Question

Identification of Audits and Auditors. Audits may be characterized as (a) financial statement audits, (b) compliance audits, (c) economy and efficiency audits, and (d) program audits. The work can be done by independent (external) auditors, internal auditors, or governmental auditors (including IRS auditors and federal bank examiners). Following is a list of the purpose or products of various audit engagements. [Students may need to refer to Chapter 1.]

a. Analyze proprietary schools’ spending to train students for oversupplied occupations.
b. Determine the fair presentation in conformity with GAAP of an advertising agency’s financial statements.
c. Study the Department of Defense’s expendable launch vehicle program.
d. Determine costs of municipal garbage pickup services compared to comparable service subcontracted to a private business.
e. Audit tax shelter partnership financing terms.
f. Study a private aircraft manufacturer’s test pilot performance in reporting on the results of test flights.
g. Periodically have U.S. comptroller of currency examine a national bank for solvency.
h. Evaluate the promptness of materials inspection in a manufacturer’s receiving department.
i. Report on the need for the states to consider reporting requirements for chemical use data.
j. Render a public report on the assumptions and compilation of a revenue forecast by sports stadium/racetrack complex.
Required:
Prepare a three-column schedule showing (1) each of the engagements listed, (2) the type of audit (financial statement, compliance, economy and efficiency, or program), and (3) the
kind of auditors you would expect to be involved.

Answer 1

Audit Engagements Type of Audit Kind of Auditors

a. Economy and efficiency Governmental auditors

b. Financial statement audit External auditors

c. Economy and efficiency Governmental auditors

d. Economy and efficiency Internal auditors

e. Compliance audit Governmental auditors

f. Compliance audit Internal auditors

g. Compliance audit Governmental auditors

h. Economy and efficiency Internal auditors

i. Program audit Governmental auditors

j. Financial statement audit External auditors

Step-by-step explanation:

a) Data and Analysis:

Types of audit:

(a) financial statement audits = check conformity with standards.

(b) compliance audits = ensure that laid-down rules are being followed.

(c) economy and efficiency audits = resource and process improvement.

(d) program audits = performance analysis to determine effective achievement of goals.

Kind of auditors:

1. independent (external) auditors = independent consultants

2. internal auditors are company employees

3. governmental auditors (including IRS auditors and federal bank examiners)