GAC Internal Controls & Auditing in Governmental Entities 3

Question 1

The Government Accountability Office (GAO) issues auditing standards known as GAGAS. For financial audits of governmental entities, GAGAS incorporates and adds to which other standards?

Accepted Answer

AICPA's Generally Accepted Auditing Standards (GAAS)

Answer

GAGAS incorporates AICPA GAAS by reference for financial audits and adds government-specific requirements on top of those standards.

Question 2

A governmental auditor identifies a significant deficiency related to grant revenue recognition. Under GAGAS, the auditor is required to:

Accepted Answer

Communicate the deficiency in writing to management and those charged with governance

Answer

GAGAS requires auditors to communicate significant deficiencies and material weaknesses in writing to management and those charged with governance.

Question 3

Under the Single Audit Act, entities that expend $750,000 or more in federal awards must have a Single Audit performed. The primary purpose of this audit is to:

Accepted Answer

Assess compliance with federal program requirements and related internal controls

Answer

The Single Audit focuses on compliance with requirements applicable to each major federal program and the internal controls over compliance.

Question 4

Which risk is MOST associated with the control environment component of COSO in a governmental entity?

Accepted Answer

Lack of ethical tone from elected officials and senior management

Answer

The control environment is shaped by the integrity, ethical values, and tone set by leadership, making ethical tone the primary risk factor.

Question 5

A performance audit of a state highway department finds that construction projects are consistently completed over budget. According to GAGAS, this finding should include an assessment of:

Accepted Answer

Economy, efficiency, and effectiveness of program operations

Answer

Performance audits under GAGAS evaluate economy, efficiency, and effectiveness, making program outcomes and resource utilization central to findings.

(GAC) Governmental Accounting Certification Practice Test

(GAC) Governmental Accounting Certification Practice Test

GAC Internal Controls & Auditing in Governmental Entities 3