ExpertHard1 markMultiple Choice
CPA · Question 28 · Area III: Performing Procedures
An auditor is performing a Single Audit under the Uniform Guidance (2 CFR 200). The auditor has identified a 'major program' to test. Which of the following determines the auditor's testing strategy for internal controls over compliance for this major program?
An auditor is performing a Single Audit under the Uniform Guidance (2 CFR 200). The auditor has identified a 'major program' to test. Which of the following determines the auditor's testing strategy for internal controls over compliance for this major program?
Answer options:
A.
The auditor is not required to test controls if substantive tests of compliance are effective.
B.
The auditor must plan to obtain a low level of control risk for compliance controls.
C.
The auditor tests controls only if the program is high risk.
D.
The auditor relies on the entity's internal audit function for all control testing.
How to approach this question
Single Audit Rule: You MUST test controls for major programs. You must plan for LOW control risk.
Full Answer
B.The auditor must plan to obtain a low level of control risk for compliance controls.✓ Correct
Unlike a standard financial statement audit where the auditor can choose a 'substantive only' approach, the Uniform Guidance mandates that for Major Programs, the auditor MUST perform tests of controls to support a low assessed level of control risk.
Common mistakes
Applying financial audit logic (optional control testing) to Single Audits.
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