Question 1A CPA has conducted an audit of the financial statements of an entity that received federal financial assistance. The CPA identified one major federal program and four nonmajor federal programs. The CPA’s responsibility related to the Schedule of Expenditures of Federal Awards is to:Express an opinion as to whether the Schedule is fairly presented.Express an opinion as to whether the Schedule is fairly presented in relation to the financial statements taken as a whole.Express negative assurance on the Schedule.The CPA has no responsibility with regard to the Schedule.4 points Question 2A CPA has conducted an audit of the financial statements of an entity that received federal financial assistance and had one program that qualified as a major program. The CPA’s responsibility related to reporting on internal control for this entity is to:zIssue an opinion on internal control relating to the financial statements.Issue a report on internal control relating to the financial statements and a report on internal control related to the federal program(s).Issue a report on internal control relating to the financial statements and an opinion on internal control related to the major program.4 points Question 3A CPA has conducted an audit of the financial statements of an entity that received federal financial assistance and had one program that qualified as a major program. The CPA’s responsibility related to reporting on compliance for this entity is toIssue a report on compliance related to the entity.Issue an opinion on compliance related to the entity.Issue a report on compliance related to the entity and a report on compliance related to the federal program(s).Issue a report on compliance related to the entity and an opinion on compliance related to the federal program(s).4 points Question 4A performance audit includes which of the following?Economy and efficiency audit.Program audits.Both (a) and (b).None of the above.4 points Question 5A program audit would include which of the following?Determining if sound procurement policies are being practiced.Determining if efficient operating procedures are being used.Determining if resources are being used efficiently.Determining the factors inhibiting satisfactory performance.4 points Question 6An auditor is engaged to audit the Eastern Planning and Development District a not-for-profit entity that receives federal financial assistance. The auditor designed his audit to provide reasonable assurance of detecting material misstatements resulting from illegal acts. What additional requirements does the auditor have with regard to compliance?None.The auditor must design the audit to provide reasonable assurance of detecting noncompliance with terms of grants and contracts.The auditor must design the audit to provide reasonable assurance of detecting all misstatements resulting from illegal acts.The auditor must design the audit to provide reasonable assurance of detecting any fraud.4 points Question 7An elected State Auditor employed by the State would NOT be considered independent when auditing which of the following entities?A component unit of the State.An agency of the State.The office of the State Auditor.All of the above.4 points Question 8An independent CPA is conducting an audit of an entity that is subject to the GAO audit standards but is not subject to the OMB audit standards. While conducting the audit the CPA found that the entity had violated a law that had a large but not material potential penalty associated with such violation. There was no accrual for the potential penalty or disclosure of the violation. What action(s) must the CPA take with regard to this violation?Nothing since the financial statements are not materially misstated.Must issue an adverse opinion if the financial statements are not changed to reflect the violation.Must issue a report that details the violation and the potential dollar effect.Must report the incident to the local law enforcement agency.4 points Question 9An independent CPA is conducting an audit of an entity that receives federal financial assistance and is subject to the GAO standards (GAGAS). The auditor must design the audit to provide reasonable assurance of detecting which of the following?Immaterial misstatements if they result from illegal acts.Noncompliance with entity policies and procedures.Noncompliance with the terms of contracts or grant agreements.All of the above.4 points Question 10An independent CPA is engaged to audit the financial statements of the City of Highland Hills. The City has a variety of revenue sources including a $350 000 grant from the U.S. Department of Housing and Urban Development. Which of the following audit standards must the CPA use when conducting the audit?The AICPA audit standards.The GAO audit standards.The OMB audit standards.All of the above.4 points Question 11 An independent CPA who conducts audits of entities that receive federal financial assistance has what responsibility related to peer review?Does not have to have one unless he/she belongs to the AICPA Private Companies Practice Section.Must have one every year.Must have one at least every two years.Must have one at least every three years.4 points Question 12An independent auditor has conducted an audit of the financial statements of an entity that receives federal financial assistance but that is not