[Keely]

Becker says “while the auditor cannot generally change the risk of material misstatement, the auditor can change his or her ASSESSMENT of this risk as the audit progresses.” Please, someone explain this to me. What is the difference between the risk of material misstatement (which I understand is inherent risk x control risk, and I understand what those are) and the auditor’s assessment of the risk? How does one go about changing their assessment? I have no experience with auditing, and I hate this sh*t. Thanks in advance!

BEC: (4/2012) 88
AUD: (5/2012) 91
REG: (8/2012) 82
FAR: (1/2013) 78 🙂

VA CPA #42010

[jeff]

You're over thinking. Stick with the Audit Risk formula that you know.

AUD - 79
BEC - 80
FAR - 76
REG - 92

Jeff Elliott, CPA (KS)
NINJA CPA | NINJA CMA | NINJA CPE | Another71

[Trisha]

The auditor assesses the inherent risk and cotrol risk levels, but they can't control the risk. So if they look at company A, and they think it is IR 5 and CR 5, then test and realize they are actually 6, they change the assessment, not the acutual risk. What changes risk is out of the auditors control, but their evaluation can adjust based on their knowledge as the audit continues…. Hopefully I didn't make it worse 🙂

REG 72, 86 and DONE!!!
BEC 80 🙂
FAR 72, 78 🙂
AUD 73, 76 🙂

[Anonymous]

With every audit there is a risk that the financial statements could have a material misstatement. The risk is always there no matter what. The auditor can't change that. Auditors can only assess the level of risk as either high or low. I hope that helps.

[KassiusKlay]

Agree with Jeff. So the auditor has no control over the IR and CR. He cannot change them. He CAN change the DR (nature, extent and timing of procedures). When they say assessment that basically means the auditor's INITIAL understanding of the RMM. As the audit progresses and new info comes to the auditors attention he can change his DR which can shift the RMM. AR= RMM (IRxCR) x DR. So first you assess the RMM. You assess an acceptable AR. Then you can increase or decrease your DR (types of tests, timing of tests, extent of testing) which will change the assessment. The assessment changes from the beginning to the end. Its not set in stone. Its changes because the initial assessment is based on limited audit procedures and as new info comes out from more elaborate or detailed tests the initial assessment might have been too low or too high. But dont over think it. AR= RMM x DR. (sorry if this doesnt make sense but its a pretty important part of audit) Cheers and good luck : )

Form is temporary, class is permanent.

Audit 4/19/12 - 77
BEC 5/31/12 - 75
FAR 8/30/12

[Trisha]

@ Kassius – congrats on your Audit victory… I am hoping mine comes with the next release 🙂

REG 72, 86 and DONE!!!
BEC 80 🙂
FAR 72, 78 🙂
AUD 73, 76 🙂

[KassiusKlay]

@Trisha Thank you so much!! Honestly woke up at 6 am today. Felt like cross between Christmas and having a dentist appointment (depending on my score). When I checked I was nervous because it said advisory score then I quickly found out that was the actual score. haha Im sure you did fabulous! Back to BEC studying…. it never ends.

Form is temporary, class is permanent.

Audit 4/19/12 - 77
BEC 5/31/12 - 75
FAR 8/30/12

[mena je twa]

Agree with all the above posters. Can't get any easier then this. If you are still struggling, Google Roger CPA Review and watch some of his lectures on youtube.

Licensed CPA, Texas - 2012

[Trisha]

I always get anxious on release day, even though I usually have an additional week or two to wait until my score comes in the MAIL. Luckily, the people at the Oregon Board of Accountancy are nice enough to release the scores over the phone… Either way, added torture…

REG 72, 86 and DONE!!!
BEC 80 🙂
FAR 72, 78 🙂
AUD 73, 76 🙂

[Keely]

Thank you all! It does help.

BEC: (4/2012) 88
AUD: (5/2012) 91
REG: (8/2012) 82
FAR: (1/2013) 78 🙂

VA CPA #42010

[Anonymous]

get CPAReviewForFree SIMS + Ninja Notes..they both do a fabulous job @ explaining AR, which I believe is intensively tested…

source-me

[KassiusKlay]

@CPATerminator AGREE!! Those SIMS that they have at CPAreviewforfree helped me tremendously. Thanks again!!!!

Form is temporary, class is permanent.

Audit 4/19/12 - 77
BEC 5/31/12 - 75
FAR 8/30/12

[Author]

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