Chapter 11 - Auditing of governmental and not-for-profit organizations. After studying Chapter 11, you should be able to: Explain the essential elements of financial audits by independent CPAs; explain what is meant by GAGAS, the source of GAGAS, and why and how GAGAS are broader than GAAS; explain the types of audits performed under GAGAS, including financial audits, attestation engagements and performance audits. | Chapter 11 Auditing of Governmental and Not-for-Profit Organizations Learning Objectives After studying Chapter 11, you should be able to: Explain the essential elements of financial audits by independent CPAs, including: The objective(s) of financial audits The source and content of GAAS Audit report formats and opinions The audit process 1 Learning Objectives (Cont’d) Explain what is meant by GAGAS, the source of GAGAS, and why and how GAGAS are broader than GAAS Explain the types of audits performed under GAGAS, including financial audits, attestation engagements and performance audits 2 Learning Objectives (Cont’d) Explain the essentials of a single audit, including: The purpose and scope Major program identification Audit work required Reports that must be submitted Describe the implications of the Sarbanes-Oxley Act of 2002 on governments and not-for-profit organizations 2 Objective of a Financial Audit The independent auditor’s objective is to render a report expressing an opinion that the financial statements present fairly the financial position, changes in financial position, and, where applicable, cash flows of the organization “Present fairly” means in conformity with appropriate generally accepted accounting principles (GAAP) Opinions are based on reasonable assurance that the statements are free from material misstatements Auditors performing financial audits follow GAAS, reflected in Statements of Auditing Standards (SASs) issued by the AICPA 10 standards (expanded on by more than 120 SASs) 3 general standards 3 field work standards 4 reporting standards See Ill. 11-1 Generally Accepted Auditing Standards (GAAS) 3 Paragraphs in a standard audit report (see Ill. 11-2): Opening Identifies the financial statements being audited Scope Describes the nature of the audit Opinion Expresses the auditor’s opinion about the fairness of the financial statements Explanatory Used in most governmental audits, usually related to the . | Chapter 11 Auditing of Governmental and Not-for-Profit Organizations Learning Objectives After studying Chapter 11, you should be able to: Explain the essential elements of financial audits by independent CPAs, including: The objective(s) of financial audits The source and content of GAAS Audit report formats and opinions The audit process 1 Learning Objectives (Cont’d) Explain what is meant by GAGAS, the source of GAGAS, and why and how GAGAS are broader than GAAS Explain the types of audits performed under GAGAS, including financial audits, attestation engagements and performance audits 2 Learning Objectives (Cont’d) Explain the essentials of a single audit, including: The purpose and scope Major program identification Audit work required Reports that must be submitted Describe the implications of the Sarbanes-Oxley Act of 2002 on governments and not-for-profit organizations 2 Objective of a Financial Audit The independent auditor’s objective is to render a report
