MaoEn/USCPA_AUD_Data huggingface dataset:
Choice "C" is incorrect. An independent federal agency that provides no funding is unlikely to be selected to be the cognizant agency for the auditee. The cognizant agency is typically the agency that provides the most funding to the auditee.
Choice "D" is incorrect. The assigned cognizant agency is based on the agency that provides the most amount of direct funding. The assigned cognizant agency is not likely one whose sole purpose is to monitor single audits."
A CPA is engaged to audit the financial statements of a local government that receives federal awards. The CPA will be required to perform a single audit for which of the following reasons?
A.
To determine whether the entity complied with laws, regulations, and the provisions of contracts or grant agreements pertaining to federal awards that have a direct and material effect on each major program
B.
To provide reasonable assurance that the financial statements are free of material misstatements resulting from violations of laws and regulations that have a direct and material effect on the determination of financial statement amounts
C.
To provide reasonable assurance of detecting material misstatements resulting from noncompliance with provisions of contracts or grant agreements that have a direct and material effect on the determination of financial statement amounts
D.
To provide reasonable assurance that the financial statements are free of material misstatements, whether caused by error or fraud,"Choice "A" is correct. One of the objectives of single audits is to audit the compliance of federal awards expended during the year as a basis for issuing additional reports on compliance related to major programs.
Choice "B" is incorrect. Providing reasonable assurance over material misstatements, regardless of the reason for the misstatement, is not part of a single audit. A single audit includes a compliance audit of federal awards, but it is a basis for issuing additional reports related to major programs and on internal control over compliance.
Choice "C" is incorrect. Providing reasonable assurance over detecting material misstatements, regardless of noncompliance, is not part of a single audit. A single audit includes a compliance audit of federal awards, but it is a basis for issuing additional reports related to major programs and on internal control over compliance.
Choice "D" is incorrect. Providing reasonable assurance over financial statements is the objective of a financial statement audit. A single audit includes an audit of the entity's financial statements but also includes reporting on a separate schedule pertaining to the federal awards."
Under Government Auditing Standards (GAGAS), when reporting on compliance with laws and regulations in a financial statement audit, the auditor's report should include:
A.
The materiality criteria used by the auditor in considering whether instances of non-compliance were significant.
B.
An opinion on whether the entity's goals and objectives were affected by its compliance with laws and regulations.
C.
Assurance that all controls over fraud and illegal acts were tested.
D.
Relevant information regarding material illegal acts and fraud or irregularities found in the course of the audit.,"Choice "D" is correct. The auditor's report either asserts that there are no findings or references a separate schedule of findings, which includes disclosure of material instances of fraud and illegal acts.
Choice "A" is incorrect. While the auditor's report on noncompliance and on internal control includes a definition of "material weakness", there is no discussion of the specific materiality criteria applied to determine the significance of instances of non-compliance.
Choice "B" is incorrect. There is no opinion expressed on the achievement of goals and objectives and their relationship to compliance.
Choice "C" is incorrect. The report discloses that internal control over financial reporting was considered as part of designing the audit, but it does not state that all controls over fraud and illegal acts were tested."
Each of the following items should be included in a presentation of pro forma financial statements, except:
A.
The source of the historical information on which the pro forma information is based.
B.
The significant assumptions used in developing the pro forma information.
C.
An indication that the pro forma information is not necessarily indicative of results.
D.
All direct and indirect effects attributed to the related transaction.,"Choice "D" is correct. A presentation of pro forma financial statements should include all significant direct effects related to the transaction. The presentation does not need to include indirect effects related to the transaction.
Choice "A" is incorrect. A presentation of pro forma financial statements should include the source of the historical information on which the pro forma information is based.
Choice "C" is incorrect. A presentation of pro forma financial statements should include an indication that the pro forma information is not necessarily indicative of results."
A practitioner has been engaged to apply agreed-upon procedures in accordance with Statements on Standards for Attestation Engagements (SSAE) to prospective financial statements. Which of the following conditions must be met for the practitioner to finalize the engagement?
A.
The prospective financial statements include a summary of significant accounting policies.
B.
The practitioner takes responsibility for the sufficiency of the agreed-upon procedures.
C.
The engaging party acknowledges that the procedures performed were appropriate to meet the intended purpose of the engagement.
D.
The practitioner reviews the findings and reaches an opinion based on the procedures performed.,"Choice "C" is correct. Prior to the issuance of the practitioner's report, the engaging party (normally the client) must acknowledge and agree that the procedures performed were appropriate to meet the intended purpose of the engagement.
Choice "A" is incorrect. The prospective financial statements should include a summary of significant assumptions, not a summary of significant accounting policies.
