The report on a nongovernmental entity's audited financial statements captures an independent auditor's opinion on financial position, results of operations, and cash flows in a single, critical phrase known well to the users of financial statements: ". . . present fairly in all material respects . . ." . One audit, one audit report.

But in the array of reports on a state or local governmental entity's single audit, auditors report on a variety of matters crucial to compliance with the Single Audit Act Amendment and with the Office of Management and Budget (OMB) Circular A-133, among them the entity's general purpose financial statements, compliance with laws and regulations, and participation in federal financial assistance programs. One audit, several reports.

Required: 

Select the audit reports issued for a single audit of a state or local governmental unit either from the National Automated Accounting Research System (NAARS), a computerized data bank that includes several hundred governmental reports (among others), or from another source such as a governmental unit near you.

1. Draft a report that interprets the meaning of each paragraph (i.e., why do you think professional standards require auditors to say what they're saying?) and indicates the conclusions reached by the auditor (i.e., what is the critical phrase users anchor on?) in each of the five reports introduced in this chapter that are applicable to the reporting entity:

a. Report on compliance with general requirements.

b. Report on major program compliance with specific requirements.

c. Report on nonmajor program compliance with specific requirements.

d. Report on the schedule of federal financial assistance.

e. Report on internal controls over federal financial assistance.

2. Explain why you think that a single audit report may not include one or more of the reports listed above.