Question 1

The Government Accountability Office has authority for issuing Governmental Auditing Standards.

Accepted Answer

A) True 
 B)False

Question 2

The use of opinion units allows an auditor to issue different opinions on different statements, instead of issuing one opinion.

Accepted Answer

A) True 
 B)False

Question 3

The program expense ratio for a not-for-profit organization will improve if the organization shifts costs from fund raising to program expenses.

Accepted Answer

A) True 
 B)False

Question 4

If an auditor is not independent which type of audit opinion is appropriate?

Accepted Answer

A)   Unqualified
B)   Qualified
C)   Adverse
D)   Disclaimer of opinionE) None of the above
F) B) and C)

Question 5

List four sources of income that is not subject to the unrelated business income tax?

Accepted Answer

Any four of the following:
(a) The busin...

Question 6

Tax-exempt organizations are required to file Form 990 by the 15th day of the 5th month following the organization's taxable year.

Accepted Answer

A) True 
 B)False

Question 7

In order to compute the operating ratio-enterprise funds, one would look in the CAFR in which of the following sections?

Accepted Answer

A)   In the government-wide Statement of Net Assets
B)   In the proprietary funds Statement of Net Assets
C)   In the proprietary funds Statement of Revenues, Expenses and Changes in Net Assets
D)   In the proprietary funds Statement of Cash FlowsE) None of the above
F) A) and B)

Question 8

The Single Audit Act intends that auditors conducting regular financial audits of state and local governments and not-for-profits organizations provide assurance to the federal government that:

Accepted Answer

A)   Federal funds have been expended in accordance with laws and regulations
B)   Federal funds are protected through a system of internal controls and sound financial management practices
C)   Both A & B
D)   None of the aboveE) A) and C)
F) A) and B)

Question 9

To apply for tax-exempt status, a non-profit organization must file:

Accepted Answer

A)   IRS Form 501(c) (3) 
B)   IRS Form 990
C)   IRS Form 1023
D)   None of the aboveE) C) and D)
F) None of the above

Question 10

Which of the following is a governmental audit that is concerned with examining, reviewing or performing agreed upon procedures on a subject matter of an assertion and reporting on the results.

Accepted Answer

A)   Financial Audit
B)   Attestation Engagement
C)   Performance Audits
D)   Nonaudit ServicesE) B) and D)
F) B) and C)

Question 11

Which of the following is true regarding the Single Audit Act and its amendments?

Accepted Answer

A)   An auditor is expected to express an opinion on "major programs," which are chosen based on size
B)   An auditor is required to select all "Type A" programs as major programs
C)   Both of the above
D)   Neither of the aboveE) B) and D)
F) B) and C)

Question 12

Which of the following is true regarding the Internal Revenue Service's concern regarding tax-exempt organizations?

Accepted Answer

A)   Organizations are charging many of their program expenses to fundraising
B)   Executives of tax-exempt organizations are receiving excessive salaries and benefits
C)   Both (a)  and (b) 
D)   Neither (a)  nor (b) E) B) and C)
F) A) and D)

Question 13

If a tax-exempt organization is found by the IRS to have paid excessive benefits, the organization must pay a tax penalty of 25% of the excess benefit and the employee must pay a 10% penalty, but the employee is entitled to keep the benefits.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not true of Tax Exempt Entities?

Accepted Answer

A)   Even though they are tax exempt entities they must still file a tax return
B)   They have to report income that is unrelated to the organization
C)   They have Retained Earnings in the equity section of financial statements
D)   Tax exempt entities get an automatic $1,000 deduction in Unrelated Business. IncomeE) All of the above
F) C) and D)

Question 15

Under the terms of the Single Audit Act and its amendments, what percentage of federal awards expenditures must be selected for audit?

Accepted Answer

A)   High Risk Auditee: 100%; Low Risk Auditee: 50%
B)   High Risk Auditee: 100%; Low Risk Auditee: 25%
C)   High Risk Auditee: 50%; Low Risk Auditee: 25%
D)   High Risk Auditee: 50%; Low Risk Auditee: 0%E) A) and D)
F) C) and D)

Question 16

A government publishes information about its fire department. What type of service efforts and accomplishments measure would Fire Loss per Capita represent?