Choice "B" is incorrect. The engaging party (client) (not the practitioner) should take responsibility for the sufficiency of the agreed-upon procedures.
Choice "D" is incorrect. The practitioner does not issue an opinion, but rather includes a description of the procedures performed and related findings, including any materiality threshold established. "
Reporting standards for financial audits under Government Auditing Standards (the Yellow Book) differ from reporting under generally accepted auditing standards in that Government Auditing Standards require the auditor to:
A.
Provide negative assurance that the auditor discovered no evidence of intentional override of internal controls.
B.
Describe the scope of the auditor's principal substantive tests.
C.
Provide positive assurance that control activities regarding segregation of duties are consistent with the entity's control objectives.
D.
Present the results of the auditor's tests of controls.,"Choice "D" is correct. The report on the audit of financial statements should describe the scope of the auditor's testing of compliance with laws and regulations and internal control over financial reporting, and present the results of those tests.
Choice "A" is incorrect. The auditor is not required to provide negative assurance regarding the override of internal control, although the audit report will provide negative assurances regarding internal control over financial reporting and its operations that may involve a material weakness.
Choice "B" is incorrect. There is no requirement that the auditor describe the scope of substantive tests. However, under Government Auditing Standards, the report on the audit of financial statements should describe the scope of the auditor's testing of compliance with laws and regulations and internal control over financial reporting.
Choice "C" is incorrect. The auditor's report on internal controls indicates whether or not material weaknesses were found, but it does not provide assurance that specific internal control activities are consistent with the entity's objectives."
Obtaining a SOC 1® Type 2 report would assist the user auditor in all of the following ways except:
A.
Allowing the reduction in the assessed control risk below maximum for controls related to areas of accounting impacted by the service organization.
B.
Allowing the user auditor to pass on any substantive testing over balances related to the areas of accounting impacted by the service organization.
C.
Aiding the user auditor in obtaining a better understanding of the controls related to areas of accounting impacted by the service organization.
D.
Providing the user auditor with assurance of the operating effectiveness of controls related to areas of accounting impacted by the service organization.,"Choice "B" is correct. A SOC 1® Type 2 report does not alone allow an auditor to pass on substantive testing of balances related to the areas of accounting impacted by the service organization. A SOC 1® report is one piece of evidence that must be considered in conjunction with other information (such as materiality, nature of transactions, risk assessment, etc.) when planning audit procedures.
Choice "A" is incorrect. Obtaining a SOC 1® Type 2 report may allow an auditor to assess control risk below maximum for areas of accounting impacted by a service organization, as such a report includes the testing of the design, implementation, and operating effectiveness of the service organization's controls.
Choice "C" is incorrect. Obtaining a SOC 1® Type 2 report would aid the user auditor in better understanding controls impacted by a service organization because it includes information such as a system description, management assertions, and design, implementation, and operating effectiveness assurance.
Choice "D" is incorrect. A SOC 1® Type 2 report includes testing of the design, implementation, and operating effectiveness of controls."
When auditing an entity's financial statements in accordance with Government Auditing Standards (the Yellow Book), an auditor is required to report on:
I.
Noteworthy accomplishments of the program.
II.
The scope of the auditor's testing of internal controls.
A.
Both I and II.
B.
II only.
C.
I only.
D.
Neither I nor II.,"Choice "B" is correct. When auditing an entity's financial statements in accordance with Government Auditing Standards, an auditor is required to report on the scope of the auditor's testing of internal control, but not on noteworthy accomplishments of the program.
Gearty & Duffy, certified public accountants, have been engaged to perform an audit of Sleepy Knoll Township in accordance with 2 CFR 200 single audit. In connection with that engagement, Gearty & Duffy will determine major programs:
A.
By testing enough grants to achieve a single specific coverage percentage.
B.
By applying only a specific dollar threshold, where all programs exceeding the threshold would be considered major.
C.
Using a list of programs included in the work plan of the Office of the Inspector General.
D.
By applying a risk-based approach.,"Choice "D" is correct. 2 CFR 200 single audit allows auditors to use a risk-based approach to determine major grants.
Choice "A" is incorrect. Risk-based auditing allows auditors to test as little as 20 percent of total federal programs or as much as 40 percent of total federal programs, depending on circumstances and on the auditor's judgment.
Choice "B" is incorrect. Programs in excess of $750,000 are generally considered to be major grants; however, the dollar threshold is not the exclusive determinant of major programs.
Choice "C" is incorrect. The judgment of the Office of the Inspector General would not exclusively influence the selection of major programs."
Which of the following components is appropriate in a practitioner's report on the results of applying agreed-upon procedures?
A.
A title that includes the phrase "independent audit."
B.
