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Governmental Audits

Governmental Audits. AICPA early work GAO and Comptroller General Need for extended audit work Government Audit Standards Yellow Book + Revisions Single Audit Act of 1984 Circular A-128 & 133 (Rev 1997) AICPA SOPs Single Audit Act Amendment of 1996. Governmental & NPO Auditing.

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Governmental Audits

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  1. Governmental Audits • AICPA early work • GAO and Comptroller General • Need for extended audit work • Government Audit Standards • Yellow Book + Revisions • Single Audit Act of 1984 • Circular A-128 & 133 (Rev 1997) • AICPA SOPs • Single Audit Act Amendment of 1996

  2. Governmental & NPO Auditing • State, Local, and Federal Government • General Accounting Office and Comptroller General of U. S. • AICPA – “Audits of State and Local Governments” • Legislative Bodies • Non-government NPOs • Internal Revenue Service • Auditing Standards Board-AICPA • GAO and Comptroller General of U.S. (1984)

  3. GAGAS Audits Different Types of Audits • Financial • Fair presentation in conformance with GAAP • Attestation Engagements • May be financial or non-financial • Assertion about a matter and reporting thereon • Performance Audits • Systematic examination that assesses performance of management and organizations toward meeting objectives; Aims are to improve programs (Effectiveness and Efficiency) • Service Efforts and Accomplishments Trend

  4. Governmental Audits-Reporting Standards • Procedure paragraph and “accepted in the United States of America.” (p. 391) • Opinion on Compliance and Internal Control System • Opinion on Federal Financial Assistance Programs • In Relation to Opinion on the Schedule of Federal Awards • Report to describe instances of fraud, etc.

  5. Single Audit Act & Amendments • (1984) One single audit that assured that federal and state fund expenditures were in accordance with law and grant agreements • Originally applied only to S & L Governments with $25,000 or more Federal Financial Assistance • Circular A-133 extended to NG NFP organizations • Cognizant ($50 Million)and Oversight Agencies

  6. Single Audit Act(1996 Amendment) • Increased Threshold Amount to $300,000 ($500,000 in 2004) • Included hospitals as coverage under the act • In 1997, AICPA issued SOP 98-3 • Auditing of S & L Governments and Nonprofit Organizations Receiving Federal Awards

  7. Auditing FFA Awards • Major programs audited according to 50% or 25% rule risk-based approach • Categorize programs as • Type A – Larger programs • Type B - Smaller programs • Type A are major programs unless low-risk (audited within past 2 years with no major audit findings) • Type B are major programs only if high-risk • Refer to example on page 395

  8. Non-government NPO Audits • Not publicly held so not required to have annual audits of financial statements • However, most medium to large organizations will go through independent audits as a matter for their own protection • Must apply for tax exemption through the Internal Revenue Service with Form 1023 • May have unrelated business income on which must pay taxes • Annual Form 990 filed with IRS (See pages 400-401) Includes UBIT if applicable • Last three year’s copies of 990 must be provided upon request by interested parties

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