Accounting for Governmental & Nonprofit Entities
17th Edition
ISBN: 9780078025822
Author: Jacqueline L. Reck James E. Rooks Distinguished Professor, Suzanne Lowensohn, Earl R Wilson
Publisher: McGraw-Hill Education
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Question
Chapter 11, Problem 19.5EP
To determine
Find the correct option, the option that indicates an additional standard imposed by GAGAS (generally accepted government auditing standards), compared to GAAS (generally accepted accounting standards).
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Students have asked these similar questions
Which statement is incorrect regarding the
external auditor's consideration of the work of
internal auditing?
а.
During the course of planning the audit, the
external auditor should perform a preliminary
assessment of the internal audit function
when it appears that internal auditing is
relevant to the external audit of the financial
statements in specific audit areas.
b.
The external auditor should consider the
activities of internal auditing and their effect, if
any, on external audit procedures.
C.
When the external auditor intends to use
specific work of internal auditing, the external
auditor need not evaluate and test that work
to confirm its adequacy for the external
auditor's purposes.
d.
The external auditor should obtain a sufficient
understanding of internal audit activities to
assist in planning the audit and developing an
effective audit approach.
Which of the following ideas is NOT included in the "Purpose" section of the Principles Underlying an Audit
Conducted in Accordance with Generally Accepted Auditing Standards?
The auditor must plan the audit work properly and supervise any assistants.
Management, and those charged with governance, are responsible for the preparation and fair presentation
of the financial statements in accordance with the applicable financial reporting framework.
The purpose of an audit is to provide users with an opinion on whether the financial statements are
presented fairly, in all material respects, in accordance with the applicable financial reporting framework.
Management has responsibility to provide the auditor with unrestricted access to individuals within the entity
from whom the auditor determines it is necessary to obtain audit evidence.
Audit standards distinguish auditors’ responsibility for planning procedures for detecting noncompliance with laws and regulations havinga direct effect on financial statements versus planning procedures for detecting noncompliance with laws and regulations that do not have a direct effect on financial statements.Required:a. What are the requirements for auditors to plan procedures to detect direct-effect compliance versus indirect-effect compliance?b. For each of the following instances of noncompliance, explain why they are either directeffect (D) or indirect-effect (I) noncompliance:1. A manufacturer inflates expenses on its corporate tax return.2. A retailer pays men more than women for performing the same job.
3. A coal mining company fails to place proper ventilation in its mines.4. A military contractor inflates the overhead applied to a combat vehicle.5. An insurance company fails to maintain required reserves for losses.6. An exporter pays a bribe to a foreign government…
Chapter 11 Solutions
Accounting for Governmental & Nonprofit Entities
Ch. 11 - Prob. 1QCh. 11 - Prob. 2QCh. 11 - Prob. 3QCh. 11 - Prob. 4QCh. 11 - Prob. 5QCh. 11 - Prob. 6QCh. 11 - Prob. 7QCh. 11 - Prob. 8QCh. 11 - Prob. 9QCh. 11 - Prob. 10Q
Ch. 11 - Background. Lake View Mental Health Affiliates, a...Ch. 11 - Prob. 12CCh. 11 - Prob. 13CCh. 11 - Prob. 14CCh. 11 - Prob. 15CCh. 11 - Prob. 16CCh. 11 - Prob. 17CCh. 11 - Prob. 19.1EPCh. 11 - Prob. 19.2EPCh. 11 - Prob. 19.3EPCh. 11 - Prob. 19.4EPCh. 11 - Prob. 19.5EPCh. 11 - Prob. 19.6EPCh. 11 - Prob. 19.7EPCh. 11 - Prob. 19.8EPCh. 11 - Prob. 19.9EPCh. 11 - Prob. 19.10EPCh. 11 - Prob. 21EPCh. 11 - Prob. 22EPCh. 11 - Prob. 23EP
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Similar questions
- all of the following are the responsibilities of the auditor except : Select one: a. adopting sound accounting policies, maintaining adequate internal control, and making fair representations in the financial statements b. making certain that all the assertions in the financial statement are correct c. report on the financial statements, and communicate as required by auditing standards, in accordance with the auditor’s findings d. obtain reasonable assurance about whether the financial statements as a whole are free from material misstatementarrow_forwardWhen asked to perform an audit to express an opinion on one or more specified elements,accounts, or items of a financial statement, the auditor(1) may not describe auditing procedures applied.(2) should advise the client that the opinion can be issued only if the financial statements have been audited and found to be fairly presented.(3) may assume that the first standard of reporting with respect to GAAP does not apply.(4) should comply with the request only if they constitute a major portion of the financialstatements on which an auditor has disclaimed an opinion based on an audit.arrow_forwardIn a financial statement audit, the auditor obtains a reasonable level of assurance about whether the financial statements are free of material misstatement in order to express an opinion. In order to obtain reasonable assurance, the auditor must have prior experience in the industry in which the audit client operates. examine all documents available that support the financial statements. obtain sufficient audit evidence. test controls around significant transaction cycles.arrow_forward
- (i) Which of the following statements correctly explains the responsibility of the external auditor?A. Responsibility to provide reasonable assurance that the financial statements are free from material error or misstatement.B. Responsibility for identifying and correcting any errors or misrepresentations in the financial statements.C. Responsibility for the reliability of the information that financial statements provide.D. Responsibility to prepare financial statements. (ii) Operational controls are designed to prevent failures in operational procedures caused by: i. Machine breakdown and human error ii. Failures in the performance of systems and weaknesses in procedures. iii. Poor management iv. Risks of errors or fraud in accounting systems and accounting and finance activities. A. i and ii onlyB. i, ii and iii onlyC. i, ii and iv onlyD. All of the above (iii) Risk tolerance refers to A. The amount of risk the company is prepared to accept in order to achieve its financial…arrow_forwardWhich of the following is most closely related to the responsibilities principle?a. The auditors’ responsibility to issue a report as a result of their examination.b. The requirement that auditors gather sufficient, appropriate evidence upon which to base an opinion on the financial statements.c. The auditors’ compliance with relevant ethical requirements of independence and due care.d. The auditors’ responsibility to plan the audit and properly supervise assistants.arrow_forwardWhich of the following statements is not true with respect to the performance principle?a. Auditors are required to prepare a written audit plan during the planning stages of initialaudits but are not required to do so in continuing audits.b. Audit teams consider materiality in planning the audit, performing the audit, and evaluating the effect of misstatements on the entity’s financial statements.c. In assessing the risk of material misstatements, the audit team considers the effectivenessof the entity’s internal controls in preventing and detecting misstatements.d. Auditors are required to consider both the relevance and the reliability of evidence inevaluating whether the evidence they have gathered is appropriate.arrow_forward
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