Explain How Federal Award Programs Are Selected for Audit Under

question 26

Essay

Explain how federal award programs are selected for audit under the risk-based approach.
A." All other programs are identified as "Type B" programs. Second, any low risk Type A programs are identified. This involves auditor judgment after fully considering the factors discussed in Chapter 11. Third, high risk Type B programs are identified. However, the auditor is not expected to perform risk assessments on relatively small federal programs, as defined in Chapter 11. At a minimum, the auditor should audit as major programs all Type A programs not identified as low risk and certain of the high risk Type B programs. The auditor is not required to identify more high-risk Type B programs than one fourth the number of low-risk Type A programs. As many major programs as necessary must be audited to ensure that at least 40% of total federal awards expended are audited.

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