AUD Study Group Q1 2017
February 6, 2017 at 8:53 pm #1465666
I retook AUD today… and I think I might have failed…. AGAIN!
I honestly have no motivation whatsoever to take it a third time. I've watched my review videos a thousands times, spent many hours goning through the book, supplementary material (including the Ninja MCQs which I bought twice and which conveniently expired today). I had no idea AUD would've been so difficult and its only going to be getting more difficult.
To say I didn't study for this exam would be a lie, because oh boy, I did! Sure, if I'm being honest, I am still having difficulty grasping an understanding of testing the cycles and understanding applying audit procedures to management assertions. I've yet to find a review course, a book, or a YouTube video that explains these in such a way I can understand.February 6, 2017 at 9:20 pm #1465695
What CPA review are you using?February 6, 2017 at 9:47 pm #1465725
@dory_reachingforthestars if I were you, I would choose a few of the most diffuct items you know will be tested (the ones that make you cringe) and just hit those hard til the end. i.e. what procuderes to perform to prove which assertions; how some factors (such as derivatives) increase/decrease detection/audit risk; when and how the audit/review/compilation reports can change; etc. Best of Luck!February 6, 2017 at 9:52 pm #1465731
Hang in there! I too have failed audit twice and I have issues really understanding those same concepts for the same reasons. You may very well have passed, don't beat yourself up yet. If by some grave injustice you did not, shrug it off and keep on tackling those sucky subjects!
We will beat this! I am rooting for you!February 7, 2017 at 12:53 am #1472151
IrieMonParticipantFebruary 7, 2017 at 8:46 am #1472490
There is a difference between studying for hours, and studying effectively for hours.
I spent about 16 days going really hard for Audit..It's super conceptual, so memorization will not work at all.
I had to tell myself that I was a detective looking for clues management left, in the form of financial statements (COVERU). CoverU is the general ones..but to remember the transaction level assertions, I tell myself, accounts have to be accurate before they can exist..Just little things like that. It's all about connecting all the dots.
I spent alot of time understanding the differences between Audit Reports, compilations, reviews and how they are all related. Save your brain power, because if they share similarities, just remember the differences. The language is sublty different. Like in reviews and comps, they use the word accountant instead of auditor..Little things like that.
I also just went directly to the AICPA website and read the SAS's directly. Boring? You bet, but it is almost in story form compared to the broken up bullet points in Becker. Every new bullet point, was almost as if I have to reset my brain a little.
Audit is too voluminous to memorize. Make connections at the higher level. See the forest first, and then look at the trees.February 7, 2017 at 9:39 am #1472633
Hi, everyone-I am in my 2nd week of studying for Audit-I will be taking it in April. So far, so good -loving the new Becker format for the online course. I was wondering if anyone has a good strategy for getting a handle on AL and research questions? I noticed there are a lot of them in Becker SIMS and I plan on going after them, but I must say I don't know what I am doing. Should I be reading all the AL, familiarize myself with the AL structure? Any and all tips are welcome and needed!February 7, 2017 at 10:38 am #1472760
@cessnapilot30 has it spot on. I too have Roger study materials and for the cycles the best way to learn is to read AU-C 501 – specific considerations for selected items. See link below. I did not do this on my last two exams, I did software solely but for the stuff you just can't understand after reading Roger's books and listening to lectures, go directly to the standard source.February 7, 2017 at 1:03 pm #1472958
MMAFEMParticipantFebruary 7, 2017 at 1:51 pm #1473006
I am on chapter 1 of Becker.
weak internal control does not equal adverse opinion.
