CGAP MCQ 3

Question 1

Which of the following best describes 'inherent risk' in a government audit context?

Accepted Answer

Risk of material misstatement absent any controls

Answer

Inherent risk is the susceptibility of an assertion to misstatement before considering any related internal controls.

Question 2

A government auditor uses stratified sampling to test grant disbursements. The primary advantage of this approach is:

Accepted Answer

It allows more efficient coverage of high-risk strata

Answer

Stratified sampling divides the population into subgroups so auditors can apply greater scrutiny to higher-risk or higher-value items.

Question 3

Under the Single Audit Act, the threshold for a program to be considered a major federal program is based on:

Accepted Answer

The program's risk classification combined with expenditure thresholds

Answer

Major program determination under the Uniform Guidance uses a risk-based approach combining Type A/B classification with risk assessment and expenditure coverage percentages.

Question 4

Which ethical principle requires a CGAP auditor to avoid situations where personal relationships could compromise audit judgment?

Accepted Answer

Independence

Answer

Independence requires auditors to be free from personal, external, and organizational impairments that could compromise their objectivity.

Question 5

A government entity uses fund accounting primarily to:

Accepted Answer

Demonstrate compliance with legal restrictions on resource use

Answer

Fund accounting segregates resources into separate accounting entities to demonstrate that legally restricted funds are used only for their intended purposes.

CGAP - Certified Government Auditing Professional Practice Test

CGAP - Certified Government Auditing Professional Practice Test

CGAP MCQ 3