Government Auditing and Compliance

Government auditing and compliance topics appear on approximately 8-12% of AUD exam questions, with the Single Audit threshold being the single most-tested detail. The #1 AICPA trap is testing outdated thresholds: the threshold was $500,000 under OMB Circular A-133, then $750,000 under the 2015 Uniform Guidance — and the 2024 Uniform Guidance revision raised it to $1,000,000 for fiscal years beginning on or after October 1, 2024. A critical detail candidates miss: under Government Auditing Standards (Yellow Book), the auditor must issue a WRITTEN report on internal control over financial reporting and compliance with laws and regulations in EVERY Yellow Book audit, even when no deficiencies are found — this is in addition to the standard GAAS audit report. Also know that major program determination uses a risk-based approach with Type A/Type B program classifications and a minimum 40% coverage requirement (reduced to 20% for low-risk auditees).