Auditing & Corporate Governance Flashcards

Which of the following BEST describes 'performance auditing' in the public sector?

Answer: Evaluating economy, efficiency, and effectiveness of government programs

Performance auditing (value-for-money auditing) examines whether government programs achieve their intended outcomes economically, efficiently, and effectively.

Under GAGAS, independence is required for which types of engagements?

Answer: All GAGAS audit and attestation engagements

GAGAS requires auditors to be independent for all audit and attestation engagements, covering financial, performance, and attestation work.

A government auditor discovers that a program manager has not complied with a federal grant requirement. This finding should be reported as a:

Answer: Instance of noncompliance

Failure to comply with laws, regulations, or grant requirements is classified and reported as noncompliance in government audit reports.

The Sarbanes-Oxley Act (SOX) Section 404 requirement for management to assess internal controls over financial reporting most directly influenced public sector auditing by:

Answer: Raising expectations for internal control documentation and testing in government entities

SOX's rigorous internal control assessment standards raised the bar for documentation and testing expectations in both private and public sector contexts.

Which reporting element is unique to government audit reports under GAGAS compared to private sector audit reports?

Answer: Statement on compliance with laws and regulations

GAGAS requires auditors to report on compliance with laws, regulations, and provisions of contracts or grant agreements, which is not standard in private sector audits.

In a government entity, 'segregation of duties' is primarily designed to:

Answer: Prevent or detect errors and fraud by dividing key tasks among different individuals

Segregation of duties divides authorization, custody, and recordkeeping among different individuals so no single person can commit and conceal errors or fraud.

Which international framework specifically guides public sector governance and was developed by the International Organisation of Supreme Audit Institutions (INTOSAI)?

Answer: ISSAI (International Standards of Supreme Audit Institutions)

INTOSAI developed the ISSAIs, which provide the international standards framework for supreme audit institutions and public sector auditing worldwide.