1. Modern Auditing:
Assurance Services and the Integrity of Financial Reporting, 8th 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

2. Chapter Overview

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

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

5. Relationship with External Auditors

6. Operational Auditing Defined
Systematic process
Evaluating an organization’s operations
Effectiveness, efficiency, and economy of operations
Reporting to appropriate persons
Recommendations for improvement

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

8. Financial Statements v. Operational Audits

9. Study Break
This part of the internal auditing definition states the auditor’s judgment has value when it is free of bias.
Internal
Independent and objective
Systematic, disciplined approach
Helps an organization accomplish its objectives
B. Independent and objective

10. Study Break
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.
Attribute Standards
Performance Standards
Implementation Standards
None of the above
B. Performance Standards

11. Study Break
Which of the following is not a phase of the operational audit?
Select auditee
Perform audit
Report findings to stockholders
Perform followup
C. Report findings to stockholders

12. Types of Government Audits
Financial Audits
Attestation Engagements
Performance Audits

13. Generally Accepted Government Auditing Standards (GAGAS)
General Standards
Independence
Professional judgment
Competence
Quality Control and Assurance

14. Generally Accepted Government Auditing Standards (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

15. Generally Accepted Government Auditing Standards (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

16. Generally Accepted Government Auditing Standards (GAGAS)
Reporting Standards for Financial Audits
Reporting views of responsible officials
Reporting privileged and confidential information
Report issuance and distribution

17. Generally Accepted Government Auditing Standards (GAGAS)
Reporting on Compliance with Laws and Regulations
Reporting on Internal Control

18. The Single Audit 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

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

20. Scope of an Audit Under the Single Audit 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

21. Study Break
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.
Financial audits
Attestation engagements
Performance audits
Compliance audits
B. Attestation engagements

22. Study Break
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.
Independence
Professional judgment
Competence
Quality Control and Assurance
C. Competence

23. Study Break
This act established the concept of a single organizationwide government audit encompassing both financial and compliance audits.
Securities Act of 1933
Securities Act of 1934
Single Audit Act
None of the above
C. Single Audit Act