Question 1

Unrelated Business Income Tax is an excise tax,applied to the gross receipts of a business activity.Therefore allocations of expenses incurred in generating the income are irrelevant.

Accepted Answer

A) True 
 B)False

Question 2

Government financial audits are subject to both GAAS and GAGAS.

Accepted Answer

A) True 
 B)False

Question 3

The single audit act is intended to provide assurance to the federal government that federal funds have been expended in accordance with laws and regulations.

Accepted Answer

A) True 
 B)False

Question 4

Tax exempt entities do not have retained earnings in the equity section of their financial statements.

Accepted Answer

A) True 
 B)False

Question 5

Attestation engagements must comply with the Government Auditing Standards but are exempt from compliance with the AICPA's attestation standards.

Accepted Answer

A) True 
 B)False

Question 6

Assuming an auditee is not considered low-risk,the auditor is required to express an opinion on compliance on major programs,which must add up to 50 percent of federal funds expended by the auditee.

Accepted Answer

A) True 
 B)False

Question 7

Fundraising efficiency is a measure of performance that expresses how much an organization spends in raising a dollar of donations.

Accepted Answer

A) True 
 B)False

Question 8

How has the Sarbanes-Oxley Act of 2002 affected the practices of not-for-profit and governmental organizations?
 Why have these provisions been adopted?

Accepted Answer

While the provisions of the Sarbanes-Oxl...

Question 9

Which of the following would be a financial audit (or a part of a financial audit) under the Government Auditing Standards?

Accepted Answer

A)   An audit expressing an opinion on the basic financial statements of a state or local government audit.
B)   An examination to determine whether purchasing procedures are appropriately designed to assure program supplies meet standards.
C)   Both of the above
D)   Neither of the aboveE) A) and B)
F) B) and C)

Question 10

Entities receiving $500,000 or more of federal funds are generally required to have a single audit.

Accepted Answer

A) True 
 B)False

Question 11

The single audit act provides assurance to the federal government that federal funds are protected through a system of internal controls and sound financial management practices.

Accepted Answer

A) True 
 B)False

Question 12

If an auditee is not considered low-risk,what percent of federal funds expended are auditors required to express an opinion on?

Accepted Answer

A)   100%
B)   70%
C)   50%
D)   25%E) A) and D)
F) B) and D)

Question 13

To compute the net debt per capita,a user of financial statements would need to look at (in the CAFR) :

Accepted Answer

A)   the debt in the government-wide Statement of Net Assets, the amount available to pay that debt in the governmental funds Balance Sheet, and the population from the statistical section.
B)   the debt and the amount available to pay that debt in the governmental funds Balance Sheet, and the population from the statistical section.
C)   the debt in the governmental funds Balance Sheet, the amount available in the government-wide Statement of Net Assets, and the population from the statistical section.
D)   all three items from the government-wide Statement of Net Assets.E) A) and B)
F) All of the above

Question 14

Which of the following is true regarding the Single Audit Act and its amendments?

Accepted Answer

A)   An auditor is expected to express an opinion on "major programs," which are chosen based on size.
B)   An auditor is required to select all "Type A" programs as major programs.
C)   Both of the above.
D)   Neither of the above.E) B) and D)
F) A) and D)

Question 15

Which of the following is not true of Tax Exempt Entities?

Accepted Answer

A)   Even though they are tax exempt entities they must still file a tax return
B)   They have to report income that is unrelated to the organization
C)   They have Retained Earnings in the equity section of financial statements
D)   Tax exempt entities get an automatic $1,000 deduction in Unrelated Business IncomeE) A) and C)
F) All of the above

Question 16

All of the following are examples of service outputs,except:

Accepted Answer

A)   Enrollment increases
B)   Dropout rates
C)   The number of gifted or alternative programs
D)   Degrees conferredE) B) and D)
F) B) and C)

Question 17

Bonds which carry the full faith and credit of a government are called general obligation bonds.

Accepted Answer

A) True 
 B)False

Question 18

Under the terms of the Single Audit Act and its amendments,what percentage of federal awards expenditures must be selected for audit?

