October 15, 2018 at 7:57 pm #2024810
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?October 16, 2018 at 7:08 am #2025059
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.October 17, 2018 at 12:48 pm #2026781October 17, 2018 at 12:49 pm #2026784
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?October 17, 2018 at 3:22 pm #2027003
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. 🙂October 17, 2018 at 7:08 pm #2027222
@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 differentOctober 17, 2018 at 8:39 pm #2027315
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.October 25, 2018 at 9:07 am #2035349
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.October 25, 2018 at 11:34 am #2035487
@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.October 31, 2018 at 12:40 pm #2041421
I recently passed all four parts of the CPA Exam.October 31, 2018 at 3:54 pm #2041823
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.November 7, 2018 at 6:03 am #2050055
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?November 7, 2018 at 11:48 am #2050424
@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.November 8, 2018 at 10:06 am #2051405
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)
-Management's consultation with other accountants (why would this be reported?)
-***what about an issue we have with management, but it is corrected?****November 8, 2018 at 12:37 pm #2051618
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?November 8, 2018 at 3:28 pm #2051834
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!!November 8, 2018 at 3:36 pm #2051849
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!November 29, 2018 at 5:48 am #2082083
Sorry – this study group got un-sticked…here's to everyone making the final push in Q4! Finish strong.
– jeffNovember 29, 2018 at 5:50 am #2082095
Q1 Study Groups also open: https://www.another71.com/cpa-exam-forum/topic/aud-study-group-q1-2019/December 3, 2018 at 6:12 pm #2098092
Has anyone had any Sims on adjusting journal entries on the exam?December 6, 2018 at 8:57 am #2101707
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?December 6, 2018 at 10:29 am #2102316
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.December 8, 2018 at 6:29 pm #2105289
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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