Question

After completing the NYU’s NFP & Governmental Accounting, the Deloitte partner invite you to join the team to perform the annual audit of the Department of Education of NYC, which receives approximately $2 million per year in federal grant to conduct an experimental school science enrichment program. The program has now been in existence for three years. During the audit, you discovered the ordinary equipment purchased for the science enrichment program cost 5% more than the industry average. Later, you found out that the vendor is Mr. Green, the Director of the program’s childhood friend. Mr. Green is negotiating with the Vendor about the becoming partner of the firm after retiring from the DEO. The agency does have the vendor bidding policy.

• What Audit Guidance do you follow for your Audit assignment for the DOE?

		A compliance audit
		A single audit, Circular A‐133, Audits of States, Local Governments, and Non-Profit Organizations, and it’s “Compliance Supplement
		A complete audit

Answer 1

• The requirements for financial statement audits of for-profit recipients are not provided for under Regulation 10 CFR, which applies only to program compliance audits.
• Compliance audits as required under Regulation 10 CFR and this Audit Program must be conducted in accordance with the requirements and guidance set forth in Statement on Auditing Standards No. 117, Compliance Audits (SAS 117) and generally accepted government auditing standards
• The audit procedures provided in this Audit Program are the minimum necessary for uniform and consistent audit coverage.

The guidance that is followed for Audit assignment for the DOE is a compliance audit.

Answers is a. A compliance audit