CGFM Exam Section 5, Chapter 1 - What
is an Audit? Exam Questions and
Answers
Audit definition - Answer-an independent, systematic, objective and unbiased
assessment that provides answers to a set of questions.
"Material" meaning - Answer-use "material" in the context of whether reasonable people
would consider that an omission or misstatement would have changed their opinions
regarding the auditor's conclusions.
Which Agency issued the Generally Accepted Auditing Standards? - Answer-AICPA -
The American Institute of Certified Public Accountants
Govt Auditing Standards (GAS) are also referred to as? - Answer-1) GAGAS - Generally
Accepted Government Auditing Standard
2) Yellow Book
Under GAGAS an audit organization that provides non-audit services: - Answer-You
may not cite GAGAS in a report that is not the result of either an audit or an attestation
engagement.
3 types of attestation engagements - Answer-1) examination
2) review
3) agreed upon procedures
Examination - Answer-Auditors obtain sufficient, appropriate evidence to
express an opinion on whether the subject matter is based on (or in conformity with) the
criteria in all material respects or the assertion is presented (or fairly stated), in all
material respects, based on the
criteria.
Review - Answer-Auditors perform sufficient testing to express a conclusion about
whether any information came to their attention on the basis of the work performed that
indicates the subject matter is not based on
(or in conformity with) the criteria, or the assertion is not presented (or fairly stated) in all
material respects based on the criteria.
Agreed upon procedures - Answer-Auditors perform specific procedures on a subject
matter. In the case of agreed-upon procedures engagements, the auditor and the client
agree on the tests to be performed and the criteria on which to base the tests.
, Examples of Performance audits - Answer-- assessing the extent to which legislative,
regulatory or organizational goals and objectives are being achieved;
- assessing the relative ability of alternative approaches to yield better program
performance or eliminate factors that inhibit program effectiveness;
- analyzing the relative cost-effectiveness of a program or activity; or
- determining whether a program produced intended results.
Name the 3 sets of Audit Standards - Answer-- Generally Accepted Auditing Standards,
issued by the American Institute of Certified Public Accountants (AICPA);
- Government Auditing Standards, issued by the Government Accountability Office
(GAO); and
- International Standards for the Professional Practice of Internal Auditing, issued by the
Institute of Internal Auditors (llA)
Government Auditing Standards (GAS) - Answer-Government auditors are often
required to conduct audits in accordance with Government Auditing Standards, also
known as GAGAS or the Yellow Book.
The Yellow Book provides standards for three types of engagements: - Answer-1)
financial audits;
2) attestation engagements; and
3) performance audits.
The Yellow Book incorporates? - Answer-by reference, the AICPA fieldwork and
reporting standards for financial audits and for attestation engagements.
Financial Audits - Answer-In a financial statement audit, the auditor usually expresses
the opinion that the statements present, fairly, the financial position of the auditee at a
point in time and for the fiscal period then ended. That opinion means that the financial
statements were prepared, usually, in accordance with the appropriate generally
accepted accounting principles, or GAAP, (but occasionally with another set of
principles.
Attestation engagements - Answer-concern examining, reviewing or performing
agreed-upon procedures on a subject matter or assertion about a subject matter and
reporting on the results.
Performance audits - Answer-provide assurance or conclusions based on an
evaluation of sufficient, appropriate evidence against stated criteria, such as specific
requirements, measures or defined business practices.
Auditors also generally provide conclusions for what type of engagement? - Answer-
performance audits
What is not covered by the Yellow Book? - Answer-Audit agencies can also provide
non-audit services (for nongovernmental audit organizations, this type or work is often
is an Audit? Exam Questions and
Answers
Audit definition - Answer-an independent, systematic, objective and unbiased
assessment that provides answers to a set of questions.
"Material" meaning - Answer-use "material" in the context of whether reasonable people
would consider that an omission or misstatement would have changed their opinions
regarding the auditor's conclusions.
Which Agency issued the Generally Accepted Auditing Standards? - Answer-AICPA -
The American Institute of Certified Public Accountants
Govt Auditing Standards (GAS) are also referred to as? - Answer-1) GAGAS - Generally
Accepted Government Auditing Standard
2) Yellow Book
Under GAGAS an audit organization that provides non-audit services: - Answer-You
may not cite GAGAS in a report that is not the result of either an audit or an attestation
engagement.
3 types of attestation engagements - Answer-1) examination
2) review
3) agreed upon procedures
Examination - Answer-Auditors obtain sufficient, appropriate evidence to
express an opinion on whether the subject matter is based on (or in conformity with) the
criteria in all material respects or the assertion is presented (or fairly stated), in all
material respects, based on the
criteria.
Review - Answer-Auditors perform sufficient testing to express a conclusion about
whether any information came to their attention on the basis of the work performed that
indicates the subject matter is not based on
(or in conformity with) the criteria, or the assertion is not presented (or fairly stated) in all
material respects based on the criteria.
Agreed upon procedures - Answer-Auditors perform specific procedures on a subject
matter. In the case of agreed-upon procedures engagements, the auditor and the client
agree on the tests to be performed and the criteria on which to base the tests.
, Examples of Performance audits - Answer-- assessing the extent to which legislative,
regulatory or organizational goals and objectives are being achieved;
- assessing the relative ability of alternative approaches to yield better program
performance or eliminate factors that inhibit program effectiveness;
- analyzing the relative cost-effectiveness of a program or activity; or
- determining whether a program produced intended results.
Name the 3 sets of Audit Standards - Answer-- Generally Accepted Auditing Standards,
issued by the American Institute of Certified Public Accountants (AICPA);
- Government Auditing Standards, issued by the Government Accountability Office
(GAO); and
- International Standards for the Professional Practice of Internal Auditing, issued by the
Institute of Internal Auditors (llA)
Government Auditing Standards (GAS) - Answer-Government auditors are often
required to conduct audits in accordance with Government Auditing Standards, also
known as GAGAS or the Yellow Book.
The Yellow Book provides standards for three types of engagements: - Answer-1)
financial audits;
2) attestation engagements; and
3) performance audits.
The Yellow Book incorporates? - Answer-by reference, the AICPA fieldwork and
reporting standards for financial audits and for attestation engagements.
Financial Audits - Answer-In a financial statement audit, the auditor usually expresses
the opinion that the statements present, fairly, the financial position of the auditee at a
point in time and for the fiscal period then ended. That opinion means that the financial
statements were prepared, usually, in accordance with the appropriate generally
accepted accounting principles, or GAAP, (but occasionally with another set of
principles.
Attestation engagements - Answer-concern examining, reviewing or performing
agreed-upon procedures on a subject matter or assertion about a subject matter and
reporting on the results.
Performance audits - Answer-provide assurance or conclusions based on an
evaluation of sufficient, appropriate evidence against stated criteria, such as specific
requirements, measures or defined business practices.
Auditors also generally provide conclusions for what type of engagement? - Answer-
performance audits
What is not covered by the Yellow Book? - Answer-Audit agencies can also provide
non-audit services (for nongovernmental audit organizations, this type or work is often
