About Auditing

The Office of Public Accountability plays a critical role in the financial affairs of the Government of Guam. Indeed, Auditing is essential to the credibility of accounting and financial reporting by state and local governments. However, not everyone is familiar with all the concepts, terminologies, and principles prevalent in the auditing profession. This glossary and list of frequently asked questions is designed to help the average citizen better understand the auditing profession as it applies to government entities.

What is an audit?

An audit can be defined as the systematic examination of an organization's financial accounts, assertions, or actions in order to evaluate conformity with some norm or predetermined standard. 


What are the different types of audits?

A. Financial Audits include financial statement and financial related audits.

1. Financial statement audits provide reasonable assurance about whether the financial statements of an audited entity present fairly the financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. 
2. Financial related audits include determining whether (a) financial information is presented in accordance with established or stated criteria, (b) the entity has adhered to specific financial compliance requirements, or (c) the entity's internal control structure over financial reporting and/or safeguarding assets is suitably designed and implemented to achieve control objectives.

B. Performance audits include economy and efficiency and program audits:

1. Economy and efficiency audits include determining whether (a) whether the agency is acquiring, protecting, and using its resources (such as personnel, property, and space) economically and efficiently, (b) the causes of inefficiencies or uneconomical practices, and (c) whether the entity has complied with laws and regulations concerning matters of economy and efficiency. 
2. Program audits include (a) determining the extent to which the desired results of benefits established by the legislature or other authorizing body are being achieved, (b) the effectiveness of organizations, programs, activities, or functions, and (c) whether the agency has complied with laws and regulations applicable to the program. 


Who performs audits?

External auditors are independent of the entities they audit. They are typically CPA firms or organizationally independent auditors e.g. Office of Public Accountability. External auditors are used to perform the annual audit of a government's financial statements.

Internal auditors are employed by the entities they audit and report to management. Although they are classified as internal, they are still expected to maintain a degree of independence pursuant to fulfilling their responsibilities as auditors. 

How do auditors obtain the information they need?

Auditors inspect, observe, confirm, and analyze evidence to determine whether financial statements are fairly presented. Evidence can be documentary, testimonial, physical, or analytical and must be relevant, competent, and sufficient. 

What is materiality?

Materiality refers to the potential effect that an error could have on a reader's impression of financial statements. An error can be considered material if it could result in the reader's changed impression. An error can be material in quantity or quality. 

What are internal controls?

Internal controls are the policies and procedures established by management to ensure integrity and comprehensiveness of information gathered by the accounting system for use in internal and external financial reporting. 

What is a reportable condition?

A reportable condition can be defined as significant deficiencies in internal controls over the fair presentation of financial reporting. 

What is a material weakness?

A material weakness is a condition that could potentially result in the material misstatement of the financial statements. 

What are an auditor's reports on internal controls?

A report on internal controls is a report that briefly lists the controls that were tested during the financial statement audit as well as any reportable conditions discovered as a result of that test. If any of the reportable conditions are material weaknesses, the auditor is required to identify them. 

What are auditor's reports on compliance?

In a report on compliance, the auditor indicates whether the entity being audited is in compliance with applicable laws and regulations that could have a material effect on the fair presentation of financial statements. The auditor makes two limited and specific observations based on the procedures performed as part of the financial statement audit. First, the auditor states that the transactions tested were in compliance with applicable laws and regulations, unless otherwise noted. Second, the auditor states that nothing came to his attention that indicates that transactions not tested were not in compliance with applicable laws and regulations. 

What are findings?

Audit findings are the format in which reportable conditions (including material weaknesses) are presented. A traditional finding is composed of four major elements: 

  • Criteria: Basis for identifying that a condition is an internal control weakness or instance of noncompliance. 
  • Condition: The internal control weakness or instance of noncompliance identified by the auditor. 
  • Cause: Explanation of why the weakness or noncompliance occurred. 
  • Effect: The negative effect that resulted or could result from the condition. 
  • Recommendation: The auditor's assessment on how to improve the condition. 
  • Management Response: Management's viewpoint of the findings. 
  • Follow-Up: The auditor's review of management's implementation of the recommendation. 

What is performance auditing?

Performance auditing is an assessment of whether management is performing its duties economically and efficiently and whether programs are achieving their intended purpose.


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OPA Mobile App



  • The is an official App from the Office of Public Accountability.
  • The App is FREE.
  • There are no Ads or third party content in the App.
  • The App works across iOS and Android devices. It is available for download directly from the Apple App Store, Google Play, or the OPA website: www.opaguam.org .
  • The App not only works on mobile smartphones, but also works on iOS and Android tablets. This provides greater mobility of information.
  • The App is “light”, which means, once installed and opened, the App provides you with access to thousands of official documents, without using up much of your devices data or storage space. Note, the App requires WiFi or Data (internet connectivity) to operate.
  • The search functionality and numerous filters in the App makes it easy to search the vast library of documents, reports, and more which OPA has released over many years. Content across the App is well organized and easy to find.
  • The App makes these key items available with a few taps for the entire Government of Guam: Performance Audits, Financial Audits, Citizen-Centric Reports, Boards and Commissions Meetings Records, and Procurement Appeals status.
  • The App includes a “hotline” allowing citizens to report concerns or inappropriate activity in the Government.
  • Those who install the App would be able to receive Push Notification Messages from OPA, such as each time an audit is released. OPA will only send important messages occasionally.