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Astor City's Audit Standards

Astor City, a small city that is not required to have independent audit, voluntarily decided to have an audit of its financial records. Currently, the city generates $900,000 in revenues. Of the revenue generated, 10% is from state sources and 2% is from federal sources. Janice Murphy, a CPA who serves on the city council has orally agreed to conduct the audit for a small gratuitous fee. Murphy decided not to accept a full fee since in the last three years she has gotten away from doing audit work and has concentrated her time on tax preparation and small business consulting. Murphy conducts the audit and presents the city with the following audit report:

(a) At a minimum what audit standards apply to Astor City (GAAS, GAS or Single Audit Act)? Why?
(b) Discuss any potential violations of the applicable audit standards.

Solution Preview

A) GAS - Governmental audit standards because this is a governmental entity. It is not subject to ...

Solution Summary

The following posting discusses audit standards as well as potential violations of audit standards.