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Question 1. Which statute originally established the requirement for a Single Audit of non‑federal entities? A) The Federal Grant Accountability Act B) The Single Audit Act of 1984 C) The Uniform Guidance (2 CFR Part 200) D) The Government Accountability Office Act Answer: B Explanation: The Single Audit Act of 1984, as amended, created the mandatory audit requirement for entities expending $750,000 or more in federal awards. Question 2. Under the Uniform Guidance, Subpart F primarily addresses: A) Cost principles for federal awards B) Audit requirements for entities expending federal funds C) Procurement standards for federal contracts D) Reporting requirements for program income Answer: B Explanation: Subpart F of 2 CFR Part 200 outlines the audit requirements, including the Single Audit, for non‑federal entities. Question 3. The “Yellow Book” is formally known as: A) Government Auditing Standards B) Uniform Administrative Requirements, Cost Principles, and Audit Requirements
C) Federal Financial Management Improvement Act D) Office of Management and Budget Circular A‑ 133 Answer: A Explanation: The Yellow Book refers to the Government Auditing Standards issued by the Comptroller General. Question 4. An entity that receives $800,000 in total federal awards in a fiscal year must: A) File a Form 990‑PFF only B) Conduct a Single Audit C) Submit a quarterly financial report to OMB D) Obtain a Federal grant management certification Answer: B Explanation: The statutory threshold for a Single Audit is $750,000 in federal expenditures; $800,000 exceeds this amount. Question 5. Which of the following best defines a “grant” under the Uniform Guidance? A) A financial assistance agreement that requires the recipient to meet specific performance objectives B) A loan that must be repaid with interest C) A cooperative agreement where the federal agency expects substantial involvement
Explanation: The SEFA must reconcile to the entity’s general ledger and any Federal financial reports to ensure completeness and accuracy. Question 8. In the risk‑based program selection methodology, a “Type A” program is defined as: A) Any program with expenditures below the Type A threshold B) A program whose total Federal award expenditures exceed the calculated Type A threshold C) A program that is mandatory to audit regardless of size D) A program that receives only direct federal funding Answer: B Explanation: Type A programs are those whose total federal award expenditures exceed the Type A threshold, which varies based on the entity’s overall federal expenditures. Question 9. The materiality threshold for a Single Audit is generally: A) 5% of the entity’s total assets B) 1% of the total Federal award expenditures, with a minimum of $100, C) 10% of the entity’s net income D) Determined solely by the auditor’s professional judgment without reference to any formula Answer: B
Explanation: For Single Audits, materiality is often set at 1% of total federal expenditures, not less than $100,000, unless the auditor determines a different amount is appropriate. Question 10. Which compliance requirement type addresses “the extent to which a recipient must contribute its own funds toward the award”? A) Matching B) Cash Management C) Procurement Standards D) Program Income Answer: A Explanation: Matching requirements specify the recipient’s required contribution, often expressed as a percentage of total costs. Question 11. The auditor’s responsibility for “special tests and provisions” includes: A) Ignoring any unique program requirements that are not listed in the 12 standard compliance types B) Testing any additional requirements specified in the award agreement, statutes, or regulations C) Applying only the standard procurement standards to all programs D) Delegating these tests to the entity’s internal audit department Answer: B
Question 14. Under the Uniform Guidance, “cash management” compliance primarily focuses on: A) The entity’s ability to forecast cash flows for the next five years B) Minimizing the time between drawing down federal funds and the actual disbursement of those funds C) Ensuring the entity maintains a cash balance of at least $1 million at all times D) Investing unspent federal funds in high‑yield securities Answer: B Explanation: Cash management requirements aim to reduce the time between drawing down funds and making expenditures, thereby minimizing idle cash. Question 15. A “significant deficiency” in internal control over compliance is: A) A deficiency that is less severe than a material weakness but important enough to merit attention B) The same as a material weakness in financial reporting C) An insignificant finding that does not need to be reported D) Only applicable to non‑federal entities that do not receive any federal awards Answer: A Explanation: A significant deficiency is a control deficiency, or combination of deficiencies, that is less severe than a material weakness yet important enough to be reported.
