Accounting For Governmental & Nonprofit Entities
Accounting For Governmental & Nonprofit Entities
18th Edition
ISBN: 9781259917059
Author: RECK, Jacqueline L., Lowensohn, Suzanne L., NEELY, Daniel G.
Publisher: Mcgraw-hill Education,
Question
Chapter 11, Problem 1Q
To determine

Mention the purpose of financial audits.

Expert Solution
Check Mark

Explanation of Solution

Financial audit: The audit which focusses on the evaluation of the faithful and fair representation (of financial statements of government entities, educational institutions, health care organizations, and not-for-profit organizations), and the reliability of the financial information, in conformity with the generally accepted accounting standards (GAAS) established by Accounting Standards Board (ASB) of American Institute of Certified Public Accountants (AICPA), by a certified public accountant (CPA) is referred to as financial audit.

Purposes of financial audit:

  • Provide assurance to the external users that the financial statements are prepared in conformity with GAAS, established by ASB of AICPA.
  • Report that the material facts have been disclosed.
  • Enhance the credibility of the financial information from the opinion declared by the CPA out of his objectivity in the audit engagement.
To determine

Indicate the bodies that are responsible for setting standards for the financial audits of government and not-for-profit organizations.

Expert Solution
Check Mark

Explanation of Solution

Governing or authorized bodies: Government entities, educational institutions, health care organizations, and not-for-profit organizations should use generally accepted accounting standards (GAAS) that are established by Accounting Standards Board (ASB) of American Institute of Certified Public Accountants (AICPA). A broader scope is provided by generally accepted government accounting standards (GAGAS) that are established by Government Accountability Office (GAO). The final level of audit is Single Audit Act which incorporates GAGAS. The Single Audit Act is the complex level of audit.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Explain how governmental financial auditing is similar to anddifferent from audits of commercial companies. Who does governmental auditing?
Which of the following groups sets standards for audits of federal financial assistance recipients? a. U.S. General Accounting Office b. U.S. Office of Management and Budget c. Governmental Accounting Standards Board d. Financial Accounting Standards Board
What are some ways an audit report for a government differs form an audit report for a for-profit organization?
Knowledge Booster
Similar questions
    • SEE MORE QUESTIONS
    Recommended textbooks for you
  • Auditing: A Risk Based-Approach (MindTap Course L...
    Accounting
    ISBN:9781337619455
    Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
    Publisher:Cengage Learning
    Principles of Accounting Volume 1
    Accounting
    ISBN:9781947172685
    Author:OpenStax
    Publisher:OpenStax College
    Business/Professional Ethics Directors/Executives...
    Accounting
    ISBN:9781337485913
    Author:BROOKS
    Publisher:Cengage
  • Auditing: A Risk Based-Approach to Conducting a Q...
    Accounting
    ISBN:9781305080577
    Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
    Publisher:South-Western College Pub
  • Auditing: A Risk Based-Approach (MindTap Course L...
    Accounting
    ISBN:9781337619455
    Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
    Publisher:Cengage Learning
    Principles of Accounting Volume 1
    Accounting
    ISBN:9781947172685
    Author:OpenStax
    Publisher:OpenStax College
    Business/Professional Ethics Directors/Executives...
    Accounting
    ISBN:9781337485913
    Author:BROOKS
    Publisher:Cengage
    Auditing: A Risk Based-Approach to Conducting a Q...
    Accounting
    ISBN:9781305080577
    Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
    Publisher:South-Western College Pub