An auditor is performing a single audit of a governmental entity under the Uniform Guidance. The auditor has determined that the entity is a low-risk auditee. Which of the following represents the minimum percentage of total federal awards expended that the auditor must test as major programs?

Answer options:

40%

20%

50%

25%

How to approach this question

Memorize the '20/40 Rule' for Single Audits. Low Risk = 20%. Not Low Risk = 40%.

Full Answer

B.20%✓ Correct

Under the Uniform Guidance (2 CFR 200), the auditor must test major programs that cover at least 40% of total federal awards expended. However, if the auditee meets specific criteria to be classified as a 'low-risk auditee,' this coverage requirement is reduced to 20%.

Common mistakes

Confusing the high-risk (40%) and low-risk (20%) thresholds.

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