Accepted Answer

A)   Input
B)   Output
C)   Outcome
D)   EfficiencyE) A) and B)
F) All of the above

Question 17

Entities that are tax exempt under IRS Section 501(c)3 are prohibited from having surpluses (revenues exceed expenses).

Accepted Answer

A) True 
 B)False

Question 18

Unrelated Business Income Tax is an excise tax, applied to the gross receipts of a business activity. Therefore allocations of expenses incurred in generating the income are irrelevant.

Accepted Answer

A) True 
 B)False

Question 19

What is the purpose of the Unrelated Business Income Tax?

Accepted Answer

Not-for-profits performing business acti...

Question 20

What are major programs with respect to the Single Audit Act of 1984 and amendment of 1996? Distinguish between Type A and Type B programs.

Accepted Answer

A major program is one that is selected ...

Exam 13: Auditing, Tax-Exempt Organizations, and Evaluating Performance

List four sources of income that is not subject to the unrelated business income tax?

Correct AnswerverifiedAny four of the following:(a) The busin...View AnswerShow Answer

The Government Accountability Office has authority for issuing Governmental Auditing Standards.

Correct AnswerverifiedShow Answer

The use of opinion units allows an auditor to issue different opinions on different statements, instead of issuing one opinion.

Correct AnswerverifiedShow Answer

Which of the following is true regarding the Single Audit Act and its amendments?

Correct AnswerverifiedShow Answer

Which of the following is not true of Tax Exempt Entities?

Correct AnswerverifiedShow Answer

The Single Audit Act intends that auditors conducting regular financial audits of state and local governments and not-for-profits organizations provide assurance to the federal government that:

Correct AnswerverifiedShow Answer

Under the terms of the Single Audit Act and its amendments, what percentage of federal awards expenditures must be selected for audit?

Correct AnswerverifiedShow Answer

In order to compute the operating ratio-enterprise funds, one would look in the CAFR in which of the following sections?

Correct AnswerverifiedShow Answer

Which of the following is a governmental audit that is concerned with examining, reviewing or performing agreed upon procedures on a subject matter of an assertion and reporting on the results.

Correct AnswerverifiedShow Answer

Which of the following is true regarding the Internal Revenue Service's concern regarding tax-exempt organizations?

Correct AnswerverifiedShow Answer

What are major programs with respect to the Single Audit Act of 1984 and amendment of 1996? Distinguish between Type A and Type B programs.

Correct AnswerverifiedA major program is one that is selected ...View AnswerShow Answer

If a tax-exempt organization is found by the IRS to have paid excessive benefits, the organization must pay a tax penalty of 25% of the excess benefit and the employee must pay a 10% penalty, but the employee is entitled to keep the benefits.

Correct AnswerverifiedShow Answer

To apply for tax-exempt status, a non-profit organization must file:

Correct AnswerverifiedShow Answer

What is the purpose of the Unrelated Business Income Tax?

Correct AnswerverifiedNot-for-profits performing business acti...View AnswerShow Answer

If an auditor is not independent which type of audit opinion is appropriate?

Correct AnswerverifiedShow Answer

Unrelated Business Income Tax is an excise tax, applied to the gross receipts of a business activity. Therefore allocations of expenses incurred in generating the income are irrelevant.

Correct AnswerverifiedShow Answer

A government publishes information about its fire department. What type of service efforts and accomplishments measure would Fire Loss per Capita represent?

Correct AnswerverifiedShow Answer

Tax-exempt organizations are required to file Form 990 by the 15th day of the 5th month following the organization's taxable year.

Correct AnswerverifiedShow Answer

The program expense ratio for a not-for-profit organization will improve if the organization shifts costs from fund raising to program expenses.

Correct AnswerverifiedShow Answer

Entities that are tax exempt under IRS Section 501(c)3 are prohibited from having surpluses (revenues exceed expenses).

Correct AnswerverifiedShow Answer

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Any four of the following:
(a) The busin...
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A major program is one that is selected ...
View Answer

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Not-for-profits performing business acti...
View Answer

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Tax-exempt organizations are required to file Form 990 by the 15^th day of the 5^th month following the organization's taxable year.

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