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If officials of the audited entity do not have such a process, auditors may wish to establish their own process.

When the audited entity does not have a process, auditors may wish to use their own.

When the process does not exist, the auditors cannot proceed.

Although all the facts are not known, it is perplexing how such a basic error involving billions of dollars could go undetected by the auditors.

A billion-dollar error was undetected by the auditors.

The auditors have never failed to detect an error.

Such work, like other performance audits, involves a level of analysis, research, or evaluation; may provide conclusions and recommendations; and results in a report.

Results, conclusions and recommendations are included in the report.

And results in a report.

A variety of outside players other than auditors have been involved in and bear differing degrees of responsibility for some of the recent business failures.

Outside players other than auditors have been working on things with little or lots responsibility.

Outside players other than auditors have been working on things with no responsbility.

Auditors should also send copies of the reports to other officials who have legal oversight authority or who may be responsible for acting on audit findings and recommendations and to others authorized to receive such reports.

Copies of the reports should also be sent, by auditors, to other officials who have legal oversight authority, those who may be responsible for acting on audit findings and recommendations, and also to others authorized to receive such reports.

Auditors should not make or send out copies of the reports, and should only keep the original reports.

Currently, outside auditor reports are not required to provide any level of assurance with regard to key internal controls.

Outside auditor reports don't have to have any level of assurance.

Outside auditor reports have a strict level of assurance.

does the subsequent discovery of such acts committed during the audit period necessarily mean that the auditors' performance was inadequate, provided the audit was made in accordance with these standards.

Discovering such acts committed during the audit might mean the auditor's performance was lacking.

Discovering such acts committed during the audit does not mean the auditor's performance was lacking.

Other immediate priorities should be setting up an inspection function of auditors that audit SEC registrants and determining how standards that govern the work of the accounting profession, such as auditor independence rules and standards for conducting audits, should be set.

One immediate priority should be the creation of an inspection function for SEC registrants.

Auditor rules and standards are unimportant, and should not be viewed as a priority.

These issues have continued to plague the accounting profession since the 1970s despite actions taken by the profession to narrow the so-called expectation gap between what the public expects or needs and what auditors can and should reasonably be expected to accomplish.

The problems have continued to plague the accounting profession since the 1970s.

After the 1970s, there were no longer any problems that plagued the accounting profession.

The auditors' understanding may come from knowledge they already have about the program or knowledge they gain from inquiries and observations they make in planning the audit.

The auditors' understanding might come from the knowledge that they have about the program.

The auditors' understanding cant just come from the knowledge that they have about the program.

Historically, participants felt that auditor communication with audit committees has been variable.

Participants felt auditor communication was variable

Auditor communication was stable

The significance of a matter is its relative importance to the audit objectives and potential users of the audit report.

It's significance is based on it's importance to the audit's objectives and users.

It doesn't matter if something is important to the audit's objectives.

However, audits performed in accordance with GAGAS are subject to review by other reviewers and by oversight officials more frequently than audits done in accordance with AICPA standards.

More oversight is necessary to be in subjection to GAGAS standards.

There is no need to implement additional audits in accord with GAGAS as compared with AICPA.

In addition, disclosures, such as those required to be reported to the SEC on Form 8-K,9 should be improved to be more transparent and helpful to regulators in determining the reasons and circumstances surrounding auditor changes.

Disclosures should be made more transparent.

The disclosure process no longer exists.

Based on that risk assessment, the auditors design and perform procedures to provide reasonable assurance of detecting

The auditors design and perform procedures based on that risk assessment.

The auditors design and perform procedures not based on that risk assessment.

Auditors should report fraud, illegal acts, or other material noncompliance.

Auditors have a duty to report fraud.

The Auditors should not report fraud.

Management Report on Audit Reports Issued During The Six Month Period Ending March 31, 2001, With Recommendations That Funds Be Put to Better Use By Management Agreed to in a Management Decision

Management has agreed to put the musings into proper decisions.

Management does not abide by the rules of audit.

In the absence of an audit report, auditors should also write a memorandum for the record that summarizes the results of the work to the date of termination and explains why the audit was terminated.

When there is no audit report there needs to be another form that explains why the audit stopped.

In the absence of an audit report, no addition paperwork is required.

If it could, the auditors should extend the audit steps and procedures, as necessary, (1) to determine if the abuse occurred and (2) if so, to determine its effect on the audit results.

The auditors should extend the audit steps.

The auditors should never extend the audit steps.

In keeping with their role as advisors and facilitators, most of the security managers said that they relied significantly on auditors to test controls.

