Discuss AICPA CPA-Auditing Exam Topic 1 Question 46

Gearty & Duffy, certified public accountants, have been engaged to perform an audit of Sleepy Knoll Township in accordance with OMB Circular A-133. In connection with that engagement, Gearty & Duffy will determine major programs:

AUsing a list of programs included in the work plan of the Office of the Inspector General.

BBy applying only a specific dollar threshold, where all programs exceeding the threshold would be considered major.

CBy applying a risk-based approach.

DBy testing enough grants to achieve a single specific coverage percentage.

Suggested Answer: C

Choice 'c' is correct. OMB Circular A-133 allows auditors to use a risk-based approach to determine major grants.

Choice 'a' is incorrect. The judgment of the Office of the Inspector General would not exclusively influence the selection of major programs.

Choice 'b' is incorrect. Programs in excess of $300,000 are generally considered to be major grants; however, the dollar threshold is not the exclusive determinant of major programs.

Choice 'd' is incorrect. Risk-based auditing allows auditors to test as little as 25 percent of total federal programs or as much as 50 percent of total federal programs, depending on circumstances and on the auditor's judgment.

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8 comments · newest first

Ozell 11 months ago

Surprised to see testing for coverage percentage as an option!

Jaclyn 12 months ago

I think option A is outdated, we need a more modern approach.

Amina 12 months ago

Wait, are we really just using a dollar threshold? That seems off.

Clay 12 months ago

Totally agree, option C makes the most sense!

Tabetha 1 year ago

Major programs are determined by risk-based approach, right?

Corrinne 1 year ago

Okay, let's break this down. The key details are the foreign bank accounts and the intentional failure to report them. That points to an income and wealth tax evasion scheme, in my opinion. I'll make sure to explain my reasoning clearly in the exam.

Tammy 1 year ago

This looks like a tricky SQL question. I'll need to carefully analyze each option to determine which two are valid CREATE TABLE commands.

Jacob 1 year ago

Ah, I've got it! The Puppet equivalent to an Ansible Playbook is called a Puppet Manifest. I remember learning that in my Puppet administration course. Feeling good about this one.

AICPA CPA-Auditing Exam - Topic 1 Question 46 Discussion