[Anonymous]

SIM Example:

Changes to the financial support of the Kanine Kennel Dog Shelter, Inc. may create additional requirements for Smith, Smythe & Smathers as they complete their audit. For each of the additional circumstances or responsibilities described below, identify the most likely combination of audit types by double-clicking on a shaded cell and selecting the appropriate option from the list provided. Assume each item is independent of the other items and all items are material.

Select Item

(A) GAAS Audit

(B) GAAS & GAGAS Audit

(C) GAAS, GAGAS, & Single Audit

1) The auditors discover that Kanine, Inc. has received over $500,000 in federal financial assistance. (B) GAAS & GAGAS Audit

2) The auditors discover that Kanine, Inc. has expended over $300,000 in federal financial assistance. (B) GAAS & GAGAS Audit

3) The auditors are obligated to evaluate materiality based upon major programs. (C) GAAS, GAGAS, & Single Audit

4) The auditors are obliged to report on internal control over compliance applicable to each major program. (C) GAAS, GAGAS, & Single Audit

5) The auditors must report on the fair presentation on the FS of Kanine, Inc., taken as a whole. (A) GAAS Audit

6) The auditors must expand their report to include whether federal financial assistance has been administered in accordance with laws and regulations (B) GAAS & GAGAS Audit

7) Firm standards should include a mandatory peer review every 3 years. (B) GAAS & GAGAS Audit

[Anonymous]

I thought when I see $500,000+ expenditures and $300,000+ that expends on each major program, the auditor must perform Single Audit Act.

However, with this SIM sample from Becker's final review, I got only one item correct, that's number 5.

Please can someone explain it better to know and decide when and when not to perform Single Audit Act.

Thanks.

[Anonymous]

Bump.

Anyone please take a look at this SIM.

Thanks.

[Anonymous]

I'm a little confused by that too…hopefully someone can help explain it?

[Anonymous]

I think, I finally learned why the answer is this and that item is wrong or so after a few days of wondering.

For item#1, the entity has merely received $500k so it falls under GAAS & GAGAS only. If it SPENT $500k or over in FFA, it would qualify for a SAA.

Same thing applies true to item#2. The $300k threshold relates to the selection of major grants upon determination that a single audit is required.

[Anonymous]

Ohh I see what you mean! Thanks for explaining that, it makes a lot more sense now!

[Author]

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