A5/M7 Government Audits

Question 1

what are the sources of standards for governmental audits?

Answer 1

GAAS and GAGAS

Question 2

what are the 3 types of engagements in GAGAS?

Answer 2

1. Financial audits
2. Attest engagements
3. Performance audits

Question 3

what are included in auditor’s report on compliance with laws and regulations in a FS audit under GAGAS?

Answer 3

• either asserts that there is no findings or references as a separate schedule of findings, including disclosure of material instances of fraud and illegal acts
• should specifically state that a compliance audit does not provide a legal determination of the entity’s compliance
• require a written report (could be separate or combined with report of FS audit) of internal control in every audit, describe the scope of the auditor’s testing of compliance with laws and regulations and internal control over financial reporting BUT do NOT express an opinion on internal controls
• if the auditor decides to issue a separate report on ICFR and compliance with laws and regulations, the auditor should state in the audit report that a separate report will be issued

Question 4

what is auditor’s objective in a compliance audit of a governmental entity?

Answer 4

• is to form an opinion on whether that government complied with applicable compliance requirements in all material respects, and then to report at the level specified by the governmental audit requirement