Accy 407 - Chapter 12

Front 1

OMB Circular A-133

Back 1

uses the high and low risk determination to regulate the amount of auditing to be performed. Although the actual work necessary for a Single Audit is established by the auditor, the OMB has set a limit for auditing high-risk and low-risk recipients. For high-risk recipients, the auditor is required to audit not less than 50% of all the federal assistance received during the year. For low-risk recipients, that limit is decreased to 25%.

Front 2

Auditors must test whether each program:

Back 2

Was administered in conformity with the appropriate OMB Circular (A-102 or A-110)
Complied with detailed requirements in the A-133 Compliance Supplement and other specified requirements

Front 3

Type A programs

Back 3

any federal program within a recipient which expends either: (1) $300,000 or more of federal assistance for recipients with $10 million or less of expended federal assistance during the audit period, or (2) 3% of the total federal assistance expended during the year for those who exceed $10 million, whichever is greater. In other words, if a recipient expended a total of $10 million or less in federal assistance, then any single program which expended $300,000 or more is considered a Type A. If a recipient expended more than $10 million in federal assistance, then any single program which expended 3% of that amount is considered a Type A program

Front 4

How does the auditor select which programs to audit for a single audit?

Back 4

Identify Type A programs
Identify low-risk programs (based on no audit findings in most recent audit and absence of certain risk factors)
Assess risk of Type B programs (major programs that are not Type A programs)

At a minimum, audit all high risk Type A programs and either
half of the high-risk Type B programs or
one high-risk Type B program for each low-risk Type A program
Audit enough major programs to ensure that at least 50% of total federal award expenditures are audited

Front 5

Required reporting for a single audit

Back 5

Financial statements and schedule of expenditures of federal awards
Summary schedule of prior audit findings
Auditor’s reports (see Ill. 12-10)
Corrective action plan

Front 6

the single audit report package must be sent to?

Back 6

Both auditee and auditor have responsibilities for the “reporting package” that must be filed electronically and sent to the single audit clearinghouse

Front 7

usually involves an instance of noncompliance with a law or regulation where the costs are either not allowable, are unreasonable, or are not supported by adequate documentation

Back 7

a questioned cost

Known questioned costs greater than $10,000 or likely costs greater than $10,000 must be reported in the schedule of findings and questioned costs

Front 8

Describes such matters as internal control weaknesses, instances of noncompliance, questioned costs, fraud, and material misrepresentations by the auditee

Back 8

Schedule of findings and questioned cost

Front 9

usually the agency providing the predominant amount of support

Back 9

cognizant agency

To promote quality control, nonfederal entities expending more than $50 million in federal awards are assigned a cognizant agency

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provides technical advice and serves as a liaison, conducts quality control reviews, refers substandard audits for disciplinary action, and facilitates communication

Back 10

cognizant agency

Front 11

T/F?

Auditors do not render an opinion on RSI.

Back 11

True

Front 12

T/F?

RSI includes the Management's Discussion and Analysis (MD&A) and budgetary comparison schedules

Back 12

True

Front 13

T/F?

Auditors apply certain limited procedures to RSI to provide assurance that it is fairly presented in relation to the basic financial statements.

Back 13

True

Front 14

Attestation engagements.

Back 14

Engagements in which auditors provide services related to internal control, compliance, MD&A presentation, review of contracts, and reliability of performance measures

Front 15

Performance audits.

Back 15

Engagements in which auditors provide an independent assessment of the management of government programs against objective criteria or best practices

Front 16

T/F?

Sensitive information may be omitted from the audit report.

Back 16

True

Front 17

T/F?

The fact that the audit was conducted in accordance with GAGAS is to be indicated in the audit report and if deficiencies are reported, any plans for corrective action should be included.

Back 17

True

Front 18

Memorize the scale on pg. 512

Audit all high-risk Type A programs AND

Either (half of high-risk B) or (one high-risk B for each low-risk A)

P. 514 – Must audit HALF of all federal award expenditures (for low risk auditee – just 25% of fed award expenditures)

Low risk = no problems over last 2 yrs with any programs audited

Back 18

notes from class

Front 19

Which of the following statements about the single audit is correct?
A) It does not apply to nongovernmental not-for-profit organizations.
B) It is intended to ensure maximum effectiveness, by conducting audits on a grant-by-grant basis.
C) Its purpose is to improve the financial management of state and local government with respect to federal financial assistance programs.
D) All of the above are correct.

Back 19

C

Front 20

A cognizant agency for audit responsibilities in a single audit is:
A) The federal awarding agency that provides the predominant amount of direct funding to a nonfederal recipient.
B) Always required no matter how much an entity expends in federal awards.
C) Normally designated by the Office of Management and Budget.
D) Designated when a nonfederal entity does not receive a large enough amount of federal awards to be assigned an oversight agency.

Back 20

A

Front 21

Which of the following statements is not true about selecting federal award programs to be audited in a single audit?
A) At least 50 percent of total federal awards expended must be audited.
B) A risk-based approach is used for selecting major programs for audit.
C) Low risk programs include those that have previously been audited with no audit findings, and are relatively stable, among other considerations.
D) A major program is one that is large and relatively risky and always includes new programs.

Back 21

D

Front 22

A single audit is required of:
A) A federal or nonfederal entity that receives more than $500,000 in a year.
B) A nonfederal entity that received more than $100,000 in a year.
C) Nonfederal entities that expend $500,000 or more in federal awards in a year.
D) Any entity that receives more that $500,000 in federal financial assistance in a year.

Back 22

C