[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?

[mooseonloose]

CRIME
control environment
risk assessment
information and communication
monitoring
existent control activities

Q: authorizing is factor of which component of internal control?

[LaidBackCPA]

A: Control activities? Part of segregation of duties.

Q: What are the elements of quality 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!

[mooseonloose]

Yes, its under control activities.

A: I was just going over quality control
Human resource
Engagement/client acceptance
Leadership responsibilties
Performance of the engagement
Monitoring
Ethical requirement

Q: who sign and mails checks?

[Spartans92]

A: Treasurer should sign and mail check so others dont have both functions of handling and recording.

Q: What is the Single Audit Act?

BEC- PASS

[LaidBackCPA]

A: Requires non-federal organizations that spend $750,000 or more in federal assistance to have organization-wide financial and compliance audits on an annual basis.

Q: What is the difference between a financial forecast and a financial projection? What standards cover each one?

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!

[Spartans92]

A: Financial forecast is general use report. Auditors have to include a statement saying that variances may occur. That is, there may be differences between the actual and the estimated data.

Financial Projection is for limited use, restricted to specified parties and should include a caveat that states it may not be useful for certain purposes.

As far as standards.. I'm not sure. Can you fill me in?

Q: If an auditor is trying to test managements assertion to valuation and accuracy what audit procedures are available?

BEC- PASS

[LaidBackCPA]

Financial forecasts and projections are covered by SSAEs, AT 301. Also, forecasts are based on the responsible's party assumptions and projections are based on hypothetical assumptions, “what if this happened?”

A: Vouching recorded amount to supporting documents.

I'm not sure what other procedures can be done. I just know you have to test to make sure the balances are in accordance with the applicable framework.

Q: What are the elements of control environment?

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!

[Spartans92]

You can also do an independent re-calculaion.

A: Management's philosophy, integrity, human resource, competence?.. uhh not sure the rest lol. What is the Acronym?

Q: If there is a going concern, what type of opinion should express?

BEC- PASS

[LaidBackCPA]

Roger uses CHOPPER for control environment
Commitment to competence
Human resources
Organizational structure
Philosophy and operating style of management
Participation with those charged with governance
Ethical and integrity values
Responsibility and authority assignment

A: A going-concern doubt does not require the opinion to be modified unless there it's not adequately disclosed, then it would result in an adverse or a qualified opinion. If it is adequately disclosed, then the auditor would use an emphasis-of-matter paragraph following the opinion paragraph. The auditor also has the option to disclaim an opinion. I guess that would be based on the auditor's judgment…So confusing lol.

Q: What is the difference between attribute and variable sampling and when is each one used?

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!

[Spartans92]

Right. Very detailed answer!

A: Attribute sampling is for control testing. Yes or No question.
Variable Sampling is for $ amounts. Used as substantive test.

Q: What are special reports?

BEC- PASS

[Spartans92]

Anyone have tips on how to work fraud risk factor questions? my biggest issue is confusing on rationalization vs incentive. I did Ninja SIM #10 and got 55%. Mainly because I mixed those 2 up.

If someone have the incentive that means they are pressured. Rationalization is the thinking they need to justify.. Sounds very similar to me though. For example, classic example if two employees are underpaid then they have the rationalization to steal. But can't I say that gives them the incentive as well because they are making less?

BEC- PASS

[mooseonloose]

@spartan are special report tax, cash, and regulatory basis under OCBOA?
Control environment mnemonic used in bec becker is EBOCA (NOT EBOLA)

Q: For which of the following events would an auditor issue a report that omits any reference to consistency?
a. A change in the method of accounting for inventories.
b. A change from an accounting principle that is not generally accepted to one that is generally accepted.
c. A change in the useful life used to calculate the provision for depreciation expense.
d. Management's lack of reasonable justification for a change in accounting principle.

[mooseonloose]

Which of the following statements is a basic element of the auditor's report under U.S. auditing standards?
a. The disclosures provide reasonable assurance that the financial statements are free of material misstatement.
b. The auditor evaluated the overall internal control.
c. An audit includes evaluating significant estimates made by management.
d. The financial statements are consistent with those of the prior period.

[mooseonloose]

Q:what is a written report?

[LaidBackCPA]

@spartans, in your example, I think the incentive/pressure to would be if they need the money pay their bills or provide for their family or if their bonus is connected to how well the the financials look . Rationalization is when they convince themselves that it's okay to steal or commit fraud.

@moose A: c. A change in the useful life used to calculate the provision for depreciation expense.

A: c. An audit includes evaluating significant estimates made by management.

A: I think a written report is a report issued following the services the the accountant was hired for, such as, an audit, compilation, review, or agreed upon procedures.

Q: Which of the following activities most likely would not be an internal control activity designed to reduce the risk of errors in the billing process?
a. Matching shipping documents with approved sales orders before invoice preparation.
b. Using computer programmed controls over the pricing and accuracy of sales invoices.
c. Comparing control totals for shipping documents with corresponding totals for sales invoices.
d. Reconciling the control totals for sales invoices with the accounts receivable subsidiary ledger.

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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