AICPA Exam CPA-Auditing Topic 1 Question 46 Discussion

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.