Most security managers stick to their established roles and let the auditors handle the control testing.

Recent budget cuts have necessitated the expansion of our security managers' roles to include testing functions.

However, because the determination of abuse is so subjective, auditors are not expected to provide reasonable assurance of detecting it.

The determination of abuse is very subjective.

The determination of abuse is not very subjective.

He noted that he prefers the AUDIT.

He prefers the audit.

He would rather not have an audit, he does not prefer them.

For example, what type of assurances are needed for nonfinanical information and can auditors provide such assurances?

Someone wants to know what information is needed for auditors.

Auditors are prohibited from sharing nonfinancial information.

Auditors should also send copies of the reports to other officials

Other officials should receive copies of auditor reports.

Auditors should keep their reports all to themselves.

In fact, the high court once became embroiled in a dispute with the auditor general's office over whether the auditor could examine IOLTA funds because they were not in a state account.

The high court had a dispute with the auditor general's office about the auditor being able to examine IOLTA funds.

The auditor general's office has always had the right to to examine IOLTA funds.

However, participants generally agreed that while the accounting profession needs to take additional steps to address any misunderstanding as to the limits of an audit, there is room to improve the audit process and auditor reporting.

Participants generally agreed that there is room to improve the audit process.

Participants generally agreed that there is not room to improve the audit process.

Auditors should determine whether officials of the audited entity have taken appropriate corrective actions on known reported significant findings and recommendations.

Auditors have a requirement to do certain checks.

The auditors determine if the entity is wrong.

Auditors may include such information in their audit report or may prepare a separate report.

Auditors can show things in their audit report or something otherwise.

Auditors don't make reports.

Participants generally agreed that the profession needs a new reporting model for audits to eliminate the misunderstanding as to what an audit of financial statements is and what its limits are.

In order to eliminate confusion about the benefits and limitations of an audit of financial statements, conference attendees argued their profession needs a new reporting model.

The participants have no difficulties in understanding audits of financial statements and are very clear on both the process and the results.

PERFORMANCE AUDITS

Auditing performance.

No audits will be conducted.

The NEPDG carried out many activities, the results of which are subject to evaluation by GAO under the plain meaning of the statute.

NEPDG conducted activities subject to investigation by GAO.

The NEPDG is an auditing body which regulates business activities.

The engagement team generally should not finalize the audit plan or issue a commitment letter until it has done initial testing and reviewed existing information about the data and the system that produces the data.

The engagement team should do the initial testing.

The engagement team should finalize the audit plan without doing any prep work.

specific tests of the effectiveness of internal control and consider the results in designing audit procedures.

Tests were conducted to see the effectiveness of control.

The results are not used in audit procedures.

However, regardless of how far the acquisition has advanced, at a minimum the auditor should always ascertain whether senior managers and users were involved in the project's initiation.

The auditor should determine who was involved in starting up the project.

Auditors should only focus on current performance without regard to project launches.

Participants also focused on the roles of the nominating, compensation, and audit committees noting that (1) nominating committees need to independently identify candidates for board membership rather than rubber stamp management's candidates, (2) compensation committees need to focus more on achievements related to the company's long-term strategic objectives and less on short-term accomplishments, such as meeting earnings projections, and (3) audit committees need to work more effectively with the independent auditor as defined by the Sarbanes-Oxley Act of 2002, and not get tied up in procedural matters concerned with their legal liabilities as committee members.

Participants focused on nominating committees' roles.

Participants ignored the committees' roles

In that respect, the financial audit is considered the loss leader in many audit organizations with a focus on cutting hours and costs and as a means to obtain consulting engagements.

Many auditing organizations consider financial audits to be a loss leader.

All auditing organizations consider financial audits to be money making opportunities.

The agency's work reflects integrity because it is professional, objective, factbased, nonpartisan, nonideological, fair and balanced.

The agency's work is ethical, professional and fair.

The agency is very crooked and its work reflects this.

One participant explained that there are a lot of things an audit cannot do.

An audit can't do everything.

An audit can do everything.

Underlying GAGAS audits is that federal, state, and local governments and other organizations cooperate in auditing programs of common interest so that the auditors may use others' work and avoid duplicate audit efforts.

The audits have an underlying theme that allows authors to use other's work.

There is no program in place to ensure that one author doesn't duplicate the work of another author.

However, auditors do not provide absolute assurance and the scope of the opinion is limited to certain financial-related information.

Auditors don't give total assurance to the accuracy.

Auditors give total assurance to the accuracy.

