MCQ Flashcards

Which type of government audit focuses on whether programs are achieving their intended results?

Answer: Performance audit

Performance audits examine whether government programs are effective, efficient, and achieving their stated objectives.

Under the Yellow Book, which standard requires auditors to report all known or likely fraud affecting the financial statements?

Answer: Reporting standards

Yellow Book reporting standards require auditors to communicate fraud findings that are material to the financial statements.

A government auditor discovers that a department head has been approving her own expense reimbursements. This is best described as:

Answer: A segregation of duties weakness

Allowing one person to both initiate and approve transactions violates the segregation of duties internal control principle.

In government auditing, 'materiality' for a compliance audit is typically determined based on:

Answer: Quantitative and qualitative factors related to the specific law or regulation

Compliance audit materiality considers both quantitative thresholds and qualitative factors such as the sensitivity of the legal requirement.

Which element is NOT typically included in a government audit report prepared under GAGAS?

Answer: Management's corrective action plan

Management's corrective action plan may be included as a response but is not a required element of the auditor's report under GAGAS.

The concept of 'economy' in government performance auditing refers to:

Answer: Acquiring resources at the lowest appropriate cost

Economy means acquiring the right resources in the right quantity and quality at the best price at the right time.

When a CGAP auditor identifies a significant deficiency in internal controls, the auditor must:

Answer: Communicate it in writing to management and those charged with governance

GAGAS requires written communication of significant deficiencies to management and those charged with governance.