AUD Study Group Q4 2018

CPA Exam Review CPA Exam Forum AUD AUD Review AUD Study Group Q4 2018

This topic contains 82 replies, has 62 voices, and was last updated by  Jingwen 1 week, 2 days ago.

Viewing 23 posts - 61 through 83 (of 83 total)
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  • #2024810

    fionnepham
    Participant

    Which of the following items should be included in prospective financial statements issued in an attestation engagement performed in accordance with the Statements on Standards for Attestation Engagements (SSAEs)?

    A. All significant assertions used to prepare the financial statement

    B. All significant assumptions used to prepare the financial statements

    C. Pro forma financial statements for the past two years

    D. Historical financial statements for the past three years

    The answer was B. Does anyone know how A and B differ? Is A more of what management thought of and B is more of what the accountant thought of to create the F/s?

    #2025059
    Globetrotter
    Globetrotter
    Participant

    Fionnepham,
    Here is what I think.
    When we are talking about prospective financials, we are talking about things that have not happened yet. Hence, the assumptions. For example, management assumes that the sales will be $100m or interest rate will be 10%. This is for the future.
    Assertions are things that as management claims have happened for the historical financials. For example, Completeness of payables in historical financials.

    AUD - 94
    BEC - NINJA in Training
    FAR - 87
    REG - NINJA in Training
    BEC - 03/2019

    AUD - 94 (11/2018)

    REG - TBD

    FAR - 87 (08/2018)

    #2026781

    fionnepham
    Participant

    @globetrotter ahh that makes sense, thanks!

    #2026784

    fionnepham
    Participant

    When perpetual inventory records are maintained in quantities and in dollars, and internal control over inventory is weak, the auditor would probably

    A) Want the client to schedule the physical inventory count at the end of the year.
    B) Insist that the client perform physical counts of inventory items several times during the year.
    C) Increase the extent of tests for unrecorded liabilities at the end of the year.
    D) Have to disclaim an opinion on the income statement for that year.

    Correct answer is A but I chose B.
    This Answer is Incorrect
    This answer is incorrect because, for the auditor's purposes, an accurate count at the beginning and at the end of the year is essential.

    Does anyone get why B is wrong? Wouldn't you want to count the inventory more often if control over it is poor to reduce any problems with the records?

    #2027003
    Globetrotter
    Globetrotter
    Participant

    I remember this question. I answered it just like you did. And my reasoning was like yours.
    And then I got to thinking.

    Inventory is the Balance Sheet account, so what matters is that number on the last day of the year. Just a snapshot.
    Since, the controls are week, we cannot count inventory on October 31st and project our conclusion to December 31st.
    I suppose if we dealt with expenses, we could have analyzed them several times throughout the year.

    It's probably, a week answer to your question. But this is how I convinced myself that A is correct. 🙂

    AUD - 94
    BEC - NINJA in Training
    FAR - 87
    REG - NINJA in Training
    BEC - 03/2019

    AUD - 94 (11/2018)

    REG - TBD

    FAR - 87 (08/2018)

    #2027222

    fionnepham
    Participant

    @globetrotter ah, I see now. Is this usually the answer for these types of questions? I've seen a bunch of questions that ask about timing with regards to level of risks but I never understood the answers/ forgot what they are at this moment. I do see that the answers to questions are usually the same regardless if the questions are slightly different

    #2027315
    Globetrotter
    Globetrotter
    Participant

    Fionnepham,
    I think one of the points I learned from studying is that when you assess Control Risk as High, you want to do your substantive testing at the Balance Sheet Date (and a lot of it. 🙂 )
    Still, to me, Auditing seems to be highly subjective. I would even say that for the way my mind works, it is more difficult than FAR.

    AUD - 94
    BEC - NINJA in Training
    FAR - 87
    REG - NINJA in Training
    BEC - 03/2019

    AUD - 94 (11/2018)

    REG - TBD

    FAR - 87 (08/2018)

    #2035349

    Butterfly
    Participant

    My name is Jean Jeffrey and I am taking Auditing and Attestation for the 3rd time on October 6, 2018. Any tips would be helpful especially as it relates to simulations involving financial ratios.

    AUD - 59
    BEC - 66
    FAR - NINJA in Training
    REG - 39
    Jean Ellen Jeffrey
    #2035487

    cottonkandi
    Participant

    @Butterfly – When I practice I usually have all of the financial ratios in front of me. I practice as much MCQ's possible, until I don't need the financial ratios for reference anymore. Then I move on to SIMs to practice. These exams are all about practice and focusing on your weak areas.

    BEC: 75!

    FAR: 84!

    AUD: 81!

    REG: 79!

    #2041421

    Courtney
    Participant

    I recently passed all four parts of the CPA Exam.

    #2041823

    Butterfly
    Participant

    Okay here is another question if anyone can help with a short answer. When do we use each of the types of estimation? What are the advantages of each? As well as any tips on advantages/disadvantages of the sampling methods? I am taking the exam in 6 days and have most of it down if I can just stop second guessing myself on practice quizzes/exams.

    Thanks to Cottonkandi for helping with the ratio.

    AUD - 59
    BEC - 66
    FAR - NINJA in Training
    REG - 39
    Jean Ellen Jeffrey
    #2050055

    Butterfly
    Participant

    General question this time as I took the Auditing exam yesterday and didn't see as many mathematical computation questions as I expected, should I draw any inference from this or not?

