The following questions deal with governmental auditing. Choose the best response.
a. Although the scope of audits of recipients of federal financial assistance in accor-
dance with federal audit regulations varies, these audits generally have which of the
following elements in common?
(1) The auditor is to determine whether the financial assistance has been adminis-
tered in accordance with applicable laws and regulations.
(2) The materiality levels are lower and are determined by the governmental entities
that provided the federal financial assistance to the recipient.
(3) The auditor should obtain written management representations that the recipi-
ent’s internal auditors will report their findings objectively and without fear of
political repercussions.
(4) The auditor is required to express both positive and negative assurance that illegal
acts that could have a material effect on the recipient’s financial statements are
disclosed to the inspector general.
b. Ward is auditing an entity’s compliance with requirements governing a major federal financial assistance program in accordance with the Single Audit Act. Ward detected noncompliance with requirements that have a material effect on the program. Ward’s report on compliance should express
(1) no assurance on the compliance tests.
(2) reasonable assurance on the compliance tests.
Chapter 26 / INTERNAL AND GOVERNMENTAL FINANCIAL AUDITING AND OPERATIONAL AUDITING 859
(3) a qualified or adverse opinion.
(4) an adverse opinion or a disclaimer of opinion.
c. A governmental audit may extend beyond an examination leading to the expression
of an opinion on the fairness of financial statement presentation to include
Program
Results Compliance
Economy
and Efficiency
(1) Yes Yes No
(2) Yes Yes Yes
(3) No Yes Yes
(4) Yes No Ye
