[jeff]

Welcome to the Q2 2015 CPA Exam Study Group for AUD.

World Premier: “Unmodified” (Audit Reports Rap Video) 🙂

Posted by Another71 on Thursday, November 13, 2014

Free NINJA: https://www.another71.com/cpa-exam-study-plan/

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[NoraU]

trish, yes this makes total sense to me. You accept the higher risk of incorrect acceptance so you can have a smaller sample size.

I do not get the incorrect rejection situation. You are willing to accept the higher risk of incorrect rejection why your sample size decreases?

BEC 05/12/14 77
REG 08/25/14 82
FAR 11/25/14 80
AUD 02/25/15 72, 05/15/15 98! DONE!!!!!!!!!!!!!!!!!!!!!!

[trish_1234]

@ nora and others please input also…. good question here!

I looked over the material and this is what I believe to be true

Incorrect rejection is a risk that the auditor may consider also (I see that the table for “mean-per-unit sampling” uses this risk together with the risk of incorrect acceptance to determine sample size) Incorrect rejection is the risk that the auditor will incorrectly reject a sample unit which may result in unnecessary audit work ( material misstatement exists when in fact it does not exist). This is a less severe risk compared to risk of incorrect acceptance (which can lead to audit failure).

So I would look at it the same way as incorrect acceptance the more your willing to accept the less you need to test.

edit: So far I only see mean per unit using incorrect rejection to determine sample size

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[trish_1234]

The best approach for minimizing the likelihood of software incompatibilities leading to unintelligible messages is for a company and its customers to

A. Agree to use the same software in the same ways indefinitely.

B. Acquire their software from the same software vendor.

C. Agree to synchronize their updating of EDI-related software.

D. Each write their own version of the EDI-related software.

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[NoraU]

trish, I am kind of got it ( I guess). If there is a higher allowable risk – sample size decreases.

Total guess for your question: C?

BEC 05/12/14 77
REG 08/25/14 82
FAR 11/25/14 80
AUD 02/25/15 72, 05/15/15 98! DONE!!!!!!!!!!!!!!!!!!!!!!

[ruggercpa2b]

Trish I am going to say C

AUD - 73, 72 retake 7/2/2016
BEC - 8/20/2016
REG - TBD
FAR - TBD

I am so ready for this nightmare to be over. Been at this way too long.

[trish_1234]

Answer (C) is correct.

EDI entails the exchange of common business data converted into standard message formats. Thus, two crucial requirements are that the participants agree on transaction formats and that translation software be developed to convert messages into a form understandable by other companies. Thus, if one company changes its software, its trading partners must also do so.

My gleim updated/added questions from January to now!!!

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[knicks92]

Anyone using Becker understand why on A1 pg 30 it says on the top for f) Corrections of an error in accounting principle (from cash method to accrual method) affect consistency and require an emphasis of matter paragraph and than Tim made a note on the side that says correction of an error that is not an accounting principle change (From cash to accrual). Isnt that not the opposite of what the book is saying. Who is right?

Tough times don't last. Tough people do.

B: 88
A: 77
R: 89
F:

[plotikkk85]

Which of the following statements concerning prospective financial statements is correct?

a. Only a financial forecast would normally be appropriate for limited use.

b. Any type of prospective financial statements would normally be appropriate for limited use.

c. Any type of prospective financial statements would normally be appropriate for general use.

d. Only a financial projection would normally be appropriate for general use.

[plotikkk85]

@ knicks92!

Change from cash to accrual is an error correction and should be treated retrospectively. Yes, it is an accounting principle change; however, it is an error.

[NoraU]

plotikkk85

B?

BEC 05/12/14 77
REG 08/25/14 82
FAR 11/25/14 80
AUD 02/25/15 72, 05/15/15 98! DONE!!!!!!!!!!!!!!!!!!!!!!

[plotikkk85]

@NoraU

Choice “b” is correct. Any type of prospective financial statements (financial forecasts and financial projections) would normally be appropriate for limited use.

Yes, you got it.

[ladybossxo]

Trish!! Sorry for taking forever to respond! I was debating between A and C as well for that question. But according to the answer, it says the accountant should establish an understanding with the client, preferably in writing, prior to a review. However, the standards do not mandate that an engagement letter be used for this purpose.. I think it makes C the most correct. Auditing can be really confusing

CPA Exams Done.

[knicks92]

Park, CPA, was engaged to audit the financial statements of Tech Co., a new client, for the year ended December 31, Year 3. Park obtained sufficient audit evidence for all of Tech's financial statement items except Tech's opening inventory. Due to inadequate financial records, Park could not verify Tech's January 1, Year 3, inventory balances. Park's opinion on Tech's Year 3 financial statements most likely will be:

Balance sheet

Income statement

a.

Unmodified

Adverse

b.

Unmodified

Disclaimer

c.

Disclaimer

Adverse

d.

Disclaimer

Disclaimer

I know the answer is B, but I swear that I read that if an auditor expresses an adverse or disclaimer of opinion, than a single FS cannot have a different opinion. Can someone clear this up?

Tough times don't last. Tough people do.

B: 88
A: 77
R: 89
F:

[plotikkk85]

Just FYI: SSARS 19:

We do not need to communicate inconsequential matters/

Like this article:

https://attestationupdate.com/2011/04/11/what-about-inconsequential-fraud-or-illegal-acts-under-ssars-19/

Three illustrations of inconsequential illegal acts:

Making the payroll tax deposit several days late – that is illegal.

Accumulating several speeding tickets on the company truck over the course of a year – obviously there’s several violations of traffic laws.

“Minor” violations of tax law, such as not having support for a few disbursements, rather loose reporting of some taxable benefits on W-2s, routinely not documenting who was present for business meals or the business purpose of those meals – those may be common occurrences but they are actually violations of the tax law, and thus technically would be “illegal acts”.

[se7en.14]

compilation & review:

whats the diff between “Presumptively mandatory” & “required” engagement letter in an audit?

[Author]

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