Auditing for Governmental and Not-for-Profit Organizations Study Guide Questions - 1903 Verified Que
Study Guide Questions
Course Introduction
This course provides an in-depth examination of auditing concepts and practices specific to governmental and not-for-profit organizations. Students will explore the unique regulatory, ethical, and reporting requirements faced by these entities, including the application of Generally Accepted Government Auditing Standards (GAGAS) and auditing under the Single Audit Act. Emphasis is placed on internal control assessment, risk evaluation, audit planning, evidence gathering, and the preparation of audit reports tailored to the needs of public sector and nonprofit stakeholders. Real-world case studies and practical exercises will enable students to apply audit methodologies in compliance with relevant legal and professional standards.
Recommended Textbook
Essentials of Accounting for Governmental and Not for Profit Organizations 10th Edition by Paul
Chapter 1: Introduction to Accounting and Financial
Reporting for Governmental and Not-For-Profit Organizations
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Q1) The Financial Accounting Standards Board sets financial reporting standards for private sector organizations,except nongovernmental,not-for-profit organizations.
A)True
B)False
Answer: False
Q2) A government may have __________________ General Fund(s)in a given year.
A) As many as needed
B) Only one
C) The number will vary depending on the needs of the government.
D) None of the above.
Answer: B
Q3) Measurement focus refers to those items,such as current and long-term assets,that are being reported on the financial statements.
A)True
B)False
Answer: True
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Chapter 2: Overview of Financial Reporting for State and Local Governments
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Q1) Governmental fund statements are prepared using the current financial resources measurement focus and modified accrual basis of accounting.
A)True
B)False
Answer: True
Q2) A reconciliation from Proprietary funds statements to government-wide statements is not necessary because ....
A) They both use the same measurement focus and basis of accounting (economic resources, accrual).
B) They both use the same measurement focus and basis of accounting (current financial resources, modified accrual).
C) They use a different measurement focus and basis of accounting.
D) They use a different measurement focus and basis of accounting
Answer: A
Q3) A government may not designate a fund to be a major fund if it does not meet specified criteria.
A)True
B)False
Answer: False
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Chapter 3: Modified Accrual Accounting: Including the Role of
Fund Balances and Budgetary Authority
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Q1) When supplies ordered for use in an activity accounted for in the General Fund of a government are received at an actual price which is less than the estimated price on the purchase order,the Encumbrance Control account is:
A) credited for the estimated price on the purchase order.
B) debited for the estimated price on the purchase order.
C) debited for the actual price for the supplies received.
D) credited for the actual price of the supplies received.
Answer: A
Q2) Purchase orders and contracts result in what for modified accrual accounting and accrual accounting?
Modified Accrual Accrual
A) Expenditure Liability
B) Expenditure No entry
C) Encumbrance Liability
D) Encumbrance No entry
Answer: D
Q3) What are the four classes of nonexchange revenues?
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Chapter 4: Accounting for the General and Special Revenue Funds
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Q1) A local government was awarded a federal grant in the amount of $1,200,000 to provide for a summer employment program for young people.The grant was a reimbursement grant and was awarded on April 30,2012.The local government expended the resources as follows: June,2012,$440,000; July 2012,$400,000; August,2012,$360,000.The federal government provided the funds the following months.The local government would recognize revenues for the fiscal year ended June 30,2012 in which amount?
A) $1,200,000
B) $840,000
C) $440,000
D) $-0-
Q2) Special Revenue Funds may be used whenever a government wishes to segregate income for specific purposes.
A)True
B)False
Q3) Transactions between funds of the same government are assumed to be arm's length in nature because there is no private inurement.
A)True
B)False
Q4) What is the difference between an extraordinary and special item?
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Chapter 5: Accounting for Other Governmental Fund Types:
Capital Projects, debt Service, and Permanent
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Q1) Which of the following is true regarding accounting for investments of permanent funds?
A) Investments with determinable fair values must be reported at fair value.
B) Gains and losses on investments would not be reported in the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances until realized by sale.
C) Both of the above are true.
D) Neither of the above is true.
Q2) Which of the following statements is false?
A) Debt service funds are required to report accrued interest and principal payments as current liabilities.
B) All of the governmental funds use the modified accrual basis of accounting.
C) General fixed assets that are acquired with governmental fund resources are recorded as expenditures in the governmental funds but are displayed as capital assets in the governmental-wide financial statements.
D) Permanent funds reflect resources that are legally restricted so that principal may not be expended and earnings are used to benefit the government or its citizenry.
Q3) What is the difference between Permanent Funds and Private Purpose Trust Funds?
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Chapter 6: Proprietary Funds
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Q1) A city government has decided to build and operate a convention center.Identify what factors should be considered in deciding whether to account for the convention center as an Enterprise Fund or as part of general governmental activities?
Q2) Enterprise funds use the economic resources measurement focus and accrual basis of accounting.
A)True
B)False
Q3) Investment pools are an example of an activity that may be accounted for in an internal service fund.
A)True
B)False
Q4) Which of the following is correct with respect to Internal Service Funds?
A) Internal service funds use accrual accounting and the economic resource focus.
B) Net Assets (fund equity) are to be reported in two categories: assigned and unassigned.
C) Internal service funds account for long-term debt but not long-term fixed assets.
D) All of the above are false statements.
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Chapter 7: Fiduciary Trustfunds
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Q1) What is a cost sharing state pension plan?
Q2) Fiduciary Funds use the Accrual basis of accounting and are not included in the government-wide financial statements.
A)True
B)False
Q3) Fiduciary Fund activities report in terms of Additions and Deductions.
A)True
B)False
Q4) Fund equity will not be found in....