A description of the procedures performed, related findings, and a description of any specified materiality threshold established for reporting exceptions.
C.
A statement that management is responsible for expressing an opinion.
D.
A statement that the practitioner acknowledged that the procedures performed are appropriate for their specific purpose. ,"Choice "B" is correct. It is appropriate to include a description of the procedures performed, related findings, and materiality thresholds in the practitioner's report in an agreed-upon procedures engagement.
Choice "A" is incorrect. A report on the results of applying agreed-upon procedures includes the term "independent" in the title, but does not include the term "audit" in the title.
Choice "C" is incorrect. An opinion is not expressed in a report on applying agreed-upon procedures. The practitioner provides a description of procedures and findings. Additionally, it is never appropriate for management to express an opinion.
Choice "D" is incorrect. The engaging party, and not the practitioner, is responsible for acknowledging the adequacy of the procedures performed and such statement is included in the practitioner's report. "
Government Auditing Standards published by the United States Government Accountability Office define standards associated with the following types of engagements:
A.
Financial audits, single audits, and program specific audits.
B.
Financial audits, attest engagements, and performance audits.
C.
Audits, reviews, and compilations.
D.
Financial audits, attest engagements, and program-specific audits.,"Choice "B" is correct. Government Audit Standards define three types of engagements: financial audits, attest engagements, and performance audits.
Choice "A" is incorrect. Single audits and program specific audits are defined by 2 CFR 200 and the Single Audit Act. Government Auditing Standards define standards for financial audits, attest engagements, and performance audits. GAGAS are used in conjunction with single audits.
Choice "C" is incorrect. Audits, reviews, and compilations are defined by generally accepted auditing standards, not generally accepted government auditing standards.
Choice "D" is incorrect. Program-specific audits are defined by 2 CFR 200 and the Single Audit Act. Government Auditing Standards define standards for financial audits, attest engagements, and performance audits."
In performing a financial statement audit in accordance with Government Auditing Standards, an auditor is required to report on the entity's compliance with laws and regulations. This report should:
A.
Provide negative assurance of the entity's legal compliance.
B.
Provide an opinion on overall compliance with laws and regulations.
C.
State that the audit should be planned to obtain reasonable assurance about whether noncompliance could have a material effect on the entity's programs.
D.
Describe the laws and regulations that the entity must comply with.,"Choice "C" is correct. Basic elements of a report on compliance include a statement that the audit should be planned to obtain reasonable assurance about whether noncompliance could have a material effect on the programs audited.
Choice "A" is incorrect. The report should specifically state that a compliance audit does not provide a legal determination of the entity's compliance.
Choice "B" is incorrect. The objective of the audit of the financial statements is not to provide an opinion on overall compliance with laws and regulations.
Choice "D" is incorrect. It is not necessary to describe the laws and regulations with which the entity must comply."
A report on internal control over compliance will include which of the following assertions?
A.
Disclaimer of opinion in the event that significant weaknesses are identified.
B.
An opinion as to whether internal controls were adequate to provide reasonable assurance that the organization would comply, in all material respects, with laws rules and regulations.
C.
Identification of material weakness in the event an adverse opinion is expressed.
D.
A disclaimer of opinion on internal control over compliance.,"Choice "D" is correct. The audit opinion states that the audit was conducted in order to express an opinion on compliance but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance.
Choice "A" is incorrect. The report disclaims an opinion on the effectiveness of internal control over compliance regardless of the status of reported weaknesses. Significant weaknesses are disclosed or referenced in a separate report.
Choice "B" is incorrect. The audit opinion states that the audit was conducted in order to express an opinion on compliance but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance.
Choice "C" is incorrect. Material weaknesses are identified as part of the report on internal control over compliance. No opinion on internal control over compliance (unqualified or adverse) is expressed."
A practitioner has been engaged to apply agreed-upon procedures in accordance with Statements on Standards for Attestation Engagements (SSAE) to prospective financial statements. Which of the following conditions must be met for the practitioner to finalize the engagement?
A.
The prospective financial statements include a summary of significant accounting policies.
B.
The practitioner takes responsibility for the sufficiency of the agreed-upon procedures.
C.
The practitioner reviews the findings and reaches an opinion based on the procedures performed.
D.
The engaging party acknowledges that the procedures performed were appropriate to meet the intended purpose of the engagement. ,"Choice "D" is correct. Prior to the issuance of the practitioner's report, the engaging party (normally the client) must acknowledge and agree that the procedures performed were appropriate to meet the intended purpose of the engagement.
Choice "C" is incorrect. The practitioner does not issue an opinion, but rather includes a description of the procedures performed and related findings, including any materiality threshold established. "
An independent auditor is issuing an audit report for a governmental entity and plans to issue separate reports on internal control over financial reporting and compliance with laws and regulations. The auditor should do which of the following?