Question 16. Which of the following best describes the “period of performance” compliance requirement? A) Costs must be incurred within the award’s authorized time frame B) The entity must submit quarterly performance reports regardless of award terms C) The award must be renewed annually regardless of project status D) All expenses must be recorded in the fiscal year the award was received Answer: A Explanation: Period of performance ensures that costs are only incurred during the time the award authorizes. Question 17. When preparing the SEFA, an entity must include the CFDA number for each award. CFDA stands for: A) Central Federal Debt Agency B) Catalog of Federal Domestic Assistance C) Consolidated Federal Development Account D) Certified Federal Distribution Agreement Answer: B Explanation: The CFDA (now the Assistance Listings) provides a unique identifier for each federal program. Question 18. The auditor’s “report on compliance for each major program” must include:
C) The Internal Revenue Service (IRS) D) The Office of Management and Budget (OMB) Answer: B Explanation: The SF‑SAC is the electronic form used to report Single Audit results to the Federal Audit Clearinghouse. Question 21. Which of the following is a primary responsibility of the auditee in a Single Audit? A) Performing all audit testing themselves B) Preparing the Schedule of Expenditures of Federal Awards (SEFA) C) Issuing the auditor’s opinion on internal control D) Determining the auditor’s sampling methodology Answer: B Explanation: The auditee must prepare and submit an accurate SEFA as part of its responsibilities. Question 22. When an auditor identifies a “questioned cost,” the appropriate next step is to: A) Immediately write‑off the cost as a loss B) Discuss the finding with management and obtain a management decision C) Exclude the cost from the audit report altogether D) Transfer the cost to the prior year’s financial statements
Answer: B Explanation: The auditor must obtain the auditee’s management decision regarding each questioned cost before finalizing the findings. Question 23. The “matching” compliance requirement is most closely related to which of the following concepts? A) The recipient’s obligation to contribute a specified percentage of total project costs B) The requirement to procure goods from small businesses C) The need to submit quarterly performance reports D) The prohibition of lobbying activities with federal funds Answer: A Explanation: Matching requires the recipient to provide a defined share of the total costs, often expressed as a percentage. Question 24. Which sampling method is considered “statistical” for compliance testing? A) Judgmental sampling B) Random sampling with a known probability of selection C) Convenience sampling D) Haphazard sampling Answer: B
C) Must be issued only after the auditor’s report on internal control is finalized D) Is limited to the entity’s cash balances only Answer: B Explanation: The financial statement opinion follows Generally Accepted Auditing Standards (GAAS) and is independent of compliance opinions. Question 28. Which of the following would be considered a “material weakness” in internal control over compliance? A) A minor documentation error in a single transaction B) A deficiency that could result in a high likelihood of material misstatement of compliance for a major program C) A typographical error in the auditor’s report D) A delayed submission of the SF‑SAC by a few days Answer: B Explanation: A material weakness is a deficiency that can lead to a material misstatement in compliance testing for a major program. Question 29. The “summary schedule of prior audit findings” must disclose: A) Only findings from the current audit year B) The status (resolved, unresolved, or partially resolved) of each prior year finding C) The auditor’s personal opinions on the entity’s management D) The entity’s projected budget for the next fiscal year
Answer: B Explanation: The schedule tracks prior audit findings and indicates whether each has been resolved, partially resolved, or remains open. Question 30. Which of the following is NOT a typical “risk criterion” used to select major programs? A) Prior audit findings B) The program’s size relative to the Type A threshold C) The entity’s brand reputation in the community D) Complexity of compliance requirements Answer: C Explanation: Brand reputation is not a standard risk criterion for program selection; audit risk focuses on financial and compliance factors. Question 31. In the context of the Single Audit, “allowable costs” must be: A) Directly related to the Federal award, reasonable, and allocable B) Only indirect costs that are not charged to any specific program C) Any cost the entity deems necessary, regardless of federal guidelines D) Costs incurred after the award’s expiration date Answer: A Explanation: Allowable costs must meet the criteria of being necessary, reasonable, and allocable to the award.
