Government Auditing and Compliance
Government auditing and compliance topics appear on approximately 8-12% of AUD exam questions, with the Single Audit $750,000 threshold being the single most-tested detail. The #1 AICPA trap is using the OLD $500,000 threshold from OMB Circular A-133 — the current threshold under the Uniform Guidance (2 CFR 200) is $750,000. 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 20% coverage requirement (40% for low-risk auditees).
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What AICPA Wants You to Know
- 1Understand the Government Auditing Standards (Yellow Book) requirements
- 2Explain the Single Audit under the Uniform Guidance
- 3Identify when a Single Audit is required
- 4Distinguish between a compliance audit and a financial statement audit
- 5Recognize the additional reporting requirements for government audits