AICPA CPA-Auditing Exam - Topic 1 Question 48 Discussion

Actual exam question for AICPA's CPA-Auditing exam

Question #: 48
Topic #: 1

Gearty & Duffy, certified public accountants, have been engaged to perform a single audit of Sleepy Knoll Township, a local government receiving substantial federal financial assistance for community development and housing assistance. A single audit represents:

AAn audit of annual activity of only federal financial assistance programs over the course of the town's fiscal year.

BAn inception to date audit of only federal financial assistance programs over the course of the grant year specified by the grant award.

CAn audit of the township's financial statements and of compliance with federal regulations relating to federal financial assistance as prescribed by the Single Audit Act and OMB Circular A-133.

DAn audit of the township's financial statements and the fair presentation of the revenues derived from federal financial assistance.

Show Suggested Answer

Suggested Answer: C

Choice 'c' is correct. A single audit represents a combined audit of both an entity's financial statements and federal financial assistance programs. The single audit provides audited organizations with the opportunity to capitalize on the efficiency of satisfying their audit requirements with a single audit.

Auditors are governed by the Single Audit Act and OMB Circular A-133.

Choice 'a' is incorrect. A single audit is not simply an audit of federal financial assistance.

Choice 'b' is incorrect. A single audit is not simply an audit of federal financial assistance.

Choice 'd' is incorrect. A single audit is not limited to expression of an opinion on the fair presentation of financial statements. It also is designed to report on compliance with laws, rules, and regulations.

by Jennie at May 07, 2022, 01:23 AM

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5 months ago

I remember the lecture on this - the service value chain is focused on creating value for the customer, not just converting inputs. I'm leaning towards option A.

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