[Q1] AUD Study Group 2014 - Page 39

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  • February 26, 2014 at 1:35 am #521499
    OneStep
    Member

    There is a difference in the calculation of the Upper Limit on Misstatements (ULM) between Becker and Wiley.

    Which one to use on the test?

    Wiley:

    ULM = Projected misstatement + Basic Precision + Allowance for projected misttatement

    And to make your decision you compare ULM to Tolerable Misstatement (TM)

    Becker:

    Becker compares Projected Misstatement to Tolerable Misstatement but Projected Misstatement in Becker is not the same concept as in Wiley and is calculated differently (similar to ULM though).

    Known Misstatement (sample errors) + Projected error (identical to Projected Misstatement in Wiley) + Allowance for sampling risk = Projected Misstatement

    To me it looks like Becker substitutes Basic precision with Known Misstatements (which is the difference between Book value and Audit value).

    My test is tomorrow and I just noticed this. If I have to compare the upper limit of misstatements to the tolerable rate, which formula should I use?

    I graduated in 2012 but I remember from my Audit class in grad school that we used the same formula that Wiley uses.

    I dont ever remember using the Known Misstatements (the difference between recorded amount and audited amount).

    Please help!! I can clarify more if it s not clear what i m asking.

    Thanks a lot!

    FAR - Apr 2013 - PASSED
    REG - Oct 2013 - PASSED
    AUD - Apr 2014 - PASSED
    BEC - May 2014 - PASSED

    February 26, 2014 at 1:35 am #521548
    OneStep
    Member

    There is a difference in the calculation of the Upper Limit on Misstatements (ULM) between Becker and Wiley.

    Which one to use on the test?

    Wiley:

    ULM = Projected misstatement + Basic Precision + Allowance for projected misttatement

    And to make your decision you compare ULM to Tolerable Misstatement (TM)

    Becker:

    Becker compares Projected Misstatement to Tolerable Misstatement but Projected Misstatement in Becker is not the same concept as in Wiley and is calculated differently (similar to ULM though).

    Known Misstatement (sample errors) + Projected error (identical to Projected Misstatement in Wiley) + Allowance for sampling risk = Projected Misstatement

    To me it looks like Becker substitutes Basic precision with Known Misstatements (which is the difference between Book value and Audit value).

    My test is tomorrow and I just noticed this. If I have to compare the upper limit of misstatements to the tolerable rate, which formula should I use?

    I graduated in 2012 but I remember from my Audit class in grad school that we used the same formula that Wiley uses.

    I dont ever remember using the Known Misstatements (the difference between recorded amount and audited amount).

    Please help!! I can clarify more if it s not clear what i m asking.

    Thanks a lot!

    FAR - Apr 2013 - PASSED
    REG - Oct 2013 - PASSED
    AUD - Apr 2014 - PASSED
    BEC - May 2014 - PASSED

    February 26, 2014 at 4:12 am #521501
    zxiao
    Member

    @OneStep@aTime

    I'm not sure if I my response would help you or not because I only use Becker(2014 version).

    In Becker, the comparison is between Upper Deviation Rate and auditor's Tolerable Deviation Rate. UDR=sample deviation rate+ Allowance for sampling risk. I never saw “Projected Misstatement” in attribute sampling though.

    Could you post a question in Wiley that's not shown in Becker? It would be easier to apply this in a real problem.

    I Can Do This!!!!!

    BEC: 89
    AUD: 99
    REG: 93
    FAR: 8/2/2014

    February 26, 2014 at 4:12 am #521549
    zxiao
    Member

    @OneStep@aTime

    I'm not sure if I my response would help you or not because I only use Becker(2014 version).

    In Becker, the comparison is between Upper Deviation Rate and auditor's Tolerable Deviation Rate. UDR=sample deviation rate+ Allowance for sampling risk. I never saw “Projected Misstatement” in attribute sampling though.

