57) Each of the following activities could be performed by an independent auditor. Select
whether generally accepted government auditing standards deem each activity Acceptable (A),
Prohibited (P), or Require conceptual framework assessment (R) in regarding to independence.
________ 1. Reporting to those charged with governance on behalf of management.
________ 2. Providing valuation services.
________ 3. Researching and responding to the audited entity’s technical questions on relevant tax
laws as an ancillary part of providing tax services.
________ 4. Preparing accounting records and financial statements.
________ 5. Providing internal control monitoring and assessments.
________ 6. Having custody of an audited entity’s assets.
________ 7. Setting policies and strategic direction for the audited entity.
________ 8. Educating the audited entity on matters within the technical expertise of the auditors.
58) Audit objectives set forth by the United States Comptroller General in Government Auditing
Standards (GAS or GAGAS) differ from the AICPA view (GAAS) as discussed in Chapter 11.
What are some of the differences?
59) What are the major types of audits and audit engagements described in the Government
Accountability Office’s Government Auditing Standards or generally accepted government
auditing standards (GAGAS), and how do they differ?
60) “An unmodified opinion on the financial statements of a local government means the entirety
of the comprehensive annual financial report (CAFR) has been audited and conforms with
GAAP.” Do you agree or disagree? Why?
61) When conducting a government financial statement audit, how does the auditor determine the
appropriate auditing standards for the engagement?
62) What are the benefits to a state or local government of establishing an audit committee?
63) Explain how federal award programs are selected for audit under the risk-based approach.
64) Answer the following questions relating to the provisions of the Single Audit Act of 1984 and
1996 amendments.
(a) What is a single audit?
(b) How do you determine if your government must have a single audit?
(c) Where would you find authoritative guidance on conducting a single audit?
65) Describe the importance of materiality for auditors and explain how materiality is determined
in audits of state and local governments that follow GASB standards.