AGA CGFM Exam Dumps

Performance Audit Objectives:

Performance audits evaluate whether government entities are operating efficiently, effectively, and in compliance with applicable laws.

A critical aspect is assessing whether the entity has implemented corrective actions in response to prior audit findings and recommendations, as this demonstrates accountability and progress.

Explanation of Answer Choices:

A . Updated its vision and strategic mission statements: Incorrect. While strategic planning is important, it is not the primary focus of performance audit objectives.

B . Corrective actions to address prior findings and recommendations: Correct. Addressing prior findings is a key objective to ensure identified issues have been resolved.

C . Updated its financial reports' MD&A: Incorrect. MD&A (Management's Discussion and Analysis) is related to financial reporting, not performance audits.

D . Internal controls in place: Incorrect. While internal controls are reviewed, the focus here is on corrective actions to past findings.

GAO, Government Auditing Standards (Yellow Book).

GAO, Performance Auditing Guidance.

Definition of the Condition in an Audit Finding:

The 'condition' describes the actual state observed during the audit. It highlights what occurred in practice, serving as the factual basis for the finding.

In this case, the condition is the absence of receipts for multiple credit card purchases.

Explanation of Answer Choices:

A . We identified multiple credit card purchases without receipts to support them: Correct. This is the observed issue (condition).

B . Government policy requires a cardholder to submit receipts for all purchases: This is the 'criteria,' which defines the standard or rule being audited against.

C . Finance Department personnel did not regularly review purchases to ensure compliance: This is the 'cause,' explaining why the condition occurred.

D . We recommend that the government implements a timely review of all credit card purchases: This is the 'recommendation,' not the condition.

GAO, Government Auditing Standards (Yellow Book).

AICPA, Elements of an Audit Finding Guidance.

* What Are Computer-Assisted Audit Techniques (CAATs)?

CAATs are specialized tools used in forensic accounting and auditing to analyze large volumes of data for patterns, anomalies, and irregularities that may indicate fraud.

These techniques help quantify the impact of fraud by identifying discrepancies, overpayments, or unaccounted transactions.

* Why Are CAATs Used for Quantifying Fraud?

CAATs can efficiently analyze transactional data, calculate losses, and determine the extent of financial damage caused by fraud.

Examples include using software to detect duplicate payments, inflated invoices, or unauthorized transactions.

* Why Other Options Are Incorrect:

A . Test of controls: Tests of controls evaluate the effectiveness of internal controls but do not quantify the impact of fraud.

C . Data integrity: Ensuring data integrity is important, but it does not specifically address quantifying fraud.

D . Benchmarking: Benchmarking compares performance metrics but does not analyze or quantify fraud.

* Reference and Documents:

GAO Fraud Prevention Framework: Highlights the use of CAATs in forensic accounting.

AICPA Forensic Accounting Guidelines: Recommends CAATs for fraud detection and quantification.

Deterrence of Fraud:

A primary deterrent to fraud is the fear of being caught. When individuals believe there is a high likelihood of detection, they are less likely to commit fraudulent acts.

Strong internal controls, monitoring, and audits increase this fear and serve as effective deterrents.

Explanation of Answer Choices:

A . Delegation of responsibility without oversight: Incorrect. Lack of oversight increases the risk of fraud rather than deterring it.

B . The fear of detection: Correct. The fear of being caught is one of the most effective fraud deterrents.

C . Job satisfaction and sense of 'team': While these contribute to a positive work environment, they do not directly deter fraud.

D . Performance of employee background checks: Background checks are a preventive measure but are less effective as a fraud deterrent compared to detection risk.

Association of Certified Fraud Examiners (ACFE), Fraud Prevention Guidance.

GAO, Fraud Risk Management Framework.

* Why Hire Contractors for Management Control Evaluations?

Management may decide to bring in external contractors when there are gaps in the organization's capacity to perform evaluations internally. One key factor is the lack of management expertise---if management lacks the necessary knowledge or experience to evaluate controls effectively, it may outsource this task to qualified contractors.

* Why Other Options Are Incorrect:

B . Availability of Qualified Contractors: While availability is a factor, it's not a variable that influences the decision to outsource. Instead, it's a logistical consideration once the decision has been made.

C . Suspicion of Internal Fraud: Suspicion of fraud may lead to investigations, but hiring contractors to evaluate controls is driven by expertise gaps rather than fraud concerns.

D . Knowledge of Systemic Deficiencies: If management already has knowledge of systemic deficiencies, they may focus on remediation rather than outsourcing evaluations.

* Reference and Documents:

GAO Standards for Internal Control in the Federal Government (Green Book): Emphasizes the need for knowledgeable personnel to evaluate controls.

GAGAS (Yellow Book): Highlights the role of external expertise in cases where internal expertise is insufficient.