AUD Study Group Q4 2021 - Page 2

Viewing 15 posts - 16 through 30 (of 40 total)
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  • #3308651
    Ninja Albert
    Participant

    wow what a story! my hours with AUD are probably much more! Failed 3 times in the. mid 70s and will be retaking this Monday. procedures are very important and lots of FAR knowledge also. So head up on that and good luck on your studies.

    #3308654
    Ninja Albert
    Participant

    wow what a story! my hours with AUD are probably much more! will be retaking this Monday, procedures are very important and lots of FAR knowledge also. So heads up on that and good luck on your studies.

    #3308672
    Ninja Albert
    Participant

    any one can who is studying AUD answer this question regarding Litigation:

    On December 1 Year 1 there was an accident in the warehouse causing an injury to one of the workers. the worker decided to sue and demanded $75000. On December 15 year 1 Aud spoke with management as it says in the minutes to meeting and it said there that management believes that there is no chance we will win this case but and will be liable to pay $100000. on February 5th year 2 the AUD received the letter of inquiry back and it said there that Company ABC's litigation is unsure for us, and we don't know the price we will pay. the AUD report date it Feb 15 year 2.

    What do we do in such a case regarding the accrual or disclosure of this pending litigation, do we say that since management said they will lose and there fore require a disclosure and accrual or do we listen to lawyers and just disclose the litigation with no price?

    do we lisen to Management or the lawyers because the lawyers were closer to the AUD report date? Or do we listen to management always regardless of what the Lawyers replied???

    #3308681
    takai.jin
    Participant

    Hey Albert, AS 2505.14 (PCAOB) and AU-C 501.17 (AICPA) might be helpful places to start. I'll definitely be looking for a solid answer tomorrow though

    Edit: Also AS 2905!

    AUD - 64
    BEC - 67
    FAR - 82
    REG - 66
    That which neither hungers nor craves is beauty defined.
    • This reply was modified 1 month, 1 week ago by takai.jin. Reason: Potentially more relevant source of info
    #3308687
    Ninja Albert
    Participant

    Testing for AUD again after 3 tries hopefully goes well. Focused on doing lots of SIMS and reviewing both strong areas and restudying weak areas.

    #3308783
    BAkatsuki
    Participant

    Hey study group, I'm taking AUD Dec 18th and am currently cramming as much info into my feeble head as I can. The AUD exam has been hell for me so any suggestions as I get to the home-stretch, I'm all ears.

    #3308789
    Ninja Albert
    Participant

    Get tp know those SOC reports very well, those are important, it is short and easy to answer!! good luck on your exam

    #3308792
    takai.jin
    Participant

    Hey BAkatsuki, I'm pretty much in the exact same boat as you. I think I've got about 90 hours total left to study. I am going to try to view as many of the cramming videos as I can, while pausing and such to learn the material (rote and recall), which I hope only takes up about 10 to 20 hours tops. I've been doing the MCQs and will spend the majority of my time on those, cross-referencing with the Ninja Notes (for flow) and will try to get in some time for sims. I'd love to know your method/plan/structure and anyone else's for that matter. Ideally, I'd have liked to build something like those spreadsheets that Mike has, but I prefer pen and paper for learning concepts; I definitely want to try that for REG though. Let's try our best!

    AUD - 64
    BEC - 67
    FAR - 82
    REG - 66
    That which neither hungers nor craves is beauty defined.
    #3308807
    Loraqns
    Participant

    Hi all!
    Just rescheduled my test for 29th from the 10th. Need advice how to structure studies going forward. Using becker: listened to all lectures, averaging 55% on mcqs, first mock 55%. I was doing well, felt burned out, decided to take a day off , it turned into 3 days off, next thing you know I am not doing well anymore. I am lacking motivation. I suspect I am adhd and audit isn't very exciting. Please advice how to make the best use of the time left. All I want is a 75 for end of they year gift !!!

    Thanks so much and happy holidays!
    PS
    becker changed the layout, can't figure out how to do random mcqs ? It used to be at the bottom of each module dont see it now

    REG - 81 [Aug 2016]
    AUD - 73 ; retake March 2017
    BEC - 59 ; rematch in 3rd Qtr
    FAR - May 2017
    #3308825
    takai.jin
    Participant

    Hi Loraqns! I've only used Ninja and have been formally diagnosed with ADHD, inattentive type. I mainly have trouble starting things (anxiety about where to begin) and focusing. To be blunt, controlled medications helps level the playing field when it comes to reading and such, but even without it I find MCQs and reviewing the Ninja Notes, in tandem, to be my preferred method to tackle most of the work. As noted in a previous post, I feel compelled to understand things fully before moving on to the next topic, which can take a lot of time especially without other guidance. Full disclosure, my natural tendencies seem to lean more towards the realms of science, especially physics and chemistry, because the laws of nature do not abide by the whims of humanity or any species that I know of; they are absolute, whereas the social sciences, while not entirely arbitrary, rely heavily on the changing moods and preferences of civilization and such.

