CGAP Certification Exam Practice Test

Certified Government Auditing Professional (CGAP) Certification Exam Practice Test Questions And Correct Answers (Verified Answers) Plus Rationales 2026 Q&A | Instant Download Pdf

• Which of the following best describes the primary purpose of

government auditing?

• To identify fraudulent activities in public institutions
• To provide independent assurance that public resources are used

efficiently, effectively, and in compliance with laws

• To assist management in daily operations
• To develop government financial policies

Rationale: The main objective of government auditing is to ensure

accountability and transparency in the use of public funds.

2. Performance audits primarily focus on:

• Financial statement accuracy 1 / 4

• Economy, efficiency, and effectiveness of government programs
• Regulatory compliance
• Fraud detection

Rationale: Performance audits assess whether resources are

managed with due regard to economy, efficiency, and effectiveness.

• Which standard governs audits of government organizations in the

U.S.?

• International Financial Reporting Standards (IFRS)
• Generally Accepted Government Auditing Standards (GAGAS)
• Generally Accepted Accounting Principles (GAAP)
• Internal Audit Standards of IIA

Rationale: GAGAS, also known as the Yellow Book, is issued by the

U.S. GAO and governs government audits.

4. The “Yellow Book” is issued by:

• Institute of Internal Auditors (IIA)
• U.S. Government Accountability Office (GAO)
• Office of the Comptroller General
• Federal Audit Council

Rationale: The GAO issues the Yellow Book, which contains GAGAS

for auditing government entities. 2 / 4

5. Independence in government auditing primarily means:

• Having no conflicts of interest
• Freedom from management influence or political pressure
• Being part of the organization’s management
• Only auditing financial statements

Rationale: Independence ensures objectivity and credibility in audit

findings and conclusions.

• Which type of audit evaluates whether a program is achieving its

objectives?

• Compliance audit
• Financial audit
• Performance audit
• Operational audit

Rationale: Performance audits assess effectiveness, efficiency, and

achievement of program goals.

• A government auditor who fails to disclose a material noncompliance

finding violates which ethical principle?

• Confidentiality
• Professional behavior 3 / 4

• Integrity
• Competence

Rationale: Integrity requires full disclosure of all significant findings,

especially material noncompliance.

• Which of the following is a key element of audit risk?
• Financial exposure
• Control risk
• Sampling risk
• Compliance risk

Rationale: Control risk is a component of audit risk that considers the

possibility that internal controls will not prevent or detect material errors.

• What is the first step in planning a government audit?
• Prepare the audit report
• Conduct fieldwork
• Define audit objectives and scope
• Evaluate internal controls

Rationale: Defining objectives and scope provides direction for audit

procedures and data collection.

• / 4