Chapter 26 - Internal Governmental and Operational Auditing

N government accountability office gao n agency in

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n Government Accountability Office (GAO): n Agency in the legislative branch of the federal government. n Headed by Comptroller General. n Reports solely to Congress. n Main purpose: to perform the audit function for Congress. n Examines financial information prepared by various federal agencies before it is submitted to Congress. n Deals with a large amount of compliance. n Increase in auditing operational efficiency and
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+ Governmental Audit n Public accounting firms can also perform audits of governments. n The same rules also apply to public accounting firms that audit governments. n The same rules also apply to companies and NFP organizations that received federal grants. n Student Aid, National Institute of Health, National Science Foundation, etc. n Financial governmental audits more expanded than F/S audits. n Financial statements of governmental units n Government contracts and grants n Internal controls n Fraud
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+ Governmental Audit n Government Auditing Standards n Issued by GAO n Also called “Yellow book” n More detailed than GAAS
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+ GAGAS n Government standards include the requirements by GAAS plus the following differences: n Materiality and Significance n In government audits the thresholds of acceptable AR and materiality are lower. n Quality Control n Governmental auditor agencies have to have an appropriate system of internal quality control and participate in external quality control review program. n Required to complete CPE hours – 80 total in each 2 year period with at least 24 hours of those to be in subjects related to government environment and auditing. n Compliance Auditing n Design audit to provide reasonable assurance of detecting misstatements resulting from noncompliance with
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+ Single Audit Act n Before 1980 each federal agency had its own audit requirements n Potentially multiple audits for the same governmental unit. n Single Audit act n Passed in 1984. n Entities with $500,000 or more in federal funds. n Extended in 1990 to higher-education institutions and other non-for profit organizations (amendment with OMB Circular A-133).
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+ Single Audit Act – Scope n Scope of the Audit: n Audit should be in accordance with GAGAS.
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