[jeff]

AUD Resources:

Free AUD Notes & Audio – https://www.another71.com/cpa-exam-study-plan

AUD 10 Point Combo: https://www.another71.com/products-page/ten-point-combo

AUD Score Release: https://www.another71.com/cpa-exam-scores-results-release

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

[peetree]

Thats what I thought casa.

I mean, tickmark meanings can be formed and assumed based on the document you're looking at but having that be on the cpa exam is just cruel!

FAR 02/21/13 - 95
REG 07/02/13 - 87
AUD 08/02/13 - 94
BEC 08/30/13 - 85
Ethics Exam - 90

Illinois candidate awaiting his license

Used Becker Self Study | Ninja Audio | Becker Flash Cards | Ninja Notes | Wiley Test Bank

[peetree]

Thats what I thought casa.

I mean, tickmark meanings can be formed and assumed based on the document you're looking at but having that be on the cpa exam is just cruel!

FAR 02/21/13 - 95
REG 07/02/13 - 87
AUD 08/02/13 - 94
BEC 08/30/13 - 85
Ethics Exam - 90

Illinois candidate awaiting his license

Used Becker Self Study | Ninja Audio | Becker Flash Cards | Ninja Notes | Wiley Test Bank

[Anonymous]

Found this online; Audit tick marks are not standardized across the industry. Instead, a common set of tick marks are used within each audit firm, with some variation across the industry. Tick marks may just as easily be used within an internal audit department as by outside auditors. With that being said there is no way the could test you on anything but the reason auditors use them and honestly I wouldn't really worry about it…

[Anonymous]

Found this online; Audit tick marks are not standardized across the industry. Instead, a common set of tick marks are used within each audit firm, with some variation across the industry. Tick marks may just as easily be used within an internal audit department as by outside auditors. With that being said there is no way the could test you on anything but the reason auditors use them and honestly I wouldn't really worry about it…

[peetree]

Thanks Casa, I think I'm going to treat it as a known risk and move on. If I get a sim on tickmarks, I'll just flip my screen off and muddle through it.

FAR 02/21/13 - 95
REG 07/02/13 - 87
AUD 08/02/13 - 94
BEC 08/30/13 - 85
Ethics Exam - 90

Illinois candidate awaiting his license

Used Becker Self Study | Ninja Audio | Becker Flash Cards | Ninja Notes | Wiley Test Bank

[peetree]

Thanks Casa, I think I'm going to treat it as a known risk and move on. If I get a sim on tickmarks, I'll just flip my screen off and muddle through it.

FAR 02/21/13 - 95
REG 07/02/13 - 87
AUD 08/02/13 - 94
BEC 08/30/13 - 85
Ethics Exam - 90

Illinois candidate awaiting his license

Used Becker Self Study | Ninja Audio | Becker Flash Cards | Ninja Notes | Wiley Test Bank

[Anonymous]

Alright so with cutoff we are concerned with whether the client has recorded transactions in the correct time period. We are

Concerned with this because we want to make sure the financials are presented fairly (big picture). So if we ship something out FOB shipping on 12/30 we should not be including this on our b/S. For cutoff we are mainly worried about transactions around year end. For valuation we are worried amount $s. Did the client apply GAAP properly? For example, are we valuing inventory at lower of cost or market? Another example of existence (in addition to my previous post) is we want to verify merchandise or equipment in a warehouse to make sure it actually exists (observation). Rights and obligations…we verify the company has legal rights by looking at contracts, purchase orders and receipts. Understandability I think has to do with presentation and disclosure…putting everything in the proper place on the financials..

[Anonymous]

Alright so with cutoff we are concerned with whether the client has recorded transactions in the correct time period. We are

Concerned with this because we want to make sure the financials are presented fairly (big picture). So if we ship something out FOB shipping on 12/30 we should not be including this on our b/S. For cutoff we are mainly worried about transactions around year end. For valuation we are worried amount $s. Did the client apply GAAP properly? For example, are we valuing inventory at lower of cost or market? Another example of existence (in addition to my previous post) is we want to verify merchandise or equipment in a warehouse to make sure it actually exists (observation). Rights and obligations…we verify the company has legal rights by looking at contracts, purchase orders and receipts. Understandability I think has to do with presentation and disclosure…putting everything in the proper place on the financials..

[Anonymous]

Okay @Qlad, let’s discuss Cutoff assertion. I think is a give-away assertion. For me, it’s the easiest assertion to understand. Cutoff speaks for itself. It relates to whether transactions and events have been recorded in the correct accounting period. When we test Cutoff assertion, we can also check on Completeness assertion of FS.

Let’s take the same example I gave earlier, i.e., $10,000 payable from FS year-end of Y1. We want to check if this is all the total payable for the entire year. We start searching from the source documents to see if they should be part of FS. Let’s say, the cash disbursements made early of Y2 (testing subsequent events) might be part of payables that were not included in FS-Y1. What should be part of Y1 should be part of FS for Y1, and Y2 for FS-Y2. We can’t go wrong with that.

Let’s discuss Existence assertion. We get our population from FS and vouch it to the source document to make sure the Existence of the transactions and account balances.

