[jeff]

NINJA Study Notes, Flashcards, and Audio: https://www.another71.com/products-page/

Wiley Software: https://www.another71.com/wiley-cpa-software/

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

[Anonymous]

Passed BEC on the first try and it is time to kill AUD. First day of intense studying starts tomorrow.

Plan of attack: Jeff's Early/lunch/late plan(3hrs)*(3 days)= 9 hrs

6 hours per day*(tues/thurs-no work)= 12 hrs

Saturday- 3 hours after breakfast= 3 hrs

total= 24hrs

Weapons: 2012 Becker review & Wiley books.

[Anonymous]

those damn transaction cycles are killing me!!!!! I'm am deathly afraid of the sims. I know I'll know I'll do well in the MC, but the sims……

[Anonymous]

Transaction cycles are a pain to study. Regarding completeness and existence, I think of the direction of testing and it helps very much! A complete transaction can be TRACED from source ”

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>” (e.g. physical assets and original-not copies-documents) to the financials. An item exists if VOUCHED “<

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” from the financial statements to the original source documents or physical assets. So a procedure to evaluate the completeness of inventory would be to test from the actual physical asset to the records/inventory listing/financial statements. Completeness is beginning (e.g. acquisition) to end (financials) and Existence is end (financials) to beginning (e.g. acquisition). Hope this helps.

[Anonymous]

Ok, so I understand the concept of tracing and vouching. What I am having a hard time with is memorizing the audit procedures that mean tracing (going from source documents) and vouching (coming from aggregated data). They don't say Auditor 1 grabbed some “source documents” and went ninja with an Excel spreadsheet and arrived at the A/R total on the balance sheet. They say in order to verify completeness, the auditor visited the plant and then viewed insurance documents and ppe subsidiary ledgers or some nonsense. I hate to sound stupid, but I don't really know what an inventory tag is!

[Anonymous]

And for you …audit people ;-). If you trace a handful of source documents to the g/l and they're all there, is that enough to say “I'm satisfied, let's get lunch!” or would you then need to vouch some different transactions in the g/l to their source documents for the same account?

[Kim4]

I've got AUD on 5/30 too — good luck to my fellow 5/30ers, and everyone else. My family is headed off to a Memorial Day picnic tomorrow, but I'm going to stay home and use the precious day off + nobody around time to get some good review in. Just couldn't give up a day off of work 2 days before the exam and not use it to study. 🙁 I'm sure they'll feel bad for me and bring me back some BBQ, haha.

FAR -- 90
AUD -- 95
BEC -- 82
REG -- 92

DONE!

[Anonymous]

An inventory tag represents items counted during an inventory. When an inventory service counts the items, the tags are left in place. An auditor will perform test counts (sometimes called full and false inclusion testing). So I would, for instance, select an item from the inventory list sheet, locate it on the shelf and count the items for agreement (existence). To test for completeness, I would randomly select an item located on the shelf or represented by the inventory tag and trace it to the inventory listing. Regarding how many or how much to test-well, that is at the discretion of the auditor and determined materiality limits for inventory. In the real world, if I say I will be satisfied as to the inventory balance if there are no or immaterial differences between my test counts and the inventory listing or that 80% of the account balance was tested with immaterial exception, then my conclusion would be that inventory is fairly stated.

[Anonymous]

CPAorDIE, thank you! I don't know why the Becker people can't put things into context. I need to visualize what the heck is going on and that makes so much more sense! I have (obviously) never been on an audit…

[Anonymous]

That was true ninjitsu. Hiya x 10

[Anonymous]

Can someone help me with this? When would an auditor reference another auditor's work in the report? Should I just assume that if the question states something like “the auditor is satisfied after talking to the predecessor auditor” that they would not reference them, and if the question leaves out their satisfaction that they would always reference them? I keep getting these questions wrong. How do I know which one they would do?

[Anonymous]

Hey, if the primary auditor has not had the opportunity to review the workpapers to become satisfied with the secondary auditor's competence or is not familiar enough with the reputation of the secondary auditor, then the primary auditor will usually say “This guys over here did part of the work–blame them if it is wrong!” They will “share responsibility” in auditor jargon. If the primary auditor engaged the secondary auditor themselves and as such reviewed the work, or the primary auditor is totally satisfied with the competence and reputation of the secondary auditor, the primary auditor will say “we got this” or issue a normal auditor's report, taking full responsibility for the opinion issued on the financial statements.

[Anonymous]

Say if a secondary auditor was engaged by the primary auditor to audit the facilities in China, the primary auditor would review the work, become satisfied and issue a report on the consolidated financials without sharing responsibility. If they ran out of time and couldn't review or some firm they know nothing about audited the subsidiary, they might share responsibility.

[Evan CPA]

Are ratios and/or audit procedures (trace, vouch, etc.) included in the Authoritative Literature?

AUD - 5/30

Using Becker self-study

[Jack_K]

@Ashley – Here is an explanation for a division of responsibility from my note.

Before relying on the other auditors, the principle auditor should 1) verify their credential/ reputation and 2) obtain representation letter from them (permission for reliance on their report)

Satisfied?

No – Issue scope limitation (qualified opinion or disclaimer of opinion)

Yes – the principle auditor is considering to take responsibility for the work of the other auditors

Taking responsibility?

No – this represents a division of responsibility; the principle auditor should 1) modify all three of the standard paragraph of the report ( NO explanatory paragraph is required) and 2) make reference to the report of other auditors (use “other auditors” in the report, do not mention their names)

Yes – this means the principle auditor is taking responsibility of other auditors, he/she can issue an unqualified opinion WITHOUT any reference to other auditors

FAR - 77
BEC - 71, 76
REG - 76
AUD - 73, 85

Roger CPA Review

"Study hard you WILL pass" Roger P

[Kim4]

ugggghhhhh — AUD tomorrow. I've done all the lectures, made my own notes from the text (Roger), did all assigned MCQs, and I've then re-created my notes and retyped them as my own little personal cram session. I feel good about the material, but nervous of course.

I told friends that I took FAR first because it is supposed to be the hardest/longest, and so since I'm done with FAR now everyone is saying, “well, it's all downhill from here! You've got the hardest one done, so now it's a breeze!!”

yeah, AUD isn't exactly a breeze, at least not the way I feel right now!!

My goal is to look over my typed notes tonight, maybe do a few MCQs and go to bed early. It doesn't sound like too many people run out of time on AUD like on FAR, so I'm really going to concentrate tomorrow on reading EVERY word of the problem. Throwing a little word like “review” in there changes the whole deal.

Thanks for the support — it's nice to be able to talk to people who get it.

FAR -- 90
AUD -- 95
BEC -- 82
REG -- 92

DONE!

[Author]

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