    Could you post a question in Wiley that's not shown in Becker? It would be easier to apply this in a real problem.

    I Can Do This!!!!!

    BEC: 89
    AUD: 99
    REG: 93
    FAR: 8/2/2014

    February 26, 2014 at 4:21 am #521503
    StudyforCPA2014
    Member

    I am using CPAexcel 2014. Does anyone read the Outline of Professional Standards at the end of the book? I only have 2 days to study and i am wondering if i should reading it or spending my time on more MCQ?

    BEC - 10/1/13 PASS
    REG - 12/6/13 PASS
    FAR - 1/21/14 PASS
    AUD - 2/27/14 PASS

    February 26, 2014 at 4:21 am #521551
    StudyforCPA2014
    Member

    I am using CPAexcel 2014. Does anyone read the Outline of Professional Standards at the end of the book? I only have 2 days to study and i am wondering if i should reading it or spending my time on more MCQ?

    BEC - 10/1/13 PASS
    REG - 12/6/13 PASS
    FAR - 1/21/14 PASS
    AUD - 2/27/14 PASS

    February 26, 2014 at 7:03 pm #521505
    taxman89
    Participant

    Have Audit on friday. having trouble at works because its fairly slow right now so i am just doing bs work anyway….would much rather be reviewing audit than doing this stuff (which is why i am on another71 lol)

    Aud-75 3x I knew i never liked you
    Bec-77 1x being in the bubble is stressful
    Reg-82 4x its not me its you...and no we cant be friends
    Far-78 1x easiest section

    February 26, 2014 at 7:03 pm #521553
    taxman89
    Participant

    Have Audit on friday. having trouble at works because its fairly slow right now so i am just doing bs work anyway….would much rather be reviewing audit than doing this stuff (which is why i am on another71 lol)

    Aud-75 3x I knew i never liked you
    Bec-77 1x being in the bubble is stressful
    Reg-82 4x its not me its you...and no we cant be friends
    Far-78 1x easiest section

    February 26, 2014 at 7:27 pm #521507
    LL Cool Jim
    Participant

    I have a question on independence on compilation

    Yes, I know that you don't need to be independent in order to compile financials. However, non independence needs to be disclose, but will the reasons for non independence needs to be disclosed as well?

    FAR Done
    REG Done
    BEC Done

    February 26, 2014 at 7:27 pm #521555
    LL Cool Jim
    Participant

    I have a question on independence on compilation

    Yes, I know that you don't need to be independent in order to compile financials. However, non independence needs to be disclose, but will the reasons for non independence needs to be disclosed as well?

    FAR Done
    REG Done
    BEC Done

    February 26, 2014 at 8:09 pm #521509
    Anonymous
    Inactive

    An auditor must disclose non-independence, and MAY disclose the reason for non-independence.

    February 26, 2014 at 8:09 pm #521558
    Anonymous
    Inactive

    An auditor must disclose non-independence, and MAY disclose the reason for non-independence.

    February 26, 2014 at 8:14 pm #521511
    zxiao
    Member

    @LL Cool Jim

    The accountant could choose to disclose the reason or not. If he or she decides to disclose, he or she must disclose all reasons.

    I Can Do This!!!!!

    BEC: 89
    AUD: 99
    REG: 93
    FAR: 8/2/2014

    February 26, 2014 at 8:14 pm #521560
    zxiao
    Member

    @LL Cool Jim

    The accountant could choose to disclose the reason or not. If he or she decides to disclose, he or she must disclose all reasons.

    I Can Do This!!!!!

    BEC: 89
    AUD: 99
    REG: 93
    FAR: 8/2/2014

    February 26, 2014 at 8:22 pm #521513
    zxiao
    Member

    FYI If the accountant doesn't disclose his or her lack of independence, he or she is not allowed to have contingent fees.

    I Can Do This!!!!!

    BEC: 89
    AUD: 99
    REG: 93
    FAR: 8/2/2014

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