1 -Compliance testing may require auditor ingenuity. The CPA rm of which you are a manager has placed you in charge of the audit of the Thornburg School District. The district receives substantial nancialsupportfromtheStateEducationAgency. The state requires aid recipients to have annual singleauditsconductedbyindependentCPArms. The rms are responsible for verifying that recip- ients have complied with the provisions of all nancial awards from the state. From your preliminary survey, you learn that thedistrictreceivedanawardof$3milliontoprovide free hot lunches to elementary school children of low-income families. The award species that only children from families with incomes under $30,000 are eligible to participate in the program. The state requires districts to determine eligibility, but it pro- vides no guidance as to how they are to do so. Based only on this limited information, it is obviously not possible to develop a specic audit program to ensure that the district has complied with the eligibility provisions. However, before you even meet with district ofcials to discuss the audit, you wish to have a preliminary strategy in mind. 1. As best you can from the limited amount of information provided, design a strategy to test compliance with the eligibility provisions. 2. Supposethattheauditisbeingconductedunder thefederalSingleAuditActandthattheauditors are required to adhere to all of its reporting provisions.Aspartofyourexamination,yound that25studentsoutof350intheprogramfailed to meet the eligibility requirements. Assuming thattheauditorsconsidertheamountsinvolved as indicative of a weakness in internal controls, how, if at all, should that nding affect your report on the program? 2 - Even when objectives are clearly stated, the reasons they have not been met may not be easy to discern. The City on the Lake Convention Center was constructed at a cost of $250 million, with the aim of attracting visitors to the area. Taxpayers were assured that the convention center would be self-supporting: that convention center revenues would be sufcient to cover all expenses, includ- ing debt service. Yet, in its rst ve years of operation, the center consistently reported oper- ating decits. In a recent report to the city council, the convention center manager attributed the decits to the centers inability to attract sufcient con- ventions and other events. Whereas convention planners had projected that the center would have events scheduled for at least 250 days during the year, it had so far averaged only 180 daysfar fewer than the break-even point. Asthecityauditor,youhavebeenrequestedby the city council to conduct a performance audit to learn why the center has been unable to attract the projected number of conventions and other events and to make recommendations for appropriate changes so that the projections can be met. Propose, in general terms, an approach to fullling the mandate of the city council