AUD Study Tips, Help with Certain Terminology

Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • #3008673 Reply
    taxmachine
    Participant

    I just recently started preparing for AUD and am having great difficulty understanding the various terms and what exactly is going on (for example, what procedures are done at different parts of an audit). I'd greatly appreciate any study tips for the AUD section as I found REG and FAR to be relatively straightforward (lots of content but most of the material was easily understandable through continued reading and practice). AUD is quite unlike REG and FAR so I am not surprised of my struggles.

    Also, if anyone can please explain to me:

    1) The difference between substantive analytical procedures and tests of details/balances
    2) During which parts of the audit are certain procedures performed such as risk assessment, substantive analytical procedures and tests of details/balances(substantive procedures), and tests of control
    3) When do auditors determine audit risk and how do they determine it
    4) Why auditors perform analytical procedures

    I think if I have a better visual understanding of what exactly is going on, I might feel more comfortable with the material. Thank you.

    REG- 93 (2/24/2020) Gleim

    FAR- 93 (5/14/2020) Gleim

    AUD- In Progress

    BEC- TBD

    #3008805 Reply
    CPAHOPECPAHOPE
    Participant

    Im restudying Auditing very throughly this time and here is my intake. I hope someone who've actually passed auditing can confirm my intake and give other relevant information about auditing. You can check our EDSPIRA ON YOUTUBE to learn the overall audit process.
    1) Accept or not to accept client by analyzing and questioning managements ethics. Also they need to get permission from client to consult with predecessor auditor to find managements value and ethics. If they pass both, auditors prepare engagement letter. Theres something about component auditors I didnt totally understand, if someone can explain, id appreciate it!

    2) Planning phase – Understand the entity and its environment. This is important as auditors need to have overall understanding to start sampling and testing on accounting transactions, amounts, and disclosures.
    Auditors also set materiality during this stage.

    3) Assess audit risk – Once auditors have overall understanding of the clients business they can now assess audit risk. They first assess inherent and control risk (managements responsibility) to set detection risk(auditors responsibility). If control risk is high( internal control isnt effective or shitty), they need to do more substantive testing.

    4) Perfrom substantive procedures – This involves both testing of test of details and analytical procedures. Test of details are testing accounting balances and disclosures. Analytical procedures are performing ratio analysis to detect anything that is off or odd. This is important as it can catch possible frauds or errors. For instance, if AR increases exponentially the next year, you would expect the same thing for sales. If not, auditors will need to do further testing to see the reasons for discrepancies.

    5) Report – After auditors gather all the sufficient and appropriate audit evidence, they can finally issue an opinion on the report.

    Component auditors and management representation letters are subjects that im not quite sure of.

    AUD - 39
    BEC - 76
    FAR - 56
    REG - 79
    FAR 57,61,57,56 (F*)

    REG 54,49,69,66, 79

    AUD 39(lol)

    BEC 64,60,50(lol),70,67,71,76

    "Theres no limit unless you allow it"

    "Why not?"

    "I dont believe in limits"

    #3008811 Reply
    taxmachine
    Participant

    Im restudying Auditing very throughly this time and here is my intake. I hope someone who've actually passed auditing can confirm my intake and give other relevant information about auditing. You can check our EDSPIRA ON YOUTUBE to learn the overall audit process.
    1) Accept or not to accept client by analyzing and questioning managements ethics. Also they need to get permission from client to consult with predecessor auditor to find managements value and ethics. If they pass both, auditors prepare engagement letter. Theres something about component auditors I didnt totally understand, if someone can explain, id appreciate it!

    2) Planning phase – Understand the entity and its environment. This is important as auditors need to have overall understanding to start sampling and testing on accounting transactions, amounts, and disclosures.
    Auditors also set materiality during this stage.

    3) Assess audit risk – Once auditors have overall understanding of the clients business they can now assess audit risk. They first assess inherent and control risk (managements responsibility) to set detection risk(auditors responsibility). If control risk is high( internal control isnt effective or shitty), they need to do more substantive testing.

    4) Perfrom substantive procedures – This involves both testing of test of details and analytical procedures. Test of details are testing accounting balances and disclosures. Analytical procedures are performing ratio analysis to detect anything that is off or odd. This is important as it can catch possible frauds or errors. For instance, if AR increases exponentially the next year, you would expect the same thing for sales. If not, auditors will need to do further testing to see the reasons for discrepancies.

    5) Report – After auditors gather all the sufficient and appropriate audit evidence, they can finally issue an opinion on the report.

    Component auditors and management representation letters are subjects that im not quite sure of.

    REG- 93 (2/24/2020) Gleim

    FAR- 93 (5/14/2020) Gleim

    AUD- In Progress

    BEC- TBD

    Thank you for the helpful suggestions and for answering my questions. I think more repetition and thinking about the audit process in my head, step by step, will better help me understand the information. Good luck preparing for your AUD retake.

    REG- 93 (2/24/2020) Gleim

    FAR- 93 (5/14/2020) Gleim

    AUD- In Progress

    BEC- TBD

    #3008814 Reply
    taxmachine
    Participant

    Thank you for the helpful suggestions and for answering my questions. I think more repetition and thinking about the audit process in my head, step by step, will better help me understand the information. Good luck preparing for your AUD retake.

    REG- 93 (2/24/2020) Gleim

    FAR- 93 (5/14/2020) Gleim

    AUD- In Progress

    BEC- TBD

    #3008835 Reply
    CPAHOPECPAHOPE
    Participant

    @taxmachine,

    No problem and thank you. Good luck to you as well!

    AUD - 39
    BEC - 76
    FAR - 56
    REG - 79
    FAR 57,61,57,56 (F*)

    REG 54,49,69,66, 79

    AUD 39(lol)

    BEC 64,60,50(lol),70,67,71,76

    "Theres no limit unless you allow it"

    "Why not?"

    "I dont believe in limits"

    #3010605 Reply
    JFKGY
    Participant

    I'm going to tell you #234 are basically “things” that we do to solve the 5 Ws – Who, what, when, where, why. I know it sounded very ridiculous, but all those risk assessment, analysis, etc, are just fancy terms of problem solving.

    Look at it this way. You got a book, and your boss tells you to sign off on it. You want to prevent being sue in the next three years because of a careless financial record on page 765 of the package, so you try to “evaluate” and “check (analysis)” as much as possible to make sure you are “reasonably correct”.

    Your boss only gives you a week to do this job. So you have to come up with “a plan” to get this done. You first “assess” the book, flip through it. Then you figured out the management plan in this book, which is playing what — internal control and CIS 101. Then you need to come up with a solution plan to read this within time limit. You figured out if you scan through 97% of the materials, the 3% risk will be materialized. (Risk assessments).

    Then you figure out in order to achieve this 97%, you need some fancy financial data analytics #1234567, you continue to do it risk assessment – analysis process until you reach your 97% goal. Then for anything you can't answer, you come up with a reasonable reason to claim innocent and all it the day. You try to do everything to protect yourselves (and reduce the workload). *** In real life, every industry had almost fix set of marginal errors. That's how you do all analysis, trends, etc. All of the fancy analysis crap are just things created to shorten our workload and get answer faster. You can do 10 excel formula it will probably give you the same result.

    Then you conclused your had almost very certain the book is right. You present it to boss, boss present it to client, client very happy, paid for the result. End of the story.

    NY - Passed CPA. In searching for the experience.
Viewing 6 posts - 1 through 6 (of 6 total)
Reply To: AUD Study Tips, Help with Certain Terminology

You can use BBCodes to format your content.
Your account can't use Advanced BBCodes, they will be stripped before saving.

Your information:




Return to Forum Home