    That being said, I have tried to develop a questioning mind (relating information, conflating ideas, fun mnemonics) whenever I look at the MCQs. I have a passion for penmanship which I believe aids in retention of the content (mechanical, sort of rote and recall) but could also be hurting me…achieving the form and categorization of various ideas has taken a long, long time, but I use a somewhat modified version of Cornell Notes (subject in the margin, most relevant ideas in bulk). The mentality I use to study is akin to learning a language as I often have a hard time understanding what is being asked of me in these limited scenarios; put another way, I use Baye's theorem to guide my decisions and responses somewhat. What I find truly helpful, which someone else also referred to, is finding some way to teach someone else the information, or find someone to discuss the information with. For me, working together is by far the fastest and easiest way for me to retain things and always has been; if the human element is there, I am at my strongest. Unfortunately, I have very little of that nowadays, so I've become comfortable explaining it to myself like some sort of game.

    I sincerely wish you the best, ADHD is tough and we're not lazy souls, we may be down but not out! I set a lot of alarms, try to exercise at least half an hour a day (delivers more oxygen to the body, helps me study), meditate or sit with myself for 10 to 15 minutes a day, and I use the MCQs to learn the content. Without the medication, I think I can only study for 30 minutes to an hour at a time before taking a break, the method I used is similar to the Pomodoro technique, but with may more downtime in-between (something is better than nothing). If you want a detailed breakdown of how I do things and would like to compare, I can provide that as well.

    AUD - 64
    BEC - 67
    FAR - 82
    REG - 66
    That which neither hungers nor craves is beauty defined.
    #3308828
    takai.jin
    Participant

    Hey Ninja Albert, it sounds as though your question may be directly referenced to these sections:

    AS 2505.07(a):

    The audit normally includes certain other procedures undertaken for different purposes that might also disclose litigation, claims, and assessments. Examples of such procedures are as follows:

    Reading minutes of meetings of stockholders, directors, and appropriate committees held during and subsequent to the period being audited.

    per AS 2505.14:

    A lawyer may be unable to respond concerning the likelihood of an unfavorable outcome of litigation, claims, and assessments or the amount or range of potential loss, because of inherent uncertainties. Factors influencing the likelihood of an unfavorable outcome may sometimes not be within a lawyer's competence to judge; historical experience of the entity in similar litigation or the experience of other entities may not be relevant or available; and the amount of the possible loss frequently may vary widely at different stages of litigation. Consequently, a lawyer may not be able to form a conclusion with respect to such matters. In such circumstances, the auditor ordinarily will conclude that the financial statements are affected by an uncertainty concerning the outcome of a future event which is not susceptible of reasonable estimation, and should look to the guidance in AS 3105.28 through .32 to determine the effect, if any, of the lawyer's response on the auditor's report.

    per AS 3105.28:

    Departures from generally accepted accounting principles involving risks or uncertainties, and materiality considerations. Departures from generally accepted accounting principles involving risks or uncertainties generally fall into one of the following categories:

    Inadequate disclosure (paragraphs .29 and .30)
    Inappropriate accounting principles (paragraph .31)
    Unreasonable accounting estimates (paragraph .32)

    Based on the information you provided, it sounds as though the amount and likelihood of litigation alleged in the minutes cannot be corroborated by the information acquired from the inquiry response.

    Per AS 2810.13:

    Misstatements Relating to Accounting Estimates. If the auditor concludes that the amount of an accounting estimate included in the financial statements is unreasonable or was not determined in conformity with the relevant requirements of the applicable financial reporting framework, he or she should treat the difference between that estimate and a reasonable estimate determined in conformity with the applicable accounting principles as a misstatement. If a range of reasonable estimates is supported by sufficient appropriate audit evidence and the recorded estimate is outside of the range of reasonable estimates, the auditor should treat the difference between the recorded accounting estimate and the closest reasonable estimate as a misstatement.

