) Expressing an opinion on whether the subject matter examined is in conformity with
recognized criteria.
B) Expressing a conclusion about whether any information came to the attention of the auditor
indicating that the subject matter reviewed conflicts with recognized criteria.
C) Providing an agreed-upon procedure report on an assertion about a subject matter.
D) Providing a due diligence report on compliance with laws and regulations.
34) In which section of the standard audit report does the auditor inform financial statement users
that certain information, such as combining statements or budgetary comparison schedules may
not have been subject to the comprehensive audit procedures?
A) Auditor‘s Opinion section.
B) Other Matters section.
C) Other Information section
D) Auditor‘s Responsibility section.
35) Generally accepted government auditing standards (GAGAS):
A) Establish the same scope as GAAS, but use wording appropriate to government entities instead
of business organizations.
B) Are set forth in the Federal Government Compliance Supplement.
C) Establish more standards that are broader in scope than those found in GAAS.
D) Establish standard wording of auditor’s reports on government financial statements.
36) An unmodified audit opinion rendered on a government unit’s basic financial statements means
those statements:
A) Have been certified as free from error.
B) Did not require modifications by the auditor.
C) Present the entity’s financial position fairly in conformity with GAAP.
D) All of these choices are correct.
37) Under the existing GAAP hierarchy for state and local government financial reporting, the
GASB Implementation guides are:
A) More authoritative than GASB Statements.
B) Equally authoritative to GASB Technical Bulletins.
C) More authoritative than the AICPA state and local government audit guide.
D) Less authoritative than AICPA Practice Bulletins.
38) An auditor would not render an opinion on a(an):
A) Financial audit of financial statements.
B) Performance audit.
C) Audit to determine whether the entity has adhered to specific compliance requirements
applicable to a major program.
D) Audit to determine whether a government department’s financial information complies with
specific state regulatory requirements.
39) A single audit conducted pursuant to the Single Audit Act Amendments of 1996 requires
which of the following types of audits?
A) Financial Audit: Yes; Performance Audit: No
B) Financial Audit: No; Performance Audit: No
C) Financial Audit: No; Performance Audit: Yes
D) Financial Audit: Yes; Performance Audit: Yes
40) All of the following reports are included in the reporting package resulting from the single
audit except:
A) Financial statements and schedule of expenditures of federal awards.
B) Summary schedule of prior audit findings.
C) Report on efficiency and effectiveness.
D) Corrective action plan.
41) Which of the following is not a required component of the audit report for a single audit?
A) A report on internal control over financial reporting and compliance with federal statutes,
regulations, and the terms and conditions of the federal award.
B) An opinion on the completeness of the schedule of expenditures.
C) A report on compliance for each major program and on internal control over compliance.
D) A schedule of findings and questioned costs.
42) Which of the following best describes the relationship between generally accepted auditing
standards (GAAS) and generally accepted government auditing standards (GAGAS)?
A) GAAS apply to independent CPA auditors; GAGAS apply to government auditors.
B) Audits conducted in conformity with GAGAS also require the auditor to conform to GAAS.
C) Audits done in accordance with GAAS must also be done in accordance with GAGAS.
D) Audits of state and local governments always require that the audit be conducted in accordance
with both GAAS and GAGAS.
43) A common reason why a government might receive a “modified opinion” from the external
auditors is:
A) A violation of generally accepted accounting principles was noted that does not cause material
misstatement of the financial statements.
B) A fund balance deficit in the General Fund.
C) Poor internal controls such that the accounting records could not be audited.
D) Expenditures exceeded appropriations in the General Fund.
44) Which of the following would not be considered Category (b) GAAP for state and local
government auditees?
A) AICPA Practice Bulletins if specifically made applicable to state and local governments by the
AICPA and cleared by the GASB.
B) GASB Technical Bulletins.
C) GASB Statements.
D) GASB Implementation Guides.
45) Which of the following is the highest in the hierarchy of generally accepted accounting
principles for federal government entities?
A) AICPA Audit and Accounting Guide
B) FASB emerging issues task force reports.
C) GASB statements.
D) FASAB statements.
46) Which of the following is not considered an opinion unit requiring a materiality determination
associated with a financial statement audit of a state or local government?
A) Aggregate discretely presented component units.
B) Investment trust fund financial statements.
C) Each major governmental fund.
D) Business-type activities.
47) When compared to generally accepted auditing standards (GAAS), generally accepted
government auditing standards (GAGAS) include additional General Standard requirements for
financial audits related to all of the following except:
A) Independence.
B) Quality control and assurance.
C) Audit opinions.
D) Competence.