[smoothiezguy]

Hey Ninjas,

I’m reviewing AUD like mad for my exam next week. One of the areas I frequently get wrong on the MCQs is regarding the assertions – Completeness, Existence, Rights and Obligations, Valuation.
Does anyone have any tips for how to not get confused about those and which is which?

Wish me luck on this exam – I’m not trending 85% yet. 🙁

Thanks!

CMA - 430
BEC - 83
FAR - ?
AUD -
REG -

[Finally_a_CPA]

I hope someone replies to your question on tips to approach the assertions. I will also be taking audit next week and am also struggling with the assertions. I've considered rescheduling the exam but I don't want to have to wait until January. 🙁 I'm just going to hope for the best next week.

[pharaoh]

I can maybe help on the completeness and existence. If you are auditing a company and you want to make sure they didn't overstate revenues, in other words, the revenue recorded in the books really happened —> did it exist/occurred? So the test will go from the books/ledger/records to the source documents/vouchers …referred to as Vouching.

In inventory for example, you are walking in the warehouse, you can see the inventory, so you already know that it exists but the question is was it recorded? Did they include everything? So the test will go from the source to the books —> this is completeness

This is where you have to know the cycles to be able to tell in the question, the direction they are going, from books to source or source to books

FAR 8/2016
AUD 1/2017
REG TBD
BEC TBD

[Anonymous]

vouch back for occurrence, trace forward for completeness, knowing just that will get you pretty far from what ive heard if you cant remember anything else!

I take audit tomorrow, first exam I'm pretty nervous. Good luck with yours!

[Anonymous]

Here is an mnemonic I used for the assertions
CAVECROC:
C: Completeness
A: Accuracy
V: Valuation and Allocation
E: Existence
C: Cut-off
R: Rights and Obligations
O: Occurrence
C: Classification and Understandability

[smoothiezguy]

@GSD512 – Looks like we're on a similar path… I too have REG left after AUD. Like you, I would reschedule this AUD exam for Jan, but I'm trying to finish before the exam updates roll out next April. Yikes – let's hope we both pass AUD next week! 🙂

@Pharaoh – That's exactly the kind of input I was needing! Thank you so much.

CMA - 430
BEC - 83
FAR - ?
AUD -
REG -

[pfloyd]

Existence- asks does the item of the financial statement actually exist and did it occur, usually deals with overstatement of assets and revenue. So you would vouch the journal entry to the source document
Completeness- asks did all economic events in the year get recorded and were any left out, usually deals with understatement of liabilities and expenses. You would trace a source document such as a purchase order to the journal, to see if the transaction was recorded.
Rights and obligations- deal with does the entity actually own the asset or liability. For example checking the brokerage statement to see if you own the security.
Valuation- are the elements of the financial statement properly valued. For example checking the allowance for doubtful accounts to see if accounts receivable are measured at net realizable value

AUD 5/27/16 74 &#%!! 7/13/2016 86!
BEC 8/17/2016
FAR 11/04/2015 73, 1/4/2016 75 (phew!)
REG 2/26/2016 74. 4/2/2016 79

[Finally_a_CPA]

Pharaoa & Jstella1993: Thanks, that is actually helpful.

drl38: Thanks, I hope you are right and that just knowing the difference between vouching and tracing will help a lot. Thankfully Roger does a great job in explaining the two so I know the difference between the two but I struggle with actually applying it. Maybe I'm just overthinking things.

Smoothiezguy: That is awesome! How are you feeling about REG? Or have you not even given much thought to it yet? Since I've always leaned a bit more towards tax, I'm really hoping it will be less overwhelming. I only have a year of experience under my belt but I bet it will come in handy. Yes, I also want to be done before the changes. Especially since results for any exams taken in Q2 won't come out until mid August. I would not want to wait that long to know if I'm done..especially given the fact that I'll have to go back to school for that damn ethics class. 🙁

[Anonymous]

You definitely want to master the “assertions” especially since much of audit methodology is based on them. It's likely that you'll have many MCQs and a simulation on assertion concepts. For me, the best ways to think about the assertions are from a balance sheet, income statement or footnote disclosures perspective.

[Patrick]

Here is the silly way I remember Completeness vs. Existence

C comes before E in the alphabet

The Completeness assertion you start at the beginning (source document) and Trace back to end where it was recorded

The Existence assertion you start at the end (records) and Vouch forward to the beginning (source)

I use this same line of thinking for remembering trace and vouch. T comes before V in the alphabet. Tracing you start at the beginning, vouching you start at the end.

It somehow makes sense in my mind, hopefully it helps 🙂

FAR 79 --Gleim; Roger Cram
BEC 75 --Ninja Book; Ninja MCQ; Roger Cram
REG 10/1/16
AUD 12/10/16
Ethics XX/XX/XX

[smoothiezguy]

@Patrick – that's great! That will help me a lot.

@GSD512 – No, I have not given any thought to REG yet. 🙁 I usually just focus on one section at time and try to get it conquered, then move on to the next one. My background is not in tax, so I'm sure it will be more difficult for me than you. I didn't know that Q2 scores aren't released until next August! That's really bad news for me if I have to take an exam in Q2 and don't pass, because then my first exam's credit will expire. Wow, that really adds the pressure to these last two exams I have.

CMA - 430
BEC - 83
FAR - ?
AUD -
REG -

[Finally_a_CPA]

Patrick: Thanks for the help. I usually think that finding a silly way to remember things works best for me.

smoothiezguy: Yeah I know. I read that on the AICPA website. It is bad news, My FAR score doesn't expire until Jan 2018 but if I have to take an exam in Q2, I really don't want to wait months to know whether I passed or not. I would feel like I would have to continue studying over the summer just to be sure. Let's hope we both pass AUD this time and REG in Q1.

[Author]

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