AUD Study Group Q1 2017

CPA Exam Forum AUD AUD Review AUD Study Group Q1 2017

This topic contains 569 replies, has 84 voices, and was last updated by  briella021 7 months, 2 weeks ago.

Viewing 30 posts - 181 through 210 (of 570 total)
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  • #1426971
    Holly
    Holly
    Participant

    NINJA 489:D.
    extent of tests of details. Which is exactly why this test didn't go as planned – practice is so different than academic.

    NINJA 678:D.
    Review the lawyer’s letter for information about litigation.

    #1427004
    Forem004
    Forem004
    Participant

    NINJA 1025:

    An auditor is obligated to communicate a proposed audit adjustment to an entity's audit committee only if the adjustment:

    A.
    has not been recorded before the end of the auditor's fieldwork.

    B.
    has a significant effect on the entity's financial reporting process.

    C.
    is a recurring matter that was proposed to management the prior year.

    D.
    results from the correction of a prior period's departure from GAAP.

    #1427016
    Forem004
    Forem004
    Participant

    4-9

    In performing a search for unrecorded retirements of fixed assets, an auditor most likely would:

    a. inspect the property ledger and the insurance and tax records and then tour the client's facilities
    b. tour the client's facilities and then inspect the property ledger and the insurance and tax records
    c. analyze the repair and maintenance account, and then tour the client's facilities
    d. tour the client's facilities and then analyze the repair and maintenance account

    I answered this one correctly, but I was second guessing myself the whole time.

    #1427021
    Forem004
    Forem004
    Participant

    4-13

    Which of the following would an auditor least likely consider with respect to fair values?

    a. segregation of duties between those committing the entity to certain transactions and those resp for understanding the valuations related to those transactions

    b. the effect on fair value measurement and disclosures of info available subsequent to the audit

    c. the role of IT in determining fair value measurements and disclosures

    d. whether the valuation methods used are appropriate in relation to the industry in which the entity operates

    #1427022
    Forem004
    Forem004
    Participant

    4-17

    According to PCAOB standards which one of the following statements does not reflect a qualitative standard that should be considered when evaluating the materiality of uncorrected misstatements?

    a. the effects of misclassification, for example, between operation and non-operating

    b. the significance of the misstatement relative to the needs of users

    c. the cost of the correction

    d. the dollar amount of the error

    #1427049
    Forem004
    Forem004
    Participant

    NINJA 496:

    When using classical variables sampling for estimation, an auditor normally evaluates the sampling results by calculating the possible error in either direction. This statistical concept is known as:

    A. precision.

    B. reliability.
    C. projected error.

    D. standard deviation.

    I remember getting this wrong the first time around. I know this is just one that I have to memorize the definition but ???

    #1427052
    Forem004
    Forem004
    Participant

    Both of your last two were correct. For Ninja 678, are they considering the contingency the estimate? I wanted to answer B, because if there is a substantial difference from last year for the same estimate, I'm going to have questions.

    #1427063

    thebigguy1992
    Participant

    5. Which of the following procedures would an auditor most likely perform to identify unusual sales transactions?

    Tracing credits in the accounts receivable ledger to source documentation.
    Performing a trend analysis of quarterly sales.
    Examining duplicate sales invoices for credit approval by the credit manager.
    Tracing cash receipt entries to the bank statement deposit for amount and date.

    Answer is B….why?

    this is from released 2016 AICPA difficult By the way

    #1427066
    Forem004
    Forem004
    Participant

    I'm looking that one up, but I try to use process of elimination if I am not familiar with a topic. You know it won't be A bc credits to AR would not result in sales transactions, not sure about B at first glance, C only tests a control – approval, and D tests that it was deposited appropriately.

    I was not familiar with the exact definition of trend analysis, but it's “ratio analysis can be used to analyze trends over time.”

    So this is the only answer that would allow you to identify an unusual transaction.

    Does that help?

    #1427081
    Holly
    Holly
    Participant

    1025 B
    4-9 A
    4-13 A
    4-17 D
    496 A

    #1427085
    Forem004
    Forem004
    Participant

    1025 B – correct!

    4-9 A – correct!

    4-13 A – B The auditor would consider subsequent events and transactions occurring before the completion of the audit, not after. The auditor is not resp for predicting the future and would not be expected to evaluate the effect of conditions arising subsequent to the audit, that, if known at the time of the audit, might have affected fair value measurements and disclosures.

    4-17 D – correct!

    496 A – correct!

    #1427087
    Holly
    Holly
    Participant

    496 – I just think of it as you know when a sample is taking it could represent the whole population, but you know it's not exact; so going a few more or less is probably more accurate (precise) than a single number.

    678 – The question asked how to determine if all estimates were identified, not reasonable. The contingency would be an estimate until it is settled and paid.

    Those are my thoughts anyway. I have never even looked at an audit report, much else been involved in one. I could be entirely wrong.

    #1427093
    Holly
    Holly
    Participant

    READ THE QUESTION UGH!!!!

