This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: 14-31.The general standards state that each audit organization must undergo an externalquality control review.2.The field work standards state that auditors should design the audit to provide reasonable assurance of detecting “material misstatements resulting from direct and material illegal acts.”3.The general standards state that the staff assigned to conduct the audit should collectively possess adequate professional proficiency for the tasks required. As indicated in the text, to meet this standard, auditors that perform government audits must complete at least 24 hours of CPE related directly to the government environment and to government auditing.4.The general standards say that the audit organization and the individual auditors must be independent. Although not explicitly discussed in the text, the relationship described — that of an auditor working for a client under audit as a financial administrator — would impair independence.5.The field work standards state that the auditors should design the audit to provide reasonable assurance of detecting “material misstatements resulting from noncompliance with provisions of contract or grant agreements.” Relying on the work of internal auditors, without at least conducting sample tests to assure that it was properly carried out, would not satisfy this standard.6.The reporting standards indicate that “in some circumstances, auditors should report irregularities and illegal acts directly to parties external to the audited entity.” As made clear in supporting OMB circulars, a pattern of violations, even if none was material or serious by itself, would warrant reporting to granting agencies.7.The reporting standards indicate that auditors must explicitly describe (either in their report on the financial statements or in a separate report) the scope of their internal control testing.14-61.The failure to audit the Office of Investments is surprising since audit organizations typically target for audit mainly programs or activities in which the dollar amounts are substantial and/or the risk of loss is significant. The Office of Investments is in charge of resources that are large in dollar amounts and are liquid. They are subject to loss through theft or fraud as well as through inappropriate investment policies and practices.2.The audit might be carried out in two parts. In the first part, the auditors would review and test the administrative controls to ensure that the office acquires only suitable securities. In the second part, they would calculate and compare the rate of return on the portfolios maintained by the office with that of various indices (such as the Standard and Poor’s 500) and that of similar institutions....
View Full Document
This note was uploaded on 01/04/2012 for the course ACC 410 taught by Professor Smith during the Fall '10 term at Strayer.
- Fall '10