In: Accounting
Single Audit. Chittenden County had the following federal award activity during the most recent fiscal year: Program# Award Received Award Expended 1 6,500,000 250,000 2 800,000 800,000 3 12,000,000 11,600,000 4 4,200,000 3,450,000 5 1,000,000 875,000 6 1,750,000 1,500,000 7 500,000 425,000 8 7,500,000 7,000,000 9 300,000 200,000 10 750,000 575,000 Required A. Based on size, which programs would be considered Type A programs? Type B programs? B. You gather the following Page 485 information: 1. Programs 3 and 4 were audited as major programs last year and had no audit findings. 2. Program 8 is a recurring federal grant that has long been deemed low risk and has not been audited for the past two years. 3. When assessing the risk of Type B programs, your audit firm has a policy of examining the largest programs in terms of current year expenditures if information on prior audits and risk factors is not available. Based on this information, which programs would you select for audit if Chittenden County is not considered a low-risk auditee? Explain your answer. Assume that Chittenden County is considered a low-risk auditee. Based on the information provided, which programs would you select for audit? Why?
Program | Award Received | Award Expended | ||
1 | 6,500,000 | 250,000 | ||
2 | 800,000 | 800,000 | ||
3 | 12,000,000 | 11,600,000 | ||
4 | 4,200,000 | 3,450,000 | ||
5 | 1,000,000 | 875,000 | ||
6 | 1,750,000 | 1,500,000 | ||
7 | 500,000 | 425,000 | ||
8 | 7,500,000 | 7,000,000 | ||
9 | 300,000 | 200,000 | ||
10 | 750,000 | 575,000 | ||
Total | 26,675,000 | |||
Part - A | ||||
Since total federal award expended exceed $25 million but less than or equal to $100 million, the type A program criteria will be total award expended times 0.03. Therefore type A program will be considered of which program award expended is equal to or more than $800,250. Hence, type A program is program # 3, 4, 5, 6 and 8 while type B program is program # 1, 2, 7, 9 and 10. | ||||
Part - B | ||||
If Chittenden County is not considered a low risk auditee, the auditor is not required to identify any high risk type B program. In this scenario, the auditor goes directly to audit as major programs. In this case program 8 is a type A program which is considered as a low risk program and not audited in past 2 years and will be audited as major program. | ||||
Assuming that Chittenden County is considered as low risk auditee, the auditor is not required to identify more high risk type B program and it should identify at least one fourth number of type A program considered as low risk. In this case there are 5 number of type A program and auditor will continue risk assesment of type B program untill 2 high risk type B program are identified (at least one fourth of 5 = 2 [rounded up]). in this case the largest type B program in terms of current year expenditures is considered and accordingly program # 2 and 10 will be sellected for audit. |