    #1427094
    Holly
    Holly
    Participant

    5. Which of the following procedures would an auditor most likely perform to identify unusual sales transactions?

    Tracing credits in the accounts receivable ledger to source documentation. – Credits wouldn't explain anything
    Performing a trend analysis of quarterly sales. – Huge sales numbers or frequent sales during dead months
    Examining duplicate sales invoices for credit approval by the credit manager. – control
    Tracing cash receipt entries to the bank statement deposit for amount and date. – completeness/understated and sales aren't typically understated

    #1427108
    Forem004
    Forem004
    Participant

    Thanks that helps HR!

    #1427142
    Forem004
    Forem004
    Participant

    5-2

    As a result of tests of controls, an auditor assessed control risk too low and decreased substantive testing. This assessment occurred because the true deviation rate in the population was:

    a. less than the risk of assessing control risk too low, based on the auditor's sample

    b. less than the derivation rate in the auditor's sample

    c. more than the risk of assessing control risk too low, based on the auditor's sample

    d. more than the deviation rate in the auditor's sample

    #1427156
    Holly
    Holly
    Participant

    5-2d. more than the deviation rate in the auditor’s sample

    #1427187
    Forem004
    Forem004
    Participant

    That's correct!

    5-9

    An auditor's letter issued on significant deficiencies relating to a nonissue's internal control observed during a financial statement audit should:

    a. include a brief description of the tests of controls performed in searching for significant deficiencies and material weaknesses

    b. indicate that the significant deficiencies should be disclosed in the annual report to the entity's shareholders

    c. include a paragraph describing management's assertion concerning the effectiveness of internal control

    d. indicate that the audit's purpose was to report on the financial statements and not to provide an opinion on internal control

    This one threw me for a minute. I didn't realize they were using “letter” interchangeably with “report.”

    #1427216

    sulaiman
    Participant

    5-9
    D ?

    Also, I have a question regarding transaction cycle, is it normal to score 45-50% in first try doing mc? This is the first sub topic in audit that throw me off! I usually score 70-80% in first try in audit so I am not sure if I should review the materials again or just do more mc to get familiar with this topic.

    #1427300
    Forem004
    Forem004
    Participant

    My co-worker, CPA of nearly twenty years, continues to remind me to just continue doing questions! Correct on 5-9

    #1427309

    sulaiman
    Participant

    Regarding 5-9, I think the reason it is not because it's a letter or a report, more actually because it is “non issuer” since we are not required to do “integrated audit”. I mean even in our report, we don't express opinion about internal control of non issuer.

    #1427445

    sulaiman
    Participant

    2009 released question..
    54 -In auditing an entity's computerized payroll transactions, an auditor would be least likely to use test data to test controls concerning:
    a.
    Control and distribution of unclaimed checks.
    b.
    Withholding of taxes and Social Security contributions.
    c.
    Missing employee identification numbers.
    d.
    Overpayment of employees for hours not worked.

    The answer is A and I don't know why!

    #1427507
    Forem004
    Forem004
    Participant

    About your response to 5-9, when it says letter in the question I think it's referring to the report that it references in the answer. Bc if not, what is an IC letter??

    Your question has to do with that is asking specifically about test data. You would be unable to use test data to check the process in A.

    #1427553
    Holly
    Holly
    Participant

    I test today!!!!!!

    #1427579
    Forem004
    Forem004
    Participant

    I thought you said the 15th! Good luck!

    #1428531

    thebigguy1992
    Participant

    i took the test/just posted a thread about it

    #1428645
    Forem004
    Forem004
    Participant

    NINJA 681: This also D, which is why I chose B on the second question.

    In evaluating the reasonableness of an accounting estimate, an auditor most likely would concentrate on key factors and assumptions that are:

    A. consistent with prior periods.

    B. similar to industry guidelines.

    C. objective and not susceptible to bias.

    D. deviations from historical patterns.

    This is the explanation for this one:

    In evaluating the reasonableness of an accounting estimate, the auditor focuses on the key factors and assumptions that are deviations from historical patterns. Also of concern to the auditor are key factors and assumptions that are significant, sensitive to variations, and subjective and susceptible to misstatement and bias. Estimates are more likely to be reasonable if they are consistent with prior periods, similar to industry guidelines, and objective and not susceptible to bias.

    AND THEN THERE'S THIS…

    NINJA 678: This is D

    Which of the following procedures most likely would assist an auditor in determining whether management has identified all accounting estimates that could be material to the financial statements?

    A.Inquire about the existence of related party transactions.

    B.Determine whether accounting estimates deviate from historical patterns.

    C.Confirm inventories at locations outside the entity.

    D.Review the lawyer’s letter for information about litigation.

    Yet this is the explanation for this one:

    Of the listed procedures, reviewing the lawyer's letter for information about litigation would most likely assist the auditor in determining whether management has identified all accounting estimates that could be material to the financial statements. Related party transactions and inventories outside the entity are not estimated amounts. Reviewing the historical pattern of accounting estimates will not usually reveal an unidentified accounting estimate.

    #1428657
    Forem004
    Forem004
    Participant

    And now I see it…nevermind!

    #1428803

    sulaiman
    Participant

    @forem004

    I hate those questions… Just one word in the question change the answers! I guess the one who gets over 95% in the exam, is the one who realizes all these minutiae issues!

    #1428831
    Forem004
    Forem004
    Participant

    I'm good with a 75!!

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