©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 11Governmental Financial Auditing The Yellow Book standards are often called generally accepted governmen
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Governmental Financial Auditing
The Yellow Book standards are often called generally accepted government auditing
standards (GAGAS)
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Financial Audit and Reporting Requirements – Yellow Book
Compliance auditing
Materiality and significance
Reporting
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Audit and Reporting – Single Audit Act and OMB Circular A-133
The threshold for requiring a single audit is $500,000
The office of Management and Budget issued
a revised Circular A-133, Audits of States,
Local Governments, and Non-Profit Organizations, to provide administrative
guidance for implementing the single audit requirements
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Audit Requirements
The audit should be in accordance with
generally accepted government auditing
standards (GAGAS)
The auditor must obtain an understanding
of internal control over federal programs
sufficient to support a low assessed
level of control risk for major programs
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Audit Requirements
The auditor should determine whether the client
had complied with the laws, regulations, and the
provisions of contracts or grant agreements
that may have a direct and material effect
on each of its major programs
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Reporting Requirements
An opinion as to whether the schedule of
federal awards is presented fairly in all material respects in relation to the
financial statements as a whole
An opinion on whether the financial
statements are in accordance with GAAP
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Reporting Requirements
A report on internal control related to the
financial statements and major programs
A report on compliance with laws,
regulations, and the provisions of contracts or grant agreements
A schedule of findings and questioned costs
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Operational Auditing
The purpose of operational auditing is to determine the effectiveness or efficiency
of any part of an organization
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Learning Objective 3
Distinguish operational auditing from financial auditing.
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Differences Between Operational and Financial Auditing
Distribution of the reports
Inclusion of nonfinancial areas
Purpose of the audit
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