If the results of such work is current, auditors may be able to rely on that work.

If the results are current, auditors can rely on the work.

If the results are outdated, auditors can rely on the work.

Auditors should prepare audit reports communicating the results of each audit.

Auditors should communicate the results of the audit.

Auditors should not prepare audit reports for any audits.

An auditor should use this guide to identify areas that are most likely to result in technical failures, unmet user needs, cost overruns, or schedule delays.

By falling the procedures herein an auditor can pinpoint areas of potential failure including increased costs, poor system usability and inability to meet deadlines.

The auditor should ignore these guidelines.

One example of this is in connection with what type of non-audit or consulting services that outside audit firms can provide to their audit clients and still maintain their independence.

Some consulting services are provided by outside audit firms.

Some consulting services are provided by internal audit firms.

When providing an opinion on financial statements, auditors should include in their report on the financial statements either a (1) description of the scope of the auditors' testing of compliance with laws and regulations and internal control over financial reporting and the results of those tests or an opinion, if sufficient work was performed; or (2) reference to the separate report(s) containing that information.

The auditors can give their opinion on the financial statements.

The auditors need not include the scope of testing ever.

Auditors should also report significant constraints imposed on the audit approach by data limitations or scope impairments.

Significant constraints imposed on the audit approach should be reported by auditors.

Significant constraints imposed on the audit approach would only lead to more troubles if reported by auditors.

Auditors should design the audit to provide reasonable assurance of detecting material misstatements of financial statements or other financial data resulting from noncompliance with provisions of contracts or grant agreements that have a direct and material effect on the determination of financial statement amounts.

Auditors should design the audit to provide certain things.

Auditors do not need to design an audit at all.

In reporting on deficiencies in internal control, auditors should identify those that are individually or in the aggregate considered to be material weaknesses.

Auditors should report anything that might be a material weakness.

Auditors do not need to report on material weaknesses.

Auditors should, however, follow the report distribution standard.

Auditors should use the report distribution standard.

Auditors should use another standard in place of the report distribution standard.

The auditors should, when appropriate, consult with legal counsel regarding any requirements or other circumstances that may necessitate the omission of certain information.

Sometimes circumstances may require that certain information be omitted.

All information must be included no mater what the circumstances.

AICPA standards provide guidance for auditors who use the work of a specialist who is not a member of their staff.

Auditors get some of their guidance from the AICPA.

The AICPA does not deal with auditors or the auditing process.

, dollars, impact, purposes, and past audit work if relevant), a description of the audited entity's responsibilities, and explanation of terms, organizational structure, and statutory basis for the program/operations.

Descriptions of audited entities responsibilities, and explanation of terms and organization of the program or operations.

Non-descriptions of audited entities responsibilities, and no explanation of terms and organization of the program or operations.

In 1980, most of the agency's auditors and management analysts were reclassified as evaluators to reflect GAO's varied work.

The GAO reclassified most of its auditors as evaluators in 1980.

The GAO decided to continue classifying management analysis as auditors.

Finally, for financial audits and information system reviews, you should not follow this guidance in assessing data reliability.

This guidance shouldn't be used when assessing the reliability of the data in a financial audit.

This guidance can be applied in any situation including during an information system review.

Further, such documentation must be complete before auditors issue their report.

Before auditors issue their report their documentation must be finished.

The documentation does not need to be complete for the auditors to issue a report.

3.1, November 1999), which incorporates the relevant guidance developed by COSO, provides definitions and fundamental concepts pertaining to internal control at the federal level and may be useful to auditors at any level of government.

These concepts and definitions may be useful to auditors at any level.

There are no relevant guidelines developed by COSO; they were all found to be useless and were deleted.

In such circumstances, auditors should also include audit documentation regarding their reasons for concluding that the planned audit procedures are effectively designed to achieve specific audit objectives.

Auditors should include documentation that supports their reasons for their conclusions.

Auditors need not include documentation that supports their reasons for their conclusions.

7.32 Auditors should communicate information about the specific nature of the audit, as well as general information concerning the planning and conduct of the performance audit, to the various parties involved in the audit to help them understand the objectives, time frames, and any data needs.

Auditors should communicate information about their audit and also general information about the planning and conduct of the audit.

Auditors should communicate information about their audit but not provide general information about the planning and conduct of the audit.

The auditor should also verify that the agency has defined its needs and requirements to support its mission, and that those requirements continue to be valid as the acquisition progresses through contract award and contract management.

The agency defining it's needs should also be verified by the auditor.