subject to the OMB standards. What report(s) must the auditor issue at the completion of this engagement?Only an opinion (or disclaimer of opinion) on the financial statements.An opinion (or disclaimer of opinion) on the financial statements and a report on internal control.An opinion (or disclaimer of opinion) on the financial statements a report on internal control and a report on compliance.An opinion (or disclaimer of opinion) on the financial statements a report on internal control and an opinion (or disclaimer of opinion) on compliance.4 points Question 13Circular A-133 issued by the Office of Management and Budget Applies only to state and local governmental unitsApplies only to not-for-profit organizationsApplies to bothApplies to neither4 points Question 14Each federal financial assistance program has specific compliance requirements. Which of the following is not an example of the general nature of the specific compliance requirements?Eligibility of individuals or groups to participate in the program.Allowability of certain types of goods or services that may be acquired.Maximum dollar amounts of expenditures.Matching fund requirements.4 points Question 15GAO performance audit standards do NOT include which of the following?The auditor should be independent of the entity being audited.The work should be adequately planned.The auditor should prepare written work papers.The auditor should obtain an understanding of management controls relevant to the audit.4 points Question 16GAO standards specify that performance audit reports should be timely and include several items. Which of the following items is NOT required under the GAO standards?Significant audit findings.Recommendation as to how to correct problems.Explanation of the audit’s objectives and of its scope and methodology.Details about the number of items tested and the sampling techniques used.4 points Question 17If a program to be subjected to a performance audit lacks clearly defined objectives what can the auditor do?Decline the audit until the entity defines its objectives.Personally discern the objectives based on the auditor’s opinion.Examine the legislation to see if the legislation articulated the goals and objectives of the program.Create a list of goals and objectives.4 points Question 18Reports issued by CPAs conducting audits subject to the GAO standards must include all of the following except:A description of the scope of compliance testing.A description of the scope of internal control testing.A description of any irregularities and illegal acts found.A description of any sampling methodology and sampling plans used.4 points Question 19The GAO publication Government Auditing Standards (commonly known as the Yellow Book) is applicable in which of the following audit situations?To independent CPAs conducting a performance audit of a governmental entity that receives no federal financial assistance.To independent CPAs auditing a nongovernmental entity that receives federal financial assistance.To independent CPAs auditing a governmental entity that receives no federal financial assistance.To state auditors auditing a local government that does not receive federal financial assistance.4 points Question 20The Schedule of Findings and Questioned Costs should include all of the following exceptInformation on types of opinions expressed on the financial statement.Information on all weaknesses in internal control.List of material noncompliance.Known questioned costs.4 points Question 21The Single Audit Act distinguishes between major and nonmajor federal programs. One factor that distinguishes a major from a nonmajor program is inherent risk. Which of the following is NOT a characteristic of “inherent risk”?Significant prior audit findings.Significant violation of the terms of a specific grant due to a misunderstanding of the requirements.Weakness in the entity’s internal controls.Lack of oversight by federal agencies.4 points Question 22Under which set of auditing standards is the auditor required to express an opinion on compliance with laws and regulations applicable to each major program?AICPA standards.GAO standards.OMB standards.All of the above.4 points Question 23Under which set of auditing standards is the auditor required to test compliance with laws and regulations that could have a direct and material effect on the financial statements of the entity?AICPA standards.GAO standards.OMB standards.All of the above.4 points Question 24What amount of continuing professional education would an auditor who is not a CPA but who is engaged in the audit of a City that receives significant amounts of federal financial assistance be required to complete?Twenty-four hours every two years.Forty hours a year.Eighty hours every two years.None because the auditor is not a CPA.4 points Question 25What is the auditor’s responsibility for the Schedule of Expenditures of Federal Awards?The auditor has no responsibility for this Schedule.The auditor should report on the Schedule without issuing an opinion.The auditor should express an opinion on the fair presentation of the Schedule.The auditor should express an opinion on the fair presentation of the Schedule in relation to the basic financial statements taken as a whole.4 points Save and SubmitClick Save and Submit to save and submit. 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