    Note: If an accounting estimate is determined in conformity with the relevant requirements of the applicable financial reporting framework and the amount of the estimate is reasonable, a difference between an estimated amount best supported by the audit evidence and the recorded amount of the accounting estimate ordinarily would not be considered to be a misstatement. Paragraph .27 discusses evaluating accounting estimates for bias.

    I'm not sure as to what extent managements' information has been “included” in the statements, but at the very least it seems as though the uncertainty exists (litigation exists, sued by employee), but the likelihood of loss cannot be determined (litigation unsure), nor is the amount of loss estimable or no reasonable estimate exists (per the lawyer's response). Per SFAS 5, the contingent loss hasn't reached the probability threshold (probable) required for disclosure, nor is the amount reasonably estimable such that it would be accrued. I might be reading between the lines here, but if “unsure” refers to the outcome of the litigation, then that means the litigation exists, yet we still do not know the probability of the contingent loss occurring. If “unsure” refers to the litigation itself…then that means we haven't been sued yet? I think those considerations could reflect on the veracity of managements' responses. Because the inquiry was received before the report date, AS 2905 is inapplicable (Subsequent Discovery of Facts Existing at the Date of the Auditor's Report). As far as audit evidence goes, it seems as though management should not accrue or disclose the loss and that, if they have done so, the auditor should, at minimum, per AS 3105.29:

    If the auditor concludes that a matter involving a risk or an uncertainty is not adequately disclosed in the financial statements in conformity with generally accepted accounting principles, the auditor should express a qualified or an adverse opinion.

    If I've blundered, please let me know so I can adjust course as well. Interesting question!

    EDIT: I'm not sure what happened, but I posted this last night, 12/6/2021 around 9:18 p.m. and when I tried to edit section 2810.13 (bolding) my reply disappeared. I tried to repost it, but the system flagged it as too similar and it was rejected. If the post does show up, I hope a moderator can help with that.

    AUD - 64
    BEC - 67
    FAR - 82
    REG - 66
    That which neither hungers nor craves is beauty defined.
    #3308846
    rollegladys
    Participant

    Took BEC Nov. 12th, and AUD on Nov. 18th, found out that I was unsuccessful with BEC (61) :(. Now I am waiting for the AUD score. I have found that my major issue with the exams were proper time management. The Ninja materials are great from the live sessions, cram sessions and audio, MCQs etc. The methods and materials reinforce your knowledge in each subjects.

    GR
    #3308888
    Ninja Albert
    Participant

    hey thanks for the reply, but this topic I believe also correlates with litigation and claims and subsequent events. For example that Lawyers response is really a sub events because the meeting happened in DEC and the response happened after B/S date so that's the real mix up here. maybe the lawyers response is more reliable since it is closer to AUD report date.

    #3308897
    takai.jin
    Participant

    Hey Albert, thanks for the clarification! I'm in the process of moving and studying for my own AUD exam on the 17th, but I will try to get to the bottom of this soon, hopefully by tomorrow. I've restructured your question as follows:

    Upon whose response do we base the accounting treatment for this contingent loss? What criteria is used to determine whose response is valid in determining the accounting treatment for this contingent loss?

    If the loss has been disclosed and accrued by Management (or however they accounted for it), then we're trying to determine whether an adjustment should be made based upon the information from the inquiry letter. For this, AS 2801 Subsequent Events seems like a good place to start. Per AS 2801.03:

    The first type consists of those events that provide additional evidence with respect to conditions that existed at the date of the balance sheet and affect the estimates inherent in the process of preparing financial statements. All information that becomes available prior to the issuance of the financial statements should be used by management in its evaluation of the conditions on which the estimates were based. The financial statements should be adjusted for any changes in estimates resulting from the use of such evidence.

    To me, it sounds as though the inquiry should be considered as evidence to be used in Management's evaluation of the estimates (probability of incurring the loss, estimation of the amount of loss). Based on that alone, I'm not sure whether the report date matters so long as the evidence was obtained during the subsequent period. I'll read more about it tomorrow.

    AUD - 64
    BEC - 67
    FAR - 82
    REG - 66
    That which neither hungers nor craves is beauty defined.
    #3308921
    Ninja Albert
    Participant

    That is a great way of writing out the question/clarification I have, I submitted this in Ninja Sparring waiting for a reply. I once asked Ninja Mike if we listen to lawyers over management, and he said we always listen to management but my question is structured different because of the idea of subsequent events. I asked him if both were in the same period/month… let us know what you can find…

    thanks

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