The agency defining it's needs should never be verified by the auditor.

For example, the quality of parts received by an activity, or the degree of complexity of tax returns to be reviewed by the IRS.

Quality of parts of tax returns are reviewed by the IRS

The IRS doesn't review quality of parts

The need to maintain public accountability for government program demands that audit reports be retrievable.

They need to be accountable in their audit reports.

They need to be accountable in their financial reports.

An additional reporting standard for financial audits performed in accordance with GAGAS

There was an additional report for financial audits performed.

The financial audits never had any reporting.

Other potential users of the auditors' report include government legislators or officials (other than those who may have authorized or requested the audit), the media, interest groups, and individual citizens.

Many different groups and individuals might make use of the audit.

The report may not be used by any public or private groups.

The audit plan, where possible, should state the criteria to be used.

The criteria being used for the audit plan should ideally be stated.

The criteria being used for the audit plan should never be stated.

Appendix Management Metrics 68 Appendix Reference Materials 80 Appendix Major Contributors to This 86Audit Guide Glossary 87

The appendix shows major contributors to the audit.

The appendix shows only the main contributor.

For example, reviewing the work output of the employee and occasional phone call or visits to the employee.

Someone can review the work output of the employee and occasionally call and visit them.

One should never review the work output of an employee.

It was viewed that one of the more positive outcomes of the Sarbanes-Oxley Act of 2002 is the relationship the act establishes between the auditor and audit committee by making the audit committee in essence the client, versus company management.

There is a relationship between auditors and committees.

There is no relationship between auditors and committees.

Under GAGAS, auditors have the same responsibilities for detecting material misstatements arising from other types of noncompliance as they do for detecting those arising from fraud and illegal acts.

Auditors have multiple responsibilities.

Auditors do not have any responsibilities.

The extent and breadth of those inquiries and observations will vary among audits based on the audit objectives, as will the need to understand individual aspects of the program, such as the following.

The inquiries' extent will vary depending on what the audit is looking for.

The inquiries' extent will always be consistent.

For example, the guide assists auditors in determining how an agency identified and defined its requirements.

Auditors are assisted by the guide in determining how an agency identified and defined its requirements.

Auditors are never assisted by the guide in determining how an agency identified and defined its requirements, they have to do it on their own.

Audit Objectives To determine whether or not the solicitation document is complete, clear, and consistent, verify that requirements continue to reflect user needs, and determine if the proposed evaluation process will result in an effective and economical acquisition.

Steps are supposed to be taken in order to make sure the document is complete, clear, and consistent.

There are no measures in place to help ensure and effective acquisition.

After audit work is complete, the auditors compare their findings with management's original assertions to see if management was generally aware of all of the weaknesses prior to the audit.

Part of the auditing process consists of auditors comparing their findings to management's self-assessment.

After the audit work is complete, the auditors divide their findings by management's original scores.

5 Users often equate a clean audit opinion with a seal of approval that fraud does not exist and annual reports are both complete and accurate.

There is possibility that fraud does not exist and reports are accurate.

Seal of approval does not bring any meaning to reports.

AUDIT DOCUMENTATION

Documents relating to the audit.

Audit explanations.

Auditors should design the audit to provide reasonable assurance of detecting material misstatements resulting from direct and material noncompliance with provisions of contracts or grant agreements.

Auditors should consider the need to detect material misstatements.

Auditors should play no role in the design of audits.

Some participants believed a periodic forensic audit may be needed to supplement the traditional financial statement audit to assist in detecting fraud.

Some of the participants thought that a regular forensic audit may help in identifying fraud.

All participants believed that traditional financial statements are enough for identifying fraud.

that the auditors expect to develop.

The auditors have expectations to develop that.

The auditors lack expectations to develop that.

When using these references, summarized below, auditors should ensure that the most current version available is used.

Auditors need to utilzie the most recent reference document available.

It's ok for auditors to use whatever version of a reference document they want.

the evidence that supports the auditors' significant judgments and conclusions.

Evidence supporting the auditors' significant conclusions and judgments.

Therre is no evidence that supports the auditors' significant judgments and conclusions.

Officials of the audited organization are responsible for resolving audit findings and recommendations directed to them and for having a process to track their status.

The officials need to have a process to track their status.

They do nothing to the audit findings.

Audit organizations also have the important responsibility for ensuring that auditors can meet their responsibilities.

Ensuring that auditors are able to take care of their responsibilities is one of the responsibilities audit organizations are tasked with.

Helping auditors meet their responsibilities isn't the audit organization's responsibility.

