12. The process used to understand the activities of an audit client is which of the following?

	A.	Complete after the initial engagement.
	B.	Complete after preliminary procedures.
	C.	Continual throughout the engagement.
	D.	Optional underneath a certain revenue threshold.

13. Which of the following is a unique procedure that auditors might perform to form an understanding of a nonprofit organization that they would not do in a different type of audit?

	A.	Obtain an in-depth understanding of the client's activities and operations.
	B.	Read third-party reviews of grant programs, including federal award programs.
	C.	Focus on areas that could cause material misstatements in the financial statements.
	D.	Document the risk assessment procedures performed in order to gain the understanding.

14. How might political and economic changes affect nonprofit organizations?

	A.	Relief efforts for disasters can draw funding away from nonprofit organizations.
	B.	States are prohibited from cutting funding to nonprofit organizations in order to balance budgets.
	C.	Changes to the economic climate are rare and should only be considered during an initial audit.
	D.	Nonprofit organizations react more quickly to downturns in the economy than for-profit businesses.

15. How might performance measures affect the audit or the auditor's assessment of the risks of material misstatement?

	A.	Typically, performance measures are used to highlight expected or normal results and trends that affect the organization being audited.
	B.	Auditors are prohibited from using performance measures when performing analytical procedures, but they can be used for planning purposes.
	C.	The pressure to meet performance targets could motivate intentional misstatements, which should be considered in the auditor's risk assessment.
	D.	If the organization is small enough, it likely will not have performance indicators, so the audit will be unaffected by them.

if you can only answer one, please don't answer at all.