A.
Issue the same opinion in each report.
B.
Report to the governing authority that separate reports will be issued.
C.
State in the audit report that separate reports will be issued.
D.
Obtain permission from the audit committee to issue separate reports.,"Choice "C" is correct. If an auditor decides to issue separate reports rather than a combined report on internal control over financial reporting and compliance with laws and regulations, then the auditor should state in the audit report that separate reports will be issued. This would appear as a paragraph entitled "Other Reporting Required by Government Auditing Standards" in the auditor's report.
Choice "A" is incorrect. The reports on internal control over financial reporting and compliance with laws and regulations may, but are not required by GAGAS to, contain an opinion. If they do contain an opinion, that opinion may be different from the financial statement opinion.
Choice "B" is incorrect. An auditor does not need to notify the governing authority when the auditor decides to issue separate reports rather than a combined report on internal control over financial reporting and compliance with laws and regulations
Choice "D" is incorrect. The auditor does not need permission from the audit committee to issue separate reports on internal control over financial reporting and compliance with laws and regulations."
Wolf is auditing an entity's compliance with requirements governing a major federal financial assistance program in accordance with Government Auditing Standards. Wolf detected noncompliance with requirements that have a material effect on the program. Wolf's report on compliance should express:
A.
Reasonable assurance on the compliance tests.
B.
A qualified or adverse opinion.
C.
No assurance on the compliance tests.
D.
An adverse or disclaimer of opinion.,"Choice "B" is correct. If material instances of noncompliance are identified, the auditor should express either a qualified or adverse opinion on compliance.
Choice "A" is incorrect. Reasonable assurance is provided on the entity's compliance with requirements of the major program (not on compliance tests.)
Choice "C" is incorrect. Assurance (in the form of an opinion) is provided on the compliance requirements for major programs.
Choice "D" is incorrect. If material instances of noncompliance are identified, a disclaimer of opinion is not appropriate."
An accountant has been engaged to review a nonissuer's financial statements that contain several material misstatements and management is unwilling to revise the financial statements. Under these circumstances, the accountant should:
A.
Determine the effects of the departures from GAAP and issue a special report on the financial statements.
B.
Express a disclaimer of opinion on the financial statements and advise the board of directors that the financial statements should not be relied on.
C.
Inform management that a review of the financial statements cannot be completed and request a change from a review to a compilation engagement.
D.
Issue a "Qualified" or "Adverse" conclusion depending on the facts and circumstances of the misstatements.,"Choice "D" is correct. If material misstatements are found and management is unwilling to revise the financial statements, the accountant should issue a modified conclusion in the Accountant's Review Report.
Choice "A" is incorrect. A special report refers to an audit report on financial statements that are prepared in conformity with a comprehensive basis of accounting other than generally accepted accounting principles, specified elements, accounts, or items of a financial statement, compliance with aspects of contractual agreements or regulatory requirements related to audited financial statements, financial presentations to comply with contractual agreements or regulatory provisions, or financial information presented in prescribed forms or schedules that require a prescribed form of auditor's reports. Special reports are not issued in review engagements.
Choice "B" is incorrect. A disclaimer of opinion is a report that can be issued when conducting an audit and is not appropriate for reports issued in accordance with SSARs.
Choice "C" is incorrect. Management's unwillingness to revise the financial statements is not a reasonable basis for requesting a change in the engagement. Note also that the entity should request the change in the engagement, not the accountant."
Which correctly describes the relationship between the PCAOB and the SEC?
A.
The PCAOB is a subsidiary of the SEC, tasked with registering public accounting firms, establishing rules relating to the preparation of audit reports, and conducting inspections, investigations, and disciplinary proceedings.
B.
The PCAOB is subject to oversight by the SEC, and only accounting firms registered with the PCAOB may prepare audit reports for SEC issuers.
C.
The SEC is subject to the oversight of the PCAOB with respect to the registration of public accounting firms that prepare audit reports for issuers.
D.
The SEC is subject to the oversight of the PCAOB with respect to conducting inspections, investigations, and disciplinary proceedings.,"Choice "B" is correct. The PCAOB is subject to oversight by the SEC, and only accounting firms registered with the PCAOB may prepare audit reports for SEC issuers.
Choice "A" is incorrect. The PCAOB is not a subsidiary of the SEC. It is, however, tasked with registering public accounting firms, establishing rules relating to the preparation of audit reports, and conducting inspections, investigations, and disciplinary proceedings.
Choices "C" and "D" are incorrect. The SEC is not subject to the oversight of the PCAOB."