    AUD - 59
    BEC - 66
    FAR - NINJA in Training
    REG - 39
    Jean Ellen Jeffrey
    #2050424

    cottonkandi
    Participant

    @Butterfly – Audit really isn't math heavy with an exception of calculating audit risks, materiality, sampling, and financial ratios, the test is mostly concept driven.

    BEC: 75!

    FAR: 84!

    AUD: 81!

    REG: 79!

    #2051405
    YouCanDoIt
    YouCanDoIt
    Participant

    Hey all, I was trying to study what should be REPORTED TO THOSE CHARGED WITH GOVERNANCE, but I took some points on it, and I am unclear on the parts with (?) next to it, any clarification would be super helpful, thanks!

    – Planning matters, such as, methods used to account for significant unusual transactions
    – Indications of fraud (if it involves senior management OR its material–so, trivial stuff doesn't matter)
    – Significant difficulties encountered during audit (? like what…with management?)
    -Disagreements with management (does this mean, accounting estimates, accounting principles)
    -Uncorrected misstatements
    -Management's consultation with other accountants (why would this be reported?)
    -***what about an issue we have with management, but it is corrected?****

    AUD - NINJA in Training
    BEC - NINJA in Training
    FAR - 75
    REG - 80
    Won't know until you try.
    #2051618

    JMG
    Participant

    Hey group,

    1. Approx exam date: 11/28 (4th time taking it)
    2. Topic you're most-comfortable within this exam section: Professional responsibilities
    3. Topic you're weakest in / worries you the most: Testing completeness/existence assertions

    Hoping to turn things around with this exam, took some time off from studying after losing REG over the summer. Sims are always kicking my butt on AUD, anyone got any tips to study better for these?

    Your fail scores are like battle scars, so wear them proudly!

    REG - 76 (expired 7/31/18)

    BEC - 69, 72, 80

    AUD - 62, 70, 74

    FAR - 50, 60

    #2051834
    YouCanDoIt
    YouCanDoIt
    Participant

    Hey all, I don't even know if anyone checks this. I did figure out my above question and if anyone else is struggling with it, I can post a better summary of my above points.

    BUT, I did have another question:

    SSARS: Used for NON-ISSUERS to: (1) prepare, (2) compile , (3) Review
    So, what would ISSUERS use to do the above. I know they are not REQUIRED to do the above , but for whatever reason, if they do, what standards would they use?
    Also, for the Review, I put them in 2 categories:
    a) Interim-Review –> Issuers (PCAOB??), Non-Issuers (SAS )
    b) Unaudited Fs Review –> Issuers (???) , Non-Issuers (SSARS)

    THANKS!!

    AUD - NINJA in Training
    BEC - NINJA in Training
    FAR - 75
    REG - 80
    Won't know until you try.
    #2051849
    YouCanDoIt
    YouCanDoIt
    Participant

    @jmg

    I am also taking mine on the 28th.

    For testing COMPLETENESS and EXISTENCE:
    1) Completeness: we are basically making sure we have included everything, so to AVOID UNDERSTATEMENT.
    Completeness is usually tested via “Tracing” –“hey, I can trace this from Source to Journal “end”, etc”

    2) Existence: we are basically making sure that all that we included actually exists, so to AVOID OVERSTATEMENT
    Existence is usually tested via “Vouching”–“hey, I can ‘VOUCH' this exists” This is tested by vouching from Journal “end” to Source document

    Now, depending on what you are testing , your “source” and “end” will vary, for example:
    a CPA might test inventory from “inventory tags” to “inventory list of client” , which is making sure all the tags are included in the client's list.

    If the CPA was instead doing from List to Tags, that means CPA wants to make sure that certain inventory actually exists, and client is not simply overstating.

    Same way payroll can be tested, to make sure actual employees exist, or employees are getting paid for hours worked and not getting paid over or under.
    I hope this helps!

    AUD - NINJA in Training
    BEC - NINJA in Training
    FAR - 75
    REG - 80
    Won't know until you try.
    #2082083

    jeff
    Keymaster

    Sorry – this study group got un-sticked…here's to everyone making the final push in Q4! Finish strong.

    – jeff

    #2082095

    jeff
    Keymaster
    #2098092

    CPAGURU
    Participant

    Has anyone had any Sims on adjusting journal entries on the exam?

    #2101707

    anusha_vee
    Participant

    Hey guys! I have a question.. I’m a little confused. So I was trying out AUD research questions and instead of using the AL given by my review course, I was using the AL in AICPA site… so for like every question, if I answer with something from SAS .. the answer it is showing me is actually from the “Application and Other Explanatory Material” part of it… for example, if I answer say AU-C 265.11 , the answer would be 265.A15.
    What is the difference between these two? Are we supposed to answer from the Explanatory material? Can someone help me? Both the section text and the Explanatory material seem right but what gets preference?

    #2102316

    Steve K
    Participant

    Thanks! Taking the exam in 2 days. Have been drilling NINJA MCQ the past few days. Did 1500 MCQ in 5 days and am trending at 82% with an avg. of 76.

    FAR - 81
    AUD - TBD (Waiting for Dec. 19th score release)
    REG - NINJA in Training
    BEC - NINJA in Training
    #2105289

    Jingwen
    Participant

    Just took mine this afternoon. Not sure how to feel about it. There are questions I for sure I knew I got or wrong. But at this point, oh well. Hopefully I have done enough to pass it. 3 of the simulations are pretty intense. I fished all that just 10 mins before the item runs out. Good luck everyone !

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