Internal Controls and Government Auditing Flashcards

Which publication defines the standards for internal control in the federal government, commonly known as the 'Green Book'?

Answer: GAO's Standards for Internal Control in the Federal Government

GAO's Standards for Internal Control in the Federal Government, known as the 'Green Book,' provides the framework for federal agencies to establish and evaluate internal controls.

What are the five components of internal control identified in the Green Book?

Answer: Control Environment, Risk Assessment, Control Activities, Information and Communication, Monitoring

The five components are Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring, aligned with the COSO framework.

Which law requires federal agencies to annually assess and report on the effectiveness of their internal controls over financial reporting?

Answer: Federal Managers' Financial Integrity Act of 1982

The Federal Managers' Financial Integrity Act (FMFIA) of 1982 requires agency heads to annually evaluate and report on the adequacy of their internal control and financial systems.

What is the purpose of the Single Audit Act?

Answer: To require non-federal entities that expend significant federal awards to undergo a comprehensive audit

The Single Audit Act requires states, local governments, and non-profit organizations that expend $750,000 or more in federal awards annually to have a single, organization-wide audit.

In government auditing, what does 'GAGAS' stand for?

Answer: Generally Accepted Government Auditing Standards

GAGAS stands for Generally Accepted Government Auditing Standards, also known as the 'Yellow Book,' issued by GAO for audits of government entities and federally funded programs.

What is a 'material weakness' in the context of internal controls?

Answer: A deficiency or combination of deficiencies that creates a reasonable possibility of a material misstatement not being prevented or detected

A material weakness is a significant deficiency in internal controls such that there is a reasonable possibility of a material misstatement in financial statements going undetected.