A) Investment trust funds.
B) Pension trust funds.
C) Agency funds.
D) Private-purpose trust funds.
Q5) Defined contribution plans usually report unfunded actuarial liabilities.
A)True
B)False
Q6) Fiduciary Funds are reported by activity.
A)True
B)False
Q7) What is a defined benefit pension plan?
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Chapter 8: Government-Wide Statements, capital Assets,
long-Term Debt
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Q1) When are the entries to convert modified-accrual statements to accrual statements posted in the individual fund general ledgers?
A) After you have completed all adjustments
B) After the closing entries
C) After preparing the government wide statement
D) None of the above, they are not posted
Q2) The City of Casper levied property taxes for 2012 in the amount of $8,000,000.The amount estimated to be uncollectible is 3%.By the end of the year,$7,300,000 had been collected.It was estimated that $400,000 would be collected during the next 60 days of 2011 and that $240,000 would be collected after that.The City has a policy of recognizing the full amount possible for property taxes.Which of the following statements is true?
A) The amount reported for property tax revenue in the government-wide Statement of Activities would be $7,660,000.
B) The amount reported for property tax revenue in the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances would be $7,700,000.
C) Both A and B
D) None of the above.
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Page 10
Chapter 9: Advanced Topics for State and Local Governments
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Q1) Public colleges who waive fees for graduate assistants must report tuition income net of the fees waived.
A)True B)False
Q2) State appropriations for higher education institutions are to be reported as nonoperating revenues in the Statement of Revenues,Expenses,and Changes in Net Assets.
A)True B)False
Q3) Public colleges do not have the power to issue debt; it must be issued by the state as general obligation debt.
A)True
B)False
Q4) The Implementation Guide for GASB Statement No.34 provides a distinction between general-purpose governments and special-purpose governments.Discuss the difference between the two.
Q5) List three types of general-purpose state or local governments and three special-purpose local governments.
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Chapter 10: Accounting for Private Not-For-Profit Organizations
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Q1) The-GASB has standards-setting authority over state and local governments,including governmentally related not-for-profit organizations such as hospitals colleges and universities.Private not-for-profits must follow all applicable ____ standards in recording transactions.
A) AICPA.
B) FASB.
C) GASB.
D) SEC.
Q2) Private not-for-profit entities are usually primarily concerned with which of the following performance measures?
A) Their Program Expense Ratio.
B) Return on Investment.
C) Change in Net Assets.
D) Ending Unrestricted Net Assets.
Q3) What is the treatment of multi-year pledges as required by FASB Statement No.116?
Q4) A Statement of Functional Expenses is required for tax agencies.
A)True
B)False
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Chapter 11: College and University Accounting
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Q1) A Charitable lead trust is a split-interest agreement.
A)True
B)False
Q2) Tuition revenue for summer classes spanning two fiscal periods must be allocated on a pro-rata basis.
A)True
B)False
Q3) Which of the following types of college/university would have these components of the Financial Report?
A) Investor Owned.
B) Public University.
C) Private Not-for-Profit.
D) None of the above.
Q4) Funds that are restricted for a certain number of years and then released are considered to be quasi-endowments and are classified as temporarily restricted funds by private colleges and universities.
A)True
B)False
Q5) How should the income earned by a private college's endowment be classified?
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Chapter 12: Accounting for Hospitals and Other Health Care
Providers
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Q1) Which of the following is not correct with respect to reporting of patient service revenue for health care organizations?
A) Patient service revenue must be reported net of estimated adjustments for contractual adjustments
B) Contractual adjustments must be reported as a prior period adjustment if material
C) Patient service revenue does not include charity care
D) Unrestricted bequests and investment income for current unrestricted purposes may be reported as either operating or nonoperatiang revenue, depending on the policy of the entity
Q2) Voluntary health and welfare organizations raise a significant amount or nearly all of their resources from contributions and grants and are subject to the rules of the AICPA Not-for-Profit Guide.
A)True
B)False
Q3) Assume you are reviewing the financial statements of a not-for-profit hospital.Where would you find the account "Assets whose is limited" and how is it used?
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Chapter 13: Auditing, tax-Exempt Organizations, and Evaluating Performance
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Q1) To compute the unreserved fund balance/revenues-General Fund,one would need to look in the CAFR for the:
A) Governmental funds Balance Sheet.
B) Governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances.
C) Both of the above.
D) Neither of the above.
Q2) The program expense ratio for a not-for-profit organization will improve if the organization shifts costs from fund raising to program expenses.
A)True
B)False
Q3) To compute the operating ratio-enterprise funds,one would need to look in the CAFR for the:
A) Government-wide Statement of Net Assets.
B) Proprietary funds Statement of Revenues, Expenses, and Changes in Fund Net Assets.
C) Both of the above.
D) Neither of the above.
Q4) Describe the different types of governmental audit and attestation engagements.
Page 15
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Chapter 14: Financial Reporting by the Federal Government
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Q1) Typically budgetary authority that is not obligated by a federal agency before the end of the fiscal year is returned to Treasury.
A)True
B)False
Q2) The Statement of Operations and Changes in Net Position for the consolidated report of the federal government is prepared on the budgetary basis of accounting.
A)True
B)False
Q3) Which of the following is not required in a federal agency's financial report?
A) Management's Discussion and Analysis
B) Notes to the Financial Statements
C) Citizen's Guide to the Financial Report
D) Required Supplemental Information
Q4) List the financial statements required of every federal government agency and indicate whether the statement is prepared using the accrual or budgetary basis of accounting.
Q5) Federal agencies must include a Statement of Cash Flows in their annual report.
A)True
B)False
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