In addition, the National Audit Office (NAO) in the United Kingdom uses the review results in its annual audits of DWP's financial statements.

NAO uses the results in it's annual audits of financial statements.

They do not use the review results.

The fourth field work standard for performance audits

Performance audits have field work standards.

Performance audits have no field work standards.

In these cases, the central security management groups kept track of audit findings related to information security and the organization's progress in implementing corrective actions.

The central security management groups kept track of audit findings.

The audit findings did not cover the organization's progress in implementing corrective actions.

Also, decisions need to be made on the setting of standards for auditing, quality control, ethics, and independence.

Auditing, quality control, ethics and independence standards must be set.

There is no need for decision making regarding auditing or quality control.

However, participants agreed that auditors should be more skeptical and should say no and walk away from clients more often than they currently do.

The participants all agreed that auditors should be more willing to walk away from prospective clients than they have been so far.

Participants were divided on the question of whether more auditors needed to simply say "no"

3. On the basis of the above audit steps and oncontacts with other project officials, determine

Both audit steps and contacts with other project officials were used.

No sources were used to develop the conclusion.

Auditors must be independent both in fact and appearance in order to be credible.

Auditors must not appear to be improper or they will lose credibility.

Auditors can appear to be corrupt without damaging their credibility.

These audit objectives are often interrelated and may be concurrently addressed in a performance audit.

A performance audit may concurrently address the interrelated objectives.

Each audit objective is separate and must be addressed individually.

Audit documentation allows for the review of audit quality by providing the reviewer documentation, either in written or electronic formats, of the evidence supporting the auditors' significant judgments and conclusions.

Audit documentation lets you review audits by giving the documentations that helped create the audit.

Audit documentation does not let you review audits by giving the documentations that helped create the audit.

Some participants believed that the existing inspection process could be improved by looking less at the accounting firms' internal systems for quality control and more at the quality of the judgments that were made by the auditors in conducting the audit.

Current inspection practices involve reviewing an accounting firms internal quality control systems.

Nobody thinks that the quality of judgments made by auditors should be reviewed.

In reporting the audit objectives, auditors should explain why the audit organization undertook the assignment and state what the report is to accomplish, and why the subject matter is important.

In reporting the objectives auditors should explain why their organization undertook the assignment and state what the report is to accomplish and the importance of the subject matter.

In reporting the objectives auditors should not explain why their organization undertook the assignment and state what the report is to accomplish and the importance of the subject matter.

In that respect, the role of the audit committee, which in some cases has not been very active or effective in its oversight of management or auditors as related to financial reporting, is evolving into not just financial management oversight, but the overall aspects of the company's financial reporting, such as releases on earnings expectations and quarterly financial reports.

The audit committee has not always handled management or auditors in financial reporting effectively, but its role is now becoming involved in releases on earnings expectations and quarterly financial reports, both overall aspects of the company's financial reporting, in addition to financial management oversight.

The audit committee is evolving to include more than financial management oversight because it has a history of serving the company effectively when overseeing management and auditors as related to financial reporting.

2.9 Program effectiveness and results audit objectives address the effectiveness of a program and typically measure the extent to which a program is achieving its goals and objectives.

Audit objectives address how many goals the program has achieved.

Audit objectives only focus on how happy employees are with their work environment.

Two types of misstatements are relevant to the auditors' consideration of fraud in an audit of financial statements- misstatements arising from fraudulent financial statements and misstatements arising from misappropriation of assets.

Misappropriation of assets can lead to misstatements, which are relevant to auditors.

Misstatements can never arise from misappropriation of assets.

The auditor should conclude the review by identifying outstanding areas of risk and the agency's actions to address those risks.

Potential problem areas should be pointed out by the auditor during the conclusion of the review.

Auditors shouldn't bother summarizing potential problem areas at any point of the report.

review processes and the appropriate level of oversight for owners of

Review the processes and levels of oversights for owners.

Ignore all oversights and processes.

Performance audits encompass a wide variety of

The audits pertain to performance.

The audits were from a small variety.

Computer-processed data, often from external sources, increasingly underpin audit reports, including evaluations (performance audits) and financial audits.

Computer-processed data is more and more likely to underpin audit reports.

Computer-processed data is not able to underpin audit reports.

An audit report is improved when it provides sufficient contextual sophistication to reflect an understanding of the issues and an awareness of the external environment, including sensitivity to relevant trends.

With enough contextual sophistication, the audit report is improved.

An audit report cannot reflect an understanding of the issues.