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Unformatted text preview: Chapter 12 - Auditing of Governmental and Not-for-Profit Organizations 12-1 CHAPTER 12: AUDITING OF GOVERNMENTAL AND NOT-FOR- PROFIT ORGANIZATIONS OUTLINE Number Topic Type/Task Status (re: 14/e) Questions: 12-1 Levels of audit Define and Explain New 12-2 Opinion units Explain New 12-3 GAGAS Explain New 12-4 GAGAS versus GAAS Explain 11-3 12-5 GAGAS audits Identify and compare 11-4 12-6 GAGAS and not-for-profits Explain New 12-7 GAGAS versus single audit Compare New 12-8 Risk-based approach Explain 11-7 12-9 Audit quality Explain New 12-10 Audit committee Describe 11-10 Cases: 12-1 Audit risk Assess New 12-2 Single audit Evaluate 11-1 12-3 Government audit considerations Evaluate New 12-4 Single audit and major programs Evaluate New 12-5 Federal awards and resources Internet 11-3 12-6 Audit quality Analysis New 12-7 Audit committees Locate Same Exercises/Problems: 12-1 Examine the CAFR Examine 11-1 12-2 Various Multiple Choice 11-2 12-3 Continuing professional education Analysis New 12-4 Single audit Analysis 11-4 revised 12-5 GAO independence standards Match 11-6 revised 12-6 Audit report Error analysis New Chapter 12 - Auditing of Governmental and Not-for-Profit Organizations 12-2 CHAPTER 12: AUDITING OF GOVERNMENTAL AND NOT-FOR- PROFIT ORGANIZATIONS Answers to Questions 12-1. The three levels of audit are generally accepted auditing standards (GAAS), generally accepted governmental auditing standards (GAGAS), and the single audit. GAAS standards are established by the AICPA, while the Government Accountability Office (GAO) establishes GAGAS. The single audit is the result of a law enacted by Congress. However, regulation related to implementation of the law is established by the Office of Management and Budget (OMB) and is available to users in Circular A-133 and the related Compliance Supplement. 12-2. An opinion unit is related to the financial reporting format of governments. Opinion units include: governmental activities, business-type activities, aggregate discretely presented component units, each major governmental and enterprise fund, and the aggregate remaining funds. Auditors need to know the number of the clients opinion units since the auditor is required to opine on each unit. Because an opinion is needed on each unit, GAAS requires that materiality determinations be made for each opinion unit. The number of opinion units affects the complexity, time, and cost of an audit. 12-3. The government audit report is longer due to increased audit requirements. The audit report of a government will include one or more explanatory paragraphs explaining: 1) that supplemental information included as part of the governments annual report is not part of the basic financial statements, 2) whether auditors applied auditing or certain limited procedures to the supplemental information, and 3) whether the auditors express an opinion on the supplemental information. Additionally, recall from Chapter 9 that certain parts of the annual report, such as the MD&A, are required supplementary...
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This note was uploaded on 11/29/2009 for the course ACCT 341 taught by Professor Burdan during the Fall '08 term at American.
- Fall '08