Select the correct one from the following:

1. An independent CPA is engaged to audit the financial statements of the City of Highland Hills. The City has a variety of revenue sources including a $350,000 grant from the U.S. Department of Housing and Urban Development. Which of the following audit standards must the CPA use when conducting the audit?

a. The AICPA audit standards.

b. The GAO audit standards.

c. The OMB audit standards.

d. All of the above.

2. An independent CPA who conducts audits of entities that receive federal financial assistance has what responsibility related to peer review?

a. Does not have to have one unless he/she belongs to the AICPA Private Companies Practice Section.

b. Must have one every year.

c. Must have one at least every two years.

d. Must have one at least every three years.

3. An independent auditor has conducted an audit of the financial statements of an entity that receives federal financial assistance, but that is not subject to the OMB standards. What report(s) must the auditor issue at the completion of this engagement?

a. Only an opinion (or disclaimer of opinion) on the financial statements.

b. An opinion (or disclaimer of opinion) on the financial statements and a report on internal control.

c. An opinion (or disclaimer of opinion) on the financial statements, a report on internal control, and a report on compliance.

d. An opinion (or disclaimer of opinion) on the financial statements, a report on internal control, and an opinion (or disclaimer of opinion) on compliance.

4. Circular A-133, issued by the Office of Management and Budget,

a. Applies only to state and local governmental units

b. Applies only to not-for-profit organizations

c. Applies to both

d. Applies to neither