Modern

Modern Auditing:
Auditing:

Assurance
Assurance Services
Services and
and the
the Integrity
Integrity
th
of
Financial
Reporting,
8
of Financial Reporting, 8th Edition
Edition
William C. Boynton

California Polytechnic State

University at San Luis Obispo

Raymond N. Johnson
Portland State University

Chapter 21 Internal, Operational, and Governmental

Auditing

Chapter
Chapter Overview
Overview

Internal
Internal Auditing
Auditing Defined
Defined
Internal
Independent and objective
Systematic, disciplined approach
Helps and organization accomplish
its objectives

Internal
Internal Auditing
Auditing
Evolution of Internal Auditing
IIA Code of Ethics
IIA Attribute and Performance
Standards
Attribute Standards
Performance Standards
Implementation Standards

Relationship
Relationship with
with External
External
Auditors
Auditors

Operational
Operational Auditing
Auditing Defined
Defined
Systematic process
Evaluating an organizations operations
Effectiveness, efficiency, and economy of
operations
Reporting to appropriate persons
Recommendations for improvement

Phases
Phases of
of an
an Operational
Operational Audit
Audit
Select Auditee
Plan Audit
Perform Audit
Report Findings
Perform Followup

Financial
Financial Statements
Statements v.
v.
Operational
Operational Audits
Audits

Study
Study Break
Break
1. This part of the internal auditing
definition states the auditors judgment
has value when it is free of bias.
A.
B.
C.
D.

Internal
Independent and objective
Systematic, disciplined approach
Helps an organization accomplish its
objectives

B. Independent and objective

Study
Study Break
Break
2. These IIA Attribute and Performance
standards describe the nature of
internal audit services and provide
quality criteria against which the
performance of these services can be
measured.
A.
B.
C.
D.

Attribute Standards
Performance Standards
Implementation Standards
None of the above

B. Performance Standards

Study
Study Break
Break
3. Which of the following is not a
phase of the operational audit?
A.
B.
C.
D.

Select auditee
Perform audit
Report findings to stockholders
Perform followup

C. Report findings to stockholders

Types
Types of
of Government
Government Audits
Audits
Financial Audits

Attestation Engagements

Performance Audits

Generally
Generally Accepted
Accepted Government
Government
Auditing
Auditing Standards
Standards (GAGAS)
(GAGAS)
General Standards
Independence

Professional judgment
Competence
Quality Control and Assurance

Generally
Generally Accepted
Accepted Government
Government
Auditing
Auditing Standards
Standards (GAGAS)
(GAGAS)
Fieldwork Standards for Financial Audits
Auditor communication

Considering the results of previous audit and

attestation engagements
Detecting material misstatements resulting
from violations of contract provisions or grant
agreements, or from abuse
Developing elements of a finding
Audit documentation

Generally
Generally Accepted
Accepted Government
Government
Auditing
Auditing Standards
Standards (GAGAS)
(GAGAS)
Reporting Standards for Financial Audits
Reporting auditors compliance with GAGAS
Reporting on internal control and on
compliance with laws, regulations, and
provisions of contracts or grant agreements
Reporting deficiencies in internal control,
fraud, illegal acts, violations of provisions of
contracts or grand agreements, and abuse

Generally
Generally Accepted
Accepted Government
Government
Auditing
Auditing Standards
Standards (GAGAS)
(GAGAS)
Reporting Standards for Financial
Audits

Reporting views of responsible officials

Reporting privileged and confidential

information

Report issuance and distribution

Generally
Generally Accepted
Accepted Government
Government
Auditing
Auditing Standards
Standards (GAGAS)
(GAGAS)
Reporting on Compliance with Laws
and Regulations

Reporting on Internal Control

The
The Single
Single Audit
Audit Act
Act
Objectives of the Act

Improve financial management

Establish uniform requirements for audits
Promote efficient and effective use of audit
resources
Ensure reliance and usage of audit work
completed

The
The Single
Single Audit
Audit Act
Act
Applicability and Administration
Federal Financial Assistance
Major Programs
Nonmajor Programs
Cognizant Agency

Scope
Scope of
of an
an Audit
Audit Under
Under the
the
Single
Single Audit
Audit Act
Act
General

Financial Statements
Internal Controls
Compliance
Audit Followup

Reporting Requirements

Opinion on Financial Statements

Report on Internal Control
Report on Compliance
Schedule of Findings and Questioned Costs

Study
Study Break
Break
4. This type of government audit concern
examining, reviewing, or performing
agreed-upon procedures on a subject
matter or an assertion about a subject
matter and reporting on the results.
A.
B.
C.
D.

Financial audits
Attestation engagements
Performance audits
Compliance audits

B. Attestation engagements

Study
Study Break
Break
5. Within the General Standards of
GAGAS, this standard states that staff
assigned to perform the audit or
attestation should collectively possess
adequate professional competence for
the tasks required.
A.
B.
C.
D.

Independence
Professional judgment
Competence
Quality Control and Assurance

C. Competence

Study
Study Break
Break
6. This act established the concept of a
single organizationwide government
audit encompassing both financial and
compliance audits.
A.
B.
C.
D.

Securities Act of 1933

Securities Act of 1934
Single Audit Act
None of the above

C. Single Audit Act