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

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Question 1

Multiple Choice

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If an auditee is not considered low-risk,what percent of federal funds expended are auditors required to express an opinion on?

A) 100%.
B) 70%.
C) 50%.
D) 25%.

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Question 2

Multiple Choice

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The Museum of Creative Arts had the following expenses: $5,000 of membership development expense,$3,000 of Fund-raising expense,$2,000 of Instructional Classes expense,and $1,500 of general and administrative expense.What is the program expense ratio (rounded) ?

A) 70%.
B) 43%.
C) 39%.
D) 17%.

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Question 3

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The single audit requirements apply only to state and local governments.Private not-for-profits do not have to comply with these requirements,even if they receive federal grants.

Which of the following conditions would exempt income-producing activities from the Unrelated Business Income Tax (UBIT) ?

Which of the following is not a type of governmental audit?

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?

The classification of Net Assets for tax-exempt organizations are consistent with FASB standards for not-for-profit organizations.

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

The Comprehensive Annual Financial Report of a local governmental unit includes several statements and sections.When a financial analyst is computing ratios and extracting other information,he or she needs to know where in the CAFR to look.Use the following classification to indicate where an analyst would look in the CAFR to compute the ratios and gather information by placing the appropriate letter(s)in the space next to each item.When possible,choose the location in the basic financial statements or notes that would be subject to examination: a.Letter of transmittal-introductory section b.Management's Discussion and Analysis c.Auditor's opinion d.Government-wide Statement of Net Assets e.Government-wide Statement of Activities f.Governmental funds Balance Sheet g.Governmental Funds Statement of Revenues,Expenditures,and Changes in Fund Balances h.Proprietary funds Statement of Net Assets i.Proprietary funds Statement of Revenues,Expenses,and Changes in Net Assets j.Proprietary funds Statement of Cash Flows k.Fiduciary funds Statement of Fiduciary Net Assets l.Fiduciary funds Statement of Changes in Fiduciary Net Assets m.Notes to the Basic Financial Statements n.Required Supplementary Information other than MD&A o.Combining and individual fund statements (Other Supplementary Information) p.Statistical Section Ratios and Other Items: ______ 1.Net debt per capita ______ 2.Net debt to fair value of property ______ 3.Interest coverage-revenue bonds ______ 4.Operating ratio-enterprise funds ______ 5.Governmental revenues per capita ______ 6.Debt service/total governmental revenues ______ 7.Unreserved fund balance/revenues-General Fund ______ 8.Actual expenditures/budgeted expenditures-General Fund ______ 9.Unrestricted net assets-governmental activities/general government expenses-governmental activities ______ 10.Cash expended on capital assets- enterprise activities ______ 11.Summary information regarding overall government financial performance for the year ______ 12.City management organizational chart ______ 13.Unfunded pension liability for the government as a whole ______ 14.Information regarding actual and planned maintenance of infrastructure,when the modified approach is used ______ 15.Debt limit and debt margin ______ 16.Total expenses for interest for a major enterprise fund ______ 17.Assessed value of property ______ 18.Information regarding balances for a nonmajor enterprise fund ______ 19.Schedule of direct and overlapping debt ______ 20.Cash balances in a pension trust fund

The program expense ratio is calculated as Program service expenses / Total expenses.

Which of the following are not required disclosures in a Form 990?

Service Efforts and Accomplishments Reporting is best completed by using a variety of measures,which are reported consistently.

Describe the types of audit opinions that may be issued on a governmental or not-for-profit financial report.

Which of the following audit opinions is issued when a government fails to comply with generally accepted accounting principles?

Which of the following would be an example of an attestation engagement?

Churches are exempt from Form 990 filing requirements.

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

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

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

Which of the following is not prohibited of organizations receiving tax-exempt status under IRS Section 501(c) 3?