An Examination of the Relations Between Audit Scope and Procedures in Audits of Municipalities

Concern over substandard governmental audits prompted a survey of knowledgeable governmental auditors regarding the relationship between the scope of governmental audits and differences in materiality threshold, risk evaluations, the degree of auditor responsibility, client expectations, and audit procedures. Three possible audit scopes were considered: 1. general purpose financial statements (GPFS), 2. GPFS+, which includes the combining and individual fund and account group statements, and 3. full-scope opinions. Some of the major findings were: 1. Most respondents reported significant differences in their perceptions of materiality evaluations, audit risks, and the degree of auditor responsibility when moving from a GPFS+ opinion to a full-scope opinion. 2. Local and regional firms were most likely to believe that the GPFS+ opinion is most profitable to the firm, followed by the GPFS and full-scope opinions.