CGAP CGAP 4 — Questions and Answers
Question 1: A performance auditor finds that a government program spends the same amount as comparable programs but achieves far better outcomes. This best illustrates:
- Effectiveness (Correct answer)
- Economy
- Efficiency
- Compliance
Correct answer: Effectiveness
Effectiveness measures the extent to which a program achieves its intended results, regardless of cost comparisons.
Question 2: Which characteristic of audit evidence refers to its pertinence to the audit objective?
- Relevance (Correct answer)
- Sufficiency
- Reliability
- Validity
Correct answer: Relevance
Relevance describes how well evidence relates to and supports the audit objectives and conclusions.
Question 3: When an auditee provides a written response to a draft audit report, the auditor's responsibility is to:
- Include the response in the final report and evaluate whether it warrants changes to findings (Correct answer)
- Accept all explanations and remove contested findings
- Ignore responses that dispute factual findings
- Submit the response to the legislature without comment
Correct answer: Include the response in the final report and evaluate whether it warrants changes to findings
GAGAS requires auditors to include auditee responses in final reports and assess whether responses warrant revisions to findings.
Question 4: Which type of sampling is most appropriate when the auditor wants every item in the population to have an equal chance of selection?
- Simple random sampling (Correct answer)
- Stratified sampling
- Cluster sampling
- Judgmental sampling
Correct answer: Simple random sampling
Simple random sampling gives every item in the population an equal probability of being selected, making results projectable to the population.
Question 5: Under GAGAS, a nonaudit service that would impair independence is one that:
- Places the auditor in the role of management or creates a situation where the auditor audits their own work (Correct answer)
- Provides training to auditee staff on accounting software
- Assists in preparing a schedule that is not subject to audit
- Involves reviewing draft financial statements for obvious errors only
Correct answer: Places the auditor in the role of management or creates a situation where the auditor audits their own work
Nonaudit services impair independence when they result in the auditor performing management functions or subsequently auditing their own work.
Question 6: A government auditor identifies abuse during a performance audit. Abuse is best described as:
- Behavior that is deficient or improper compared to reasonable practice, even if not illegal (Correct answer)
- Any criminal act by a government employee
- A violation of federal statutes only
- A material weakness in internal control
Correct answer: Behavior that is deficient or improper compared to reasonable practice, even if not illegal
Abuse involves behavior that is unreasonable, improper, or wasteful compared to sound management practices, even if not technically illegal.
Question 7: Which body issues the Generally Accepted Government Auditing Standards (GAGAS) used in the United States?
- U.S. Government Accountability Office (GAO) (Correct answer)
- Office of Management and Budget (OMB)
- American Institute of CPAs (AICPA)
- Institute of Internal Auditors (IIA)
Correct answer: U.S. Government Accountability Office (GAO)
GAGAS, commonly called the Yellow Book, is issued by the Comptroller General of the United States through the GAO.
CGAP CGAP 4
A performance auditor finds that a government program spends the same amount as comparable programs but achieves far better outcomes.
This best illustrates: