Auditing & Investigations Flashcards

An OIG audit team identifies a material weakness in an agency's financial management system. Which statement BEST describes a material weakness?

Answer: A control deficiency where the design or operation of a control does not allow management to prevent or detect misstatements on a timely basis

A material weakness is a significant control deficiency, or combination of deficiencies, such that there is a reasonable possibility that a material misstatement will not be prevented or detected timely.

Under the False Claims Act, the 'qui tam' provision allows:

Answer: Private citizens to file civil fraud suits on behalf of the government and share in any recovery

The qui tam provision allows private individuals (relators) to sue on the government's behalf for false claims and receive a percentage of recovered funds as a financial incentive.

During an investigation, an OIG special agent conducts a non-custodial interview of a federal employee subject. Which statement about Miranda warnings is correct?

Answer: Miranda warnings are required only when the subject is in custody and questioned about criminal matters

Miranda warnings are constitutionally required only when a person is in custody (or its equivalent) and subject to interrogation about potential criminal matters.

The 'net worth method' used in fraud investigations is primarily designed to:

Answer: Detect unreported income by comparing increases in net worth to reported income

The net worth method identifies potential unreported income by calculating unexplained increases in a subject's net worth that exceed their reported income sources.

An OIG concludes an investigation and determines the allegations are 'unsubstantiated.' This disposition means:

Answer: The investigation found insufficient evidence to prove or disprove the allegation

An 'unsubstantiated' finding means the investigation did not develop sufficient evidence to confirm or refute the allegation—it is not the same as a finding of innocence.

Which concept describes the OIG's responsibility to follow up on previously issued audit recommendations?

Answer: Resolution and closure

Resolution and closure is the process by which OIGs track management's implementation of audit recommendations to ensure corrective actions are completed.

Under GAGAS, 'non-audit services' provided by an audit organization to an auditee must be evaluated because they can:

Answer: Create self-review or management participation threats to auditor independence

Non-audit services such as preparing financial statements or designing internal controls can create self-review threats (auditing your own work) or management participation threats under GAGAS independence standards.