Reference no: EM132634749

Question - The following descriptions relate to an independent CPA firm that includes among its audit clients municipalities, school districts, and not-for-profit organizations, all of which receive federal financial assistance. Each description presents a possible violation of Government Auditing Standards. For each description, indicate the standard at issue and tell why there might be a violation.

The firm periodically assigns members of its staff on a temporary basis to government and not-for-profit audit clients. The staff members typically serve as financial consultants or as acting financial administrators.

The firm may not test compliance with certain federal grant provisions if the grant was examined by the client's internal auditors and no violations were detected.

In its single audit of a client's federally assisted program, the firm detected numerous instances of noncompliance with applicable federal regulations. Inasmuch as none of the violations was either serious or material, the firm reported them to the client in its "management letter" but did not mention them in its compliance report to federal officials.

As part of all financial audits of federal funds recipients, the auditors carefully assess the adequacy of internal controls. They do not, however, prepare a specific report on internal controls or address them in the standard audit report.