Problem #3

Several questions come up while youare serving as a partner of the CPA firm engaged to perform the annualaudit of the Shady Pines School District. The district receivesapproximately $1.7 million per year in federal assistance. Thisincludes $550,000 in annual grants to conduct an experimental highschool science enrichment program. The program has been in existencefor three years.

1. You assign one of the firm’s managersto be in charge of the audit’s field work. The manager recentlyreturned from a two week professional education course in Partnershipand S-Corporation taxation. She took the course to satisfy her state’sbiannual 80-hour CPE requirement. She took no other CPE courses in thepast two years. Why might her appointment be in violation of Government Auditing Standards ?
2. Soon afterthe audit staff began the engagement, the school district’s chieffinancial officer called to complain that the auditors were makinginquiries of the district’s employees as to the political activities ofdistrict administrators. Those matters, he asserted, were clearlybeyond the scope of a financial engagement. How would you respond?
3. Aftercompleting the financial audit for the district, the school boardrequested that the firm conduct a performance audit of the scienceenrichment program. In what way would the performance audit differconceptually from the financial engagement?
4. Assumingyou have been able to establish that the primary objective of thescience enrichment program is to encourage students to enter vocationalfields related to science. The grand funds may be used to pay forteachers’ training, curriculum development projects, equipment andtexts, and extracurricular activities related to science.

1. • What would be the purpose of preparing a schedule showing how the grant funds were disbursed?
   • How would you recommend the auditors gain an understanding of the internal controls over program expenditures?
   • Inasmuchas the program has been in existence for only three years, how might youassess whether the program has fulfilled its objectives?

Required:

• Submit your responses to the Problem #3 questions in a 3-5-page Microsoft Word document.
• Ensure your responses are well-written.
• Be sure to follow the formatting guidelines outlined in the CSU Global Writing Center (Links to an external site.) .
• Include at least two scholarly references in addition to the course textbook. The CSU Global Library (Links to an external site.) is a good place to find these references.