Modified opinion does not equal to good investment.February 7, 2017 at 2:02 pm #1473021
@mmafem – no, an engagement letter is required but not a management representation letter.February 7, 2017 at 2:12 pm #1473035
please help with this question…
Under the Statements on standards for accounting and review services, a representation letter (“written representation”), signed by management, is required for
Financial statement Preperation financial Statement compilation
a. No No
b. No Yes
c. Yes No
d. YEs Yes
i choose A but the answer is B,,,,,,,Why???? its Wiley Mod 6: Q11.
what am i missing here????February 7, 2017 at 3:06 pm #1473119
I believe that is an error. A management repr letter is not required for a compilation nor for financial statement prep. You are simply putting the statements together. It is an attest engagement but not assurance.February 7, 2017 at 3:28 pm #1473155
Is reporting on internal control now required for all audits? (SAS 130)
Also, I understand the audit risk model well, however, if everything stays constant and the question ask ” if you increase substantive testing (which is lower dr) does that mean control risk has to be inverse or not relevant to the question (since usually, it would mean lower AR)February 7, 2017 at 3:34 pm #1473162
I remember reading on the forum a month ago how, on paper it says that engagement letter isnt required. However, the answer is
Engagement letters are required for all 3 ( comps, reviews, and audits)
It's the rep letters that are not required for comps… Only..
(I could be wrong, however, I remember there was a lengthy discussion about that here)February 7, 2017 at 6:33 pm #1473395
rep letter is required for review but not complication. withdraw from the engagement if entity declines to provide rep letter.February 7, 2017 at 7:54 pm #1473438
Do we give positive assurance or negative assurance for comfort letter? I find this question confusing:
Which of the following matters is covered in a typical comfort letter?
a.Positive assurance concerning whether unaudited condensed financial information complied with generally accepted accounting principles.
b.Negative assurance concerning whether the entity's internal controls operated as designed during the period being audited.
c.An opinion as to whether the audited financial statements comply in form with the accounting requirements of the SEC.
d.An opinion regarding whether the entity complied with laws and regulations under Government Auditing Standards and the Single Audit Act of 1984.
Choice “c” is correct. In a typical comfort letter, the accountants express an opinion (i.e., positive assurance) concerning the financial statements' compliance (as to form) with the pertinent accounting requirements of the SEC.
Choice “b” is incorrect. No assurance is generally provided in a comfort letter regarding the operation of an entity's internal control.
Choice “d” is incorrect. A typical comfort letter is addressed to the underwriters of the securities. Government Auditing Standards and the Single Audit Act are not applicable to a comfort letter related to the issuance of securities.
Choice “a” is incorrect. Negative assurance (not positive) is typically provided regarding unaudited condensed financial information.February 7, 2017 at 8:29 pm #1473480
An auditor should obtain written representations from management concerning litigation claims and assessments. These representations may be limited to matters that are considered either individually or collectively material, provided an understanding on the limits of materiality for this purpose has been reached by
A The auditor and the client’s lawyer.
B Management and the auditor.
C Management, the client’s lawyer, and the auditor.
D The auditor independently of management.
B. This answer is correct because materiality should be determined by management and the auditor. The client’s lawyer only becomes involved when an inquiry has been directed to him/her.
Can someone explain to me why the correct answer is B? Why would mgmt be involved in determining materiality? I thought this is the CPA's responsibilityFebruary 7, 2017 at 9:24 pm #1473528
Before I go further, I found the answer in AU 337.09; please read for yourself. It's a lengthy statement ending in,
“Inquiry need not be made concerning matters that are not considered material, provided the client and the auditor have reached an understanding on the limits of materiality for this purpose.”
the trick of the question is noticing the statement “for this purpose.” The “purpose” is to provide a letter to the lawyer requesting information litigation claim infomation. In this instance the item assessed for materiality is litigation claims. Management and the auditor will discuss the claims and determine what is material [aka litigation that is likely to actually be executed or may cause harm]. Large companies get tons of claims, many result in nothing; all claims are not material.
Hope this is helpfulFebruary 7, 2017 at 10:01 pm #1473572
@mooseonloose I believe negative assurance on whether the FS are in the correct form for the SEC (when the company is planning on going public usually).February 8, 2017 at 6:24 pm #1474390
Can anyone give me example of detention risk, inherit risk, control risk, audit risk?February 8, 2017 at 10:55 pm #1474627
Risk is essentially a probability or a likelihood of something happening. So audit risk is the risk that the auditor gives an unmodified opinion they shouldn't
Audit Risk= RMMx DR
= IRx CR x DR
inherent as the word implies means naturally occuring. So inherent risk is the risk of a misstatement occuring without considering any controls. So if a company is in an industry with super complex accounting rules, odds of someone making a mistake in booking an entry is higher. Another would probably be lack of skilled personnel booking journal entries.
