CGAP Types of Auditing 3 — Questions and Answers
Question 1: A state auditor general's office is reviewing all expenditures of a state agency over a five-year period to evaluate both financial accuracy and whether the agency met its legislative mandates. This engagement combines which two audit types?
- Financial and compliance audits (Correct answer)
- Compliance and economy audits
- Performance and investigative audits
- Attestation and operational audits
Correct answer: Financial and compliance audits
Reviewing financial accuracy is a financial audit, while checking adherence to legislative mandates is a compliance audit; both can be combined.
Question 2: Under Government Auditing Standards, which type of engagement is defined as one where the auditor expresses a conclusion about a subject matter based on criteria agreed upon by the practitioner and the engaging party?
- Financial audit
- Performance audit
- Attestation engagement (Correct answer)
- Agreed-upon procedures engagement
Correct answer: Attestation engagement
An attestation engagement involves the auditor expressing a conclusion on subject matter against agreed criteria, distinct from a full audit opinion.
Question 3: The primary purpose of an economy and efficiency audit is to determine:
- Whether financial statements are free from material misstatement
- Whether the entity is using resources with minimum waste at an appropriate quality level (Correct answer)
- Whether the program is achieving its intended goals and objectives
- Whether the entity is complying with applicable laws
Correct answer: Whether the entity is using resources with minimum waste at an appropriate quality level
Economy and efficiency audits assess whether resources are acquired and used with minimum waste while maintaining appropriate quality.
Question 4: A government auditor issues a report concluding that a housing agency's internal controls over rent collection are not adequate to detect errors. This finding most likely comes from which audit type?
- Compliance audit
- Financial audit (Correct answer)
- Performance audit
- Program results audit
Correct answer: Financial audit
Evaluating internal controls over financial processes such as rent collection is a core element of financial audits.
Question 5: When an auditor assesses a government program's impact on target beneficiaries and compares outcomes to program goals, the auditor is conducting a:
- Compliance audit
- Financial audit
- Program results audit (Correct answer)
- Attestation engagement
Correct answer: Program results audit
A program results audit (a form of performance audit) evaluates whether a program is meeting its intended goals and benefiting its target population.
Question 6: Which of the following is a distinguishing feature of investigative audits compared to other government audit types?
- They are always conducted by external auditors
- They are primarily focused on detecting and documenting potential fraud, waste, or abuse (Correct answer)
- They always result in criminal referrals
- They follow performance audit standards exclusively
Correct answer: They are primarily focused on detecting and documenting potential fraud, waste, or abuse
Investigative audits are specifically aimed at detecting, documenting, and reporting suspected fraud, waste, or abuse in government operations.
Question 7: A state auditor conducts an engagement to verify that a contractor accurately reported costs reimbursed under a cost-plus contract with the government. This is best classified as:
- Performance audit
- Contract audit (Correct answer)
- Program results audit
- Attestation engagement
Correct answer: Contract audit
A contract audit examines contractor costs and compliance with contract terms, especially under cost-reimbursement arrangements.
CGAP Types of Auditing 3
A state auditor general's office is reviewing all expenditures of a state agency over a five-year period to evaluate both financial accuracy and whether the agency met its legislative mandates.
This engagement combines which two audit types?