If the total of major federal programs was $7,000,000 for an auditee who is not low risk, the percentage of coverage rule would be met if the aggregate of major federal programs were no more than

Question

Quizplus · Accepted Answer

The percentage of coverage equals the aggregate amount of major federal programs divided by the total federal expenditures. If the auditee is not low risk, the required percentage of coverage is 50%. Therefore, to determine the maximum amount of major federal program expenditures that would meet the coverage requirement, we divide the total federal expenditures by 50%:
$7,000,000 ÷ 50% = $14,000,000. Any amount over $14,000,000 would not meet the coverage requirement. Therefore, the correct answer is B.

If the Total of Major Federal Programs Was $7,000,000 for an Auditee