Question 34. When reconciling the SEFA to the general ledger, the auditor should primarily verify: A) That the SEFA totals match the entity’s total assets B) That each award’s expenditures in the SEFA are reflected in the general ledger accounts C) That the SEFA includes only cash expenditures, excluding in‑kind contributions D) That the SEFA is prepared using spreadsheet software Answer: B Explanation: Reconciliation ensures that each award’s expenditures reported in the SEFA are accurately recorded in the entity’s accounting system. Question 35. The “engagement letter” in a Single Audit serves to: A) Document the auditor’s findings and recommendations B) Define the scope, objectives, responsibilities, and timelines for the audit C) Replace the auditor’s opinion on internal control D) Provide a list of all federal awards received by the entity Answer: B Explanation: The engagement letter outlines the terms of the audit engagement, including scope and responsibilities. Question 36. Which of the following is a required element of the “corrective action plan” (CAP) submitted by the auditee? A) A detailed timeline for addressing each finding
B) The auditor’s signature approving the plan C) A list of all employees involved in the audit D) The entity’s audited financial statements for the prior five years Answer: A Explanation: The CAP must include specific actions, responsibilities, and timelines to remediate identified findings. Question 37. Under the Uniform Guidance, “level of effort” compliance requirements typically relate to: A) The amount of time the auditor spends on the audit B) The percentage of the award that must be expended on a specific activity or outcome C) The number of employees the entity must hire to administer the award D) The level of federal oversight required for the program Answer: B Explanation: Level of effort requirements specify a minimum percentage of the award that must be spent on a defined activity. Question 38. If an entity fails to meet the “cash management” requirement, the auditor should: A) Automatically issue an adverse opinion on the financial statements B) Report the non‑compliance as a finding in the Schedule of Findings and Questioned Costs (SFQC)
Answer: B Explanation: The SF‑SAC is the electronic reporting form used to submit Single Audit results to the FAC. Question 41. A “type B” program is identified when: A) Its expenditures are below the Type A threshold but the entity’s overall federal expenditures exceed $25 million B) Its expenditures are above the Type A threshold C) The program is a sub‑award rather than a direct award D) The program has no compliance requirements Answer: A Explanation: Type B programs are those that do not meet the Type A threshold; the specific threshold calculation changes when the entity’s total federal expenditures exceed $25 million. Question 42. Which of the following is a typical “performance indicator” used by auditors when evaluating compliance with “matching” requirements? A) The percentage of total award costs that are funded by the recipient’s non‑federal resources B) The number of staff members assigned to the project C) The entity’s credit rating D) The amount of cash on hand at year‑end Answer: A
Explanation: Matching compliance is measured by the proportion of non‑federal funds contributed relative to total costs. Question 43. In the Single Audit, “questioned costs” are defined as: A) Any cost that the auditor believes is unallowable, improper, or unrecorded in accordance with the applicable Federal award requirements B) All costs that exceed $10, C) Only costs that have been reported as fraudulent to law enforcement D) Costs that are not supported by any documentation, regardless of amount Answer: A Explanation: Questioned costs are those the auditor determines may be unallowable, improper, or not recorded per award requirements. Question 44. The auditor’s “report on compliance for each major program” must be issued: A) Before the audit of the financial statements is completed B) Within 30 days after receipt of the entity’s management decision on findings C) Simultaneously with the financial statement opinion as part of the Single Audit report package D) Only if the entity requests it in writing Answer: C Explanation: The compliance report is part of the overall Single Audit reporting package and is issued together with the other required reports.