Control risk is the risk that with controls in place, the controls wont detect a misstatement in the financials in a timely manner
Think of detection risk as the size of a fishing net. If you want to catch smaller misstatements, the size of your net should be smaller. Detection risk is essentially what the auditor controls.they have zero cntrol over inheren risk and control risk. So depending on the initial assessment of the client the auditor determines how much evidence to gather. If they believe there might be lots of misstatements, then detection risk is lowered.February 10, 2017 at 8:03 am #1475328
Taking AUD 2/17 and honestly I'm excited for this one. I'm still nervous and am trying to do it while balancing grad school (my grad school grades will be happy when this is over). I think I've been through everything enough to come out with a passing score and I feel better about it so far than I did with FAR and BEC. I'm just so excited to potentially be done. This CPA journey has been a marathon I'm glad I don't have to run again. Any advice on how to best spend my time for the last week of studying?February 10, 2017 at 3:28 pm #1475625
Transaction cycles are killing me. like really wth is this even. I have becker, anyone have any tips on how to tackle this chapter.February 11, 2017 at 12:08 am #1475848
just wondering… how possible is it to complete Chapter 5 and 6 in one day using becker? My exam is actually schedule for the end of the month. Im somewhat behind but will be finishing up Chapter 4 tomorrow. Im trying to hit the last 2 chapters on sunday so I can review 2 weeks.
Embarrassingly to say but its my 3rd time so the material isn't all that new to me. Been scoring in around 77's to high 80's, nothing less. Take that as a good sign.. Could be better. I dont want another 74. Work has been preventing me to study 🙁February 11, 2017 at 12:13 am #1475854
@moose, post some questions here. I took 3 days to spread out that section and I just finished.. hated it even 3rd time around. Wouldn't say I'm a master but I have a decent understanding. Sometimes its very logical.February 11, 2017 at 11:59 am #1475947
Spartan, I am at the point where I don't even know the purpose of transaction cycles and whats cover u suppose to do. I am so lost. I skipped chapter 4 and went on to chapter 5. Sample is confusing as well, other than that I think chapter 5 and 6 is doable in a day.February 11, 2017 at 3:42 pm #1476121
Becker, does a very confusing job of teaching cycles. The best way to understand it is to read each cycle (learn revenue and spending cycles first) then first understand what department the cycle starts in thru where it ends. Once you have that down then focus on what personnel in each department does (what inventory/document they handle), then put it together (where inventory/documents originate and who originates to where they end up). It helped me to do this by literally drawing it out. For example, for the sales (revenue) cycle, I drew a sales person (creates sale order) at a desk taking a sale from a customer in the sales department, then drew an arrow from them to the credit manager in the billing department (approves customer credit) , then drew an arrow to the next department, and so forth. After doing this it all seemed so easy, and then it helped me to decipher that awful flowchart Becker has in the book. (I failed audit twice with Becker btw and then got Roger, the cycles are explained so much better). You can also YouTube the cycles, an instructor may explain it better, but I recommend drawing it out. Once you draw it yourself it really sticks.February 11, 2017 at 4:40 pm #1476159
@thanks! I actually have roger videos as well. I will check it out once I am done reviewing chapter 1,2, and 3. How did you deal with sampling?February 11, 2017 at 10:53 pm #1476375
Which of the following factors is most relevant when an auditor considers the client's organizational structure in the context of control risk?
…….. a.Management's attitude toward information processing and accounting departments.
…….. b.The suitability of the client's lines of reporting.
…….. c.Physical proximity of the accounting function to upper management.
…….. d.The organization's recruiting and hiring practices.
Some of these internal control questions are confusing / tricky. I chose A, but the correct answer is B. Wouldn't the organizational structure have more to do with the “tone at the top” versus the clients line of reporting? I don't really understand why B is a better answer. Really trying to plow through this information as quickly and efficiently as possible but busy season hours are limiting my time to study. Any help is appreciated.
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