Chapter011

Chapter011 - CHAPTER 11: AUDITING OF GOVERNMENTAL AND...

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CHAPTER 11: AUDITING OF GOVERNMENTAL AND NOT-FOR- PROFIT ORGANIZATIONS OUTLINE Number Topic Type/Task Status (re: 13/e) Questions: 11-1 Role of independent auditors Explain 11-1 11-2 GAAP and audit report Explain 11-2 revised 11-3 GAGAS vs. GAAS Define 11-3 11-4 Types of audits and engagements Define 11-4 11-5 GAS independence standards Explain 11-5 11-6 Single audit concept Describe 11-6 revised 11-7 Selection of programs for audit Explain 11-7 11-8 Reportable condition and material weakness Distinguish 11-8 11-9 Audit reports for a single audit Describe 11-9 11-10 Audit committee Describe 11-10 Cases: 11-1 Single audit Evaluate 11-1 revised 11-2 Single audit and major programs Evaluate 11-2 revised 11-3 Federal awards and resources Internet 11-3 revised 11-4 Authoritative literature Locate 11-4 11-5 Audit committees Locate New Exercises/Problems: 11-1 Examine the CAFR Examine 11-1 11-2 Various Multiple Choice 11-2 revised 11-3 Qualified audit opinion Prepare report 11-3 revised 11-4 Single audit Classify 11-4 11-5 Auditor’s opinion Essay 11-5 11-6 GAO independence standards Match 11-6 revised 11-7 Conformity with GAAP Essay 11-7 11-1
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CHAPTER 11: AUDITING OF GOVERNMENTAL AND NOT-FOR- PROFIT ORGANIZATIONS Answers to Questions 11-1. Independent auditor's reports should provide users assurance that the statements are prepared in conformity with accounting and financial reporting standards established by authoritative bodies and generally accepted in the United States, and that all material facts are disclosed. Auditors do not insure or guarantee that the financial statements are free of errors or that all fraud was detected. 11.2. An "unqualified opinion" is the opinion that the financial statements present fairly the financial position at a certain date, changes in financial position for a period of time, and, where applicable, cash flows of the organization for the year then ended, in conformity with generally accepted accounting principles (GAAP). A governmental entity might receive a “qualified opinion” if the auditors conclude there is a departure from generally accepted accounting principles that does not materially impact whether the overall financial statements are fairly presented. For example, the government might not capitalize infrastructure assets, and yet the value of those assets (and related depreciation expense) is not material to total assets (or total expenses). Auditors may also qualify their opinion if the scope of the audit has been restricted. An “adverse opinion” is issued when the auditor believes that the overall financial statements are so materially misstated that they do not present fairly the financial position, changes in financial position, or, if applicable, the cash flows of the entity, but this opinion is rarely used. An auditor may also “disclaim an opinion” if there was a severe limitation on the scope of the audit or the auditor was not independent of the client.
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This note was uploaded on 04/06/2010 for the course ACCT 100 taught by Professor Smith during the Spring '10 term at Harvard.

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Chapter011 - CHAPTER 11: AUDITING OF GOVERNMENTAL AND...

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