Under a Single Audit

question 41

Multiple Choice

Under a single audit:

• A) An annual audit must be performed encompassing the nonfederal entity's financial statements and schedule of expenditures of federal awards.
• B) The audit must be conducted by an independent auditor in accordance with generally accepted government auditing standards (GAGAS) and cover the operations of the entire nonfederal entity.
• C) For each major program, the auditor must obtain an understanding of the internal controls pertaining to the compliance requirements for the program, assess control risk, and perform tests of controls, unless the controls are deemed to be ineffective.
• D) All of the given statements regarding a single audit are True.

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Definitions:

Opportunity Cost

The value of the best alternative that must be forgone as a result of choosing a particular action or decision.

Law of Comparative Advantage

An economic principle stating that countries or individuals gain when they produce goods and services for which they have lower opportunity costs relative to others.

Low Opportunity Cost

A situation where the cost of forgoing the next best alternative is relatively minimal.

Productive Activity

An action or process that leads to the creation of goods or services which have value and contribute to the economy.