Dawn, what an excellent question as there is no “clear” answer. In general, most “b” programs are selected based on the percentage of coverage requirement. Since there is no specific “audit every 3 year” requirement similar to “A” programs, you have a significant amount of leeway to exercise judgement.
I have summarized the requirements below. After looking at this, you could easily get away with not auditing the “B” program very often.
(d) Step three.
(1) The auditor must identify Type B programs which are high-risk using professional judgment and the criteria in § 200.519 Criteria for Federal program risk. However, the auditor is not required to identify more high-risk Type B programs than at least one fourth the number of low-risk Type A programs identified as low-risk under Step 2 (paragraph © of this section). Except for known material weakness in internal control or compliance problems as discussed in § 200.519 Criteria for Federal program risk paragraphs (b)(1),(b)(2), and ©(1), a single criteria in risk would seldom cause a Type B program to be considered high-risk. When identifying which Type B programs to risk assess, the auditor is encouraged to use an approach which provides an opportunity for different high-risk Type B programs to be audited as major over a period of time.
Generally paragraph .519 indicates the following:
(a) A General – overall evaluation of the risk of noncompliance
(b) Current and prior audit experience.
(1) Weaknesses in internal control over Federal programs would indicate higher risk. Either multiple environments or subrecipients.
(2) Prior audit findings would indicate higher risk, particularly when the situations identified in the audit findings could have a significant impact on a Federal program or have not been corrected.
(3) Federal programs not recently audited as major programs may be of higher risk than Federal programs recently audited as major programs without audit findings. © Oversight exercised by Federal agencies and pass-through entities.
(d) Inherent risk of the Federal program.
(2) The phase of a Federal program in its life cycle at the Federal agency may indicate risk.
(3) The phase of a Federal program in its life cycle at the auditee may indicate risk. (4) Type B programs with larger Federal awards expended would be of higher risk than programs with substantially smaller Federal awards expended.