AUD 6.10 - Ethical Requirements of the GAO and DOL

  1. True / False: The GAO ethical standards include a principle related to fraud
    False
  2. What are the 5 ethical principles according to GAGAS?
    • Serve the public interest
    • Act with integrity
    • Work with independence and objectivity
    • Use government information, resources, and positions properly
    • Behave professionally
  3. An auditor under GAGAS must have an external peer review every ____ years.
    3
  4. What are the 3 steps for using the GAGAS independence conceptual framework
    • identify threats to independence
    • evaluate the significance of the threats, both individually and in the aggregate
    • apply safeguards to eliminate the threats or reduce them to an acceptable level
  5. What are the broad categories of threats to independence according to GAGAS, and a brief description
    • Self-Interest Threat: A financial or other interest will inappropriately influence an auditor’s judgment or behavior
    • Self-Review Threat: The auditor has provided non-audit services and will not appropriately evaluate the results of previous judgments made when forming a judgment significant to an audit
    • Bias Threat: The auditor will allow his political, ideological, social, or other convictions to prevent a position that is not objective
    • Familiarity Threat: A close relationship with management or personnel in the audited entity influences the auditor’s judgment
    • Undue Influence Threat: External influences or pressures will impact the auditor
    • Management Participate Threat: When the auditor takes on a management role in the audited entity
    • Structural Threat: When an audit organizations placement within a government entity, in combination with the structure of the government entity being audited, will impact the organization’s ability to perform work and report results objectively.
  6. What is the best safeguard for any of the above threats?
    Get a 2nd Opinion: Consult an outside party, have them reperform a portion of the audit, or at least perform a review
  7. True / False: Review by an outside party is an acceptable safeguard to reduce the threat of independence when the auditor has assumed some management responsibilities for an audited entity.
    • False
    • NO safeguards could reduce the threat to an acceptable level.
  8. What types of documentation are required to validate independence?
    • Document…
    • Threats to independence and require the application of safeguards and the safeguards applied
    • The safeguards employed if the audit organization is structurally located within a government entity
    • Consideration of audited entity management’s ability to effectively oversee a non-audit service to be provided by the auditor
    • The auditor’s understanding with an audited entity for which the auditor will perform a non-audit service.
  9. True / False: A CPA is required to be independent when rendering an opinion on an employee benefit plan under the Employee Retirement Income Security Act of 1974 (ERISA)
    True
  10. True / False: For ERISA, independence is not impaired when a former officer or employee of the retirement plan or plan sponsor is employed by the firm and the former employee has completely disassociated from the plan, and does not participate in the audit of the FS during the period he was employed by the plan.
    True
  11. True / False: For ERISA, independence is impaired when the accountant’s firm is engaged by the plan sponsor during the period when the accountant’s firm is also engaged with the employee benefit plan.
    • False
    • Independence is not impaired
  12. True / False: For ERISA, independence is impaired because the firm provided actuary services for the entity.
    • False
    • Independence is not impaired
  13. True / False: For ERISA, independence is impaired if you firm maintains financial records for the employee benefit plan.
    True
Author
BethM
ID
333069
Card Set
AUD 6.10 - Ethical Requirements of the GAO and DOL
Description
Becker Review 2017
Updated