[NeedsA75]

For those of you studying for AUD, I thought we could have a thread where we asked each other questions that we are unsure of…I saw a similar thread for BEC and it really helped me in certain areas..

It goes like this: answer the most recent question in the thread, and then ask a question of your own. It doesn’t have to be a question right out of the study material, but can be more of a general question..

I’ll go first:

Q. How long does an auditor have to retain their working papers after the completion of an audit for issuers and non-issuers?

[NeedsA75]

@Spartans

A: Risk of incorrect acceptance is a risk associated with variable sampling where the auditor accepts the dollar value of a sample as correct when it is in fact materially misstated. This impacts the effectiveness of the audit.
Risk of incorrect rejection is the risk that an auditor will reject the dollar value of an account balance as misstated when in fact it is fairly stated. This effects the efficiency of the audit.

[Spartans92]

@Needs, Excellent!

Q: How does Control Risk relate to Detection Risk? And What happens to substantive testing when detection risk decreases as well as the timing of testing?

LOL I'm just keep refreshing this page while my Ninja MCQ is sitting idle.

BEC- PASS

[NeedsA75]

A: As control risk increases, detection risk decreases. There is an inverse relationship between the two (control risk exists independently of the audit). Substantive testing will increase and be more intensive to compensate for detection risk decreasing as well as testing being done at the end of the period as opposed to the interim period.

Q: What is the formula for Upper Limit Deviation Range? (Hint ______ + _______ )

[Spartans92]

Right on!

A: Tolerable misstatement + Sample deviation. I know that is a horrible guess. All I can recall is you can rely on control as long as UDR < TDR. When UDR > TDR then we cannot rely on controls. I think that is what I remember from becker.. anyone confirm?

Q: How should auditor account for supplementary information, that is, should they make any reference in their report and/or apply analytical procedures etc?

BEC- PASS

[NeedsA75]

Yes, when UDR<TDR you rely on controls and vice versa. UDR = Sample Deviation + Allowance for sampling risk

A: Ugh, I hate supp info. I believe you add an other matters paragraph describing the info? I'm not sure if you have to do any testing on the supplementary info but I thought maybe you had to check whether it was consistent with the financial statements that its derived from? This always confuses me with summary financial info..

[mooseonloose]

What are the non attest services?

[LaidBackCPA]

A: preparation, bookkeeping, consultation, and tax return prep

Q: What services do you have to be independent to perform?

FAR: 76 (4/2/2016)
REG: 64 (6/10/2016); 78 (7/12/16)
AUD: (9/2/2016)
BEC: (10/3/2016)

Studying for these exams with no accounting experience!

[mooseonloose]

A: attest engagements

Q: what is Adverse interest threat?
what is advocacy threat?
what is familiarity threat?
what is management participation threat?
what is self interest threat?
what is self review threat?
what is undue influence threat?

I think these are very good questions that we overlook.

[LaidBackCPA]

A: Adverse interest- opposing interest between the client and accountant
Advocacy- accountant's actions are all for the client's interest
Familiarity- long close relationship with the client
Management participation-taking the role of management
Self-interest- accountant benefits from having a relationship with the client
Self-review- accountant reviews his/her own work
Undue influence- accountant's judgement being influenced by the client

Q:What broad principles relate to websites under the assurance service WebTrust?

FAR: 76 (4/2/2016)
REG: 64 (6/10/2016); 78 (7/12/16)
AUD: (9/2/2016)
BEC: (10/3/2016)

Studying for these exams with no accounting experience!

[mooseonloose]

A: if the site is secured and trusted?

Q: at least how often should PCAOB inspect a registered public firm that regularly issue audit report for 99 issuers? what about 101 issuers?

[LaidBackCPA]

Online privacy, security, processing integrity, availability, and confidentiality.

A: For 100 or fewer there is an inspection every 3 years, for 101+ there is an annual inspection.

Q: When would you issue a qualified/modified opinion? Adverse opinion? Disclaimer?

FAR: 76 (4/2/2016)
REG: 64 (6/10/2016); 78 (7/12/16)
AUD: (9/2/2016)
BEC: (10/3/2016)

Studying for these exams with no accounting experience!

[mooseonloose]

A: material GAAP but not pervasive = qualify
material GAAS but not Pervasive=qualify

Material GAAP and pervasive= Adverse
Material GAAS and pervasive=Disclaimer (insufficient evidence, lack of independent.)

Q: What is the Yellow book?

[LaidBackCPA]

A: Generally Accepted Government Auditing Standards

Q: What are analytical procedures?

FAR: 76 (4/2/2016)
REG: 64 (6/10/2016); 78 (7/12/16)
AUD: (9/2/2016)
BEC: (10/3/2016)

Studying for these exams with no accounting experience!

[mooseonloose]

A: ratios. trend, etc It is required for planning and overall review but maybe be used as substantive procedures.

What kind of assurance is given in a preparation, compilation, review, audit, and agreed upon procedures?

[LaidBackCPA]

A: No assurance- preparation, compilation, and agreed upon procedures
Limited or negative assurance- review
Positive assurance- audit

Q: What are the components of internal control?

FAR: 76 (4/2/2016)
REG: 64 (6/10/2016); 78 (7/12/16)
AUD: (9/2/2016)
BEC: (10/3/2016)

Studying for these exams with no accounting experience!

[Author]

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