Acct567 Professor Homework week 6 Problem 12 4 Also 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 the assessment 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 has standards 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 audit a 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 the auditor 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 https www cfda gov index s program mode list tab list tabmode list so list froma345e59a09d0aa1d5eef16228ddd 7b4c 1250 so list froma345e59a09d0aa1d5eef16228ddd7b4c programs www cfda gov Problem 14 2