Acct567Professor: Homework week 6Problem 12 – 4Also known as GAS, GAGAS stands for Generally Accepted Government Auditing Standards. These standards are imposed by the Comptroller General in the Yellow Book. On the other hand,GAAS stands for Generally Accepted Auditing Standards, which are established by the AICPA (American Institute of Certified Public Accountants). GAGAS enable auditors to provide their opinions on the financial statements and provide reports on attestation engagements, financial statement audits, and performance audits such as the operational audits that are performed for theassessment of the effectiveness and efficiency of an organization. As such, GAGAS has a broader scope as it encompasses and expands on GAAS. Aside from GAAS, the AICPA also hasstandards on Consulting Services and Standards on attestation Engagements (SSAEs).a. The Department of education sponsors the programs Early Reading First and Title I. On the other hand, the Department of Agriculture sponsors the Adult Care Food Program, the School Breakfast Program, and the National School Lunch Program. Finally, the Department of Health and Human Services sponsors the Head Start program.b. For audit purposes, the programs that can be considered a cluster are the National School Breakfast program and the National School Lunch program, which are both sponsored by the Department of Agriculture.c. Given that the criterion for a program to be considered a major Type A program is a total of 300,000 in federal funds expended, only Head Start can be considered a Type A program as it has a total of $520,000 in funds expended. On the other hand, the other clusters have expended funds that are below the threshold of $100,000, which make them exempt from consideration on the basis of their size.In particular, the Child Adult Care Food Program is at $28,112; the Early Reading First Program is at $55, 0000, and the program cluster, which consists of School Breakfast and School Lunch, is at $33,149.d. Based on size alone, I would choose to audit the Head Start program. It is a Type A program and has used more than 50% of the entire amount of funds that the organization received. With no other low-risk Type A programs, only Head Start would need to undergo an audit.e. An audit problem identified by GAO and OMB in the past is that the same programs end up being audited. However, in this case, the Head Start program is the only program that meets the 50%-coverage rule, which essentially means that it’s the only program that would require to be audited. In this case, the auditor may choose to audita low-risk program just to comply with the A-133 requirement. On the other hand, the auditor should also perform an analysis and determine whether the auditee could be considered a low-risk auditee. Upon determination that the auditee is low-risk, theauditor would need to audit 25% of the expended federal funds. In this case, the auditor should select one Type B for every low-risk Type A. For the selection of the low-risk programs, the criterion of $224,066 of expended funds would be used (25% of 896,261). To meet the requirements, the auditor can just choose to audit the Title 1 program instead.f. An important compliance issue is the income eligibility of the children that the program served. A violation of this compliance requirement would imply that the federal funds were misused as far as the program’s purpose was concerned. However,the organization in this case has complied with this requirement as it had served economically disadvantaged children through its various education and food programs. https://www.cfda.gov/index?s=program&mode=list&tab=list&tabmode=list&_so_list_froma345e59a09d0aa1d5eef16228ddd7b4c=1250&_so_list_froma345e59a09d0aa1d5eef16228ddd7b4cwww.cfda.govProblem 14 -