Accepted Answer

A)   High Risk Auditee: 100%; Low Risk Auditee: 50%
B)   High Risk Auditee: 100%; Low Risk Auditee: 25%
C)   High Risk Auditee: 50%; Low Risk Auditee: 25%
D)   High Risk Auditee: 50%; Low Risk Auditee: 0%E) All of the above
F) None of the above

Question 19

The Single Audit Act intends that auditors conducting regular financial audits of state and local governments and not-for-profits organizations provide assurance to the federal government that:

Accepted Answer

A)   Federal funds have been expended in accordance with laws and regulations.
B)   Federal funds are protected through a system of internal controls and sound financial management practices.
C)   Both A & B
D)   None of the above.E) B) and D)
F) A) and B)

Question 20

Government Auditing Standards,published in a document called the Yellow Book incorporate the AICPA standards and provide extensions that are necessary due to the unique nature of public entities.Which of the following is not one of the extensions?

Accepted Answer

A)   Requirement that auditors have knowledge of government accounting and auditing
B)   Higher materiality thresholds than in the private sector
C)   Public availability of audit reports
D)   Written evaluation of internal controlsE) A) and D)
F) A) and C)

Exam 13: Auditing, tax-Exempt Organizations, and Evaluating Performance

Bonds which carry the full faith and credit of a government are called general obligation bonds.

Correct AnswerverifiedShow Answer

Assuming an auditee is not considered low-risk,the auditor is required to express an opinion on compliance on major programs,which must add up to 50 percent of federal funds expended by the auditee.

Correct AnswerverifiedShow Answer

Under the terms of the Single Audit Act and its amendments,what percentage of federal awards expenditures must be selected for audit?

Correct AnswerverifiedShow Answer

Tax exempt entities do not have retained earnings in the equity section of their financial statements.

Correct AnswerverifiedShow Answer

To compute the net debt per capita,a user of financial statements would need to look at (in the CAFR) :

Correct AnswerverifiedShow Answer

Attestation engagements must comply with the Government Auditing Standards but are exempt from compliance with the AICPA's attestation standards.

Correct AnswerverifiedShow Answer

How has the Sarbanes-Oxley Act of 2002 affected the practices of not-for-profit and governmental organizations? Why have these provisions been adopted?

Correct AnswerverifiedWhile the provisions of the Sarbanes-Oxl...View AnswerShow Answer

If an auditee is not considered low-risk,what percent of federal funds expended are auditors required to express an opinion on?

Correct AnswerverifiedShow Answer

The single audit act provides assurance to the federal government that federal funds are protected through a system of internal controls and sound financial management practices.

Correct AnswerverifiedShow Answer

Which of the following is not true of Tax Exempt Entities?

Correct AnswerverifiedShow Answer

All of the following are examples of service outputs,except:

Correct AnswerverifiedShow Answer

Government financial audits are subject to both GAAS and GAGAS.

Correct AnswerverifiedShow Answer

The Single Audit Act intends that auditors conducting regular financial audits of state and local governments and not-for-profits organizations provide assurance to the federal government that:

Correct AnswerverifiedShow Answer

Entities receiving $500,000 or more of federal funds are generally required to have a single audit.

Correct AnswerverifiedShow Answer

Which of the following is true regarding the Single Audit Act and its amendments?

Correct AnswerverifiedShow Answer

Fundraising efficiency is a measure of performance that expresses how much an organization spends in raising a dollar of donations.

Correct AnswerverifiedShow Answer

Which of the following would be a financial audit (or a part of a financial audit) under the Government Auditing Standards?

Correct AnswerverifiedShow Answer

Unrelated Business Income Tax is an excise tax,applied to the gross receipts of a business activity.Therefore allocations of expenses incurred in generating the income are irrelevant.

Correct AnswerverifiedShow Answer

The single audit act is intended to provide assurance to the federal government that federal funds have been expended in accordance with laws and regulations.

Correct AnswerverifiedShow Answer

Government Auditing Standards,published in a document called the Yellow Book incorporate the AICPA standards and provide extensions that are necessary due to the unique nature of public entities.Which of the following is not one of the extensions?

Correct AnswerverifiedShow Answer

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While the provisions of the Sarbanes-Oxl...
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