Certified Government Auditing Professional (CGAP) Practice Exam

What type of audit standards do audits at the federal, state, or local levels of government in the US most likely follow?

1. Always subject to both IIA Standards and Generally Accepted Government Auditing Standards (GAGAS).

2. Subject only to GAGAS.

3. Most commonly subject to Generally Accepted Auditing Standards (GAAS).

4. Influenced by various issued laws, audit requirements, and policies of the audit organization.

The correct answer is: Influenced by various issued laws, audit requirements, and policies of the audit organization.

The correct answer identifies that audits conducted at the federal, state, or local levels of government in the U.S. are influenced by various laws, audit requirements, and policies established by the audit organization. This reflects the complexity of the auditing landscape within government entities, where different layers of regulations and mandates come into play. Government auditing is not uniform, as different governmental entities may adhere to specific statutory requirements that dictate their auditing practices. This includes adherence to laws relevant to public accountability, funding regulations, and policies that can vary significantly across jurisdictions. Each level of government can impose its own standards and procedures, necessitating a flexible approach to comply with applicable laws and ensure proper oversight. While Generally Accepted Government Auditing Standards (GAGAS) are indeed fundamental to government audits, indicating a recognized framework for conducting these audits, they operate within a broader environment shaped by legislative and organizational policies. This distinction is crucial, as it underscores the necessity for auditors to remain aware of the diverse requirements specific to their audits, which can include factors beyond standard auditing practices. The other options inaccurately generalize the requirements or narrow the focus to specific standards, failing to capture the full spectrum of influences present in government auditing.