Week 5 DQ 1
How do audits of governmental agencies differ from those of not-for-profit entities? How are these audits different from those of organizations that operate for profit? Who are the stakeholders for the various audits?
1. Differences between audits of governmental agencies and not-for-profit entities relate to the difference in audit standards for these entities. Government auditing standards as established by the Government Accountability Office (GAO) are stricter and provide enhanced standards for audits of governmental entities, government auditors are required to have a higher degree of independence than not-for-profit auditors and government auditors must obtain more continuing professional education credits hours than not-for-profit auditors. In addition to the enhanced requirements stated above, governmental accounting standards also require auditors to design their audits to be able to detect noncompliance with contracts and grants. GAO standards also require enhanced standards with regard to evidence in audit workpapers and reporting.
2. Audits for governments and not-for-profit organizations differ from those performed for private sector businesses in that government and not-for-profit audits goes beyond the attest function of private sector audits. In government and not-for-profit audits, auditors not only attest to the accuracy of the financial and non-financial information contained within the financial statements and MD&A but they also provide an evaluation of whether the government or not-for-profit organization complied with laws and regulations and whether the entity being audited carried out their objectives and mission as defined in their mission statement efficiently and effectively.
3. The stakeholders for financial audits, of private sector organizations used in determining whether financial statement are “presented fairly in accordance with generally accepted accounting principles” are investors, creditors, officers of the business
1. Differences between audits of governmental agencies and not-for-profit entities relate to the difference in audit standards for these entities. Government auditing standards as established by the Government Accountability Office (GAO) are stricter and provide enhanced standards for audits of governmental entities, government auditors are required to have a higher degree of independence than not-for-profit auditors and government auditors must obtain more continuing professional education credits hours than not-for-profit auditors. In addition to the enhanced requirements stated above, governmental accounting standards also require auditors to design their audits to be able to detect noncompliance with contracts and grants. GAO standards also require enhanced standards with regard to evidence in audit workpapers and reporting.
2. Audits for governments and not-for-profit organizations differ from those performed for private sector businesses in that government and not-for-profit audits goes beyond the attest function of private sector audits. In government and not-for-profit audits, auditors not only attest to the accuracy of the financial and non-financial information contained within the financial statements and MD&A but they also provide an evaluation of whether the government or not-for-profit organization complied with laws and regulations and whether the entity being audited carried out their objectives and mission as defined in their mission statement efficiently and effectively.
3. The stakeholders for financial audits, of private sector organizations used in determining whether financial statement are “presented fairly in accordance with generally accepted accounting principles” are investors, creditors, officers of the business