Mgt. says, our total sales for this year is $50,000. FS has these sales so we start our investigation of that item as in starting from the roof of the client’s house and draw them to the source documents (going down to your basement/foundation of the house) [FS > Source Document] pertaining to these sales transactions. If we see proof of shipping of the sales invoice, we agree on mgt.’s existence assertion. One procedure would be receivable confirmations. When the customer says “Yes we owe ABC Company $5,000 of merchandise we ordered online from November Y1.”, then we can agree to what has been asserted by mgt. as existing and occurring transactions and account balances.

For investments and inventories transactions/balances, we confirm them with third party registrars and custodians to check if those assets really exist or not at all.

P.S.

On my second round of tackling Becker’s homework, I finally had a chance to work on Optional HW – 147 MCQs from A4 this week. I still have difficulty with audit evidence and assertions at this point. I find some of them really torturing. So I scored 83% and got 25 items incorrect. When I reworked on those 25 items, I got 1 question WRROOOONG (again?). My gosh!

The question was asking for “unrecorded retirement of PPE”. Okay, Sonia [talking to myself], this got to be completeness assertion [Source document > FS].

However, the correct answer was looking for Existence assertion. “How could that be?”

I had to use my wild imagination (as usual) to be able to convince myself Becker is not messing with me (again) this time.

Okay, let's say FS has $25,000 account balance under PPE.

Hmmm, am I looking for overstatement or understatement of PPE? Retirement of PPE should be a deduction. If an item is retired, PPE should then be lesser than $25,000.

So, it’s like searching for something that’s invisible.

Okay, looking from the roof of the client’s house [FS], I need to get down [basement] to the source document [go to the actual site and count the existing fixed assets]. If my actual inspection of the fixed assets matches with what is declared in the FS, I have to agree with the mgt.’s assertion of Existence of retired PPEs.

The irony of this audit procedure is this. If we (actually) see the equipment still present or still existing at the client’s business, we would NOT agree on mgt.’s assertion of existence of retired PPEs.

But if we DON'T see this equipment, then we can agree on mgt.’s assertion of Existence.

[Anonymous]

Okay @Qlad, let’s discuss Cutoff assertion. I think is a give-away assertion. For me, it’s the easiest assertion to understand. Cutoff speaks for itself. It relates to whether transactions and events have been recorded in the correct accounting period. When we test Cutoff assertion, we can also check on Completeness assertion of FS.

Let’s take the same example I gave earlier, i.e., $10,000 payable from FS year-end of Y1. We want to check if this is all the total payable for the entire year. We start searching from the source documents to see if they should be part of FS. Let’s say, the cash disbursements made early of Y2 (testing subsequent events) might be part of payables that were not included in FS-Y1. What should be part of Y1 should be part of FS for Y1, and Y2 for FS-Y2. We can’t go wrong with that.

Let’s discuss Existence assertion. We get our population from FS and vouch it to the source document to make sure the Existence of the transactions and account balances.

Mgt. says, our total sales for this year is $50,000. FS has these sales so we start our investigation of that item as in starting from the roof of the client’s house and draw them to the source documents (going down to your basement/foundation of the house) [FS > Source Document] pertaining to these sales transactions. If we see proof of shipping of the sales invoice, we agree on mgt.’s existence assertion. One procedure would be receivable confirmations. When the customer says “Yes we owe ABC Company $5,000 of merchandise we ordered online from November Y1.”, then we can agree to what has been asserted by mgt. as existing and occurring transactions and account balances.

For investments and inventories transactions/balances, we confirm them with third party registrars and custodians to check if those assets really exist or not at all.

P.S.

On my second round of tackling Becker’s homework, I finally had a chance to work on Optional HW – 147 MCQs from A4 this week. I still have difficulty with audit evidence and assertions at this point. I find some of them really torturing. So I scored 83% and got 25 items incorrect. When I reworked on those 25 items, I got 1 question WRROOOONG (again?). My gosh!

The question was asking for “unrecorded retirement of PPE”. Okay, Sonia [talking to myself], this got to be completeness assertion [Source document > FS].

However, the correct answer was looking for Existence assertion. “How could that be?”

I had to use my wild imagination (as usual) to be able to convince myself Becker is not messing with me (again) this time.

Okay, let's say FS has $25,000 account balance under PPE.

Hmmm, am I looking for overstatement or understatement of PPE? Retirement of PPE should be a deduction. If an item is retired, PPE should then be lesser than $25,000.

So, it’s like searching for something that’s invisible.

Okay, looking from the roof of the client’s house [FS], I need to get down [basement] to the source document [go to the actual site and count the existing fixed assets]. If my actual inspection of the fixed assets matches with what is declared in the FS, I have to agree with the mgt.’s assertion of Existence of retired PPEs.

The irony of this audit procedure is this. If we (actually) see the equipment still present or still existing at the client’s business, we would NOT agree on mgt.’s assertion of existence of retired PPEs.

But if we DON'T see this equipment, then we can agree on mgt.’s assertion of Existence.

[kevinco]

My trick to cram the two major assertions that examiners look at (Existence and Completeness) was to use the two acronyms EV and CT

Existence – Trace

Completeness – Vouch.

But one still to know what vouching and tracing is.

Boise State Alumni

05/08/13 FAR Passed - 80
07/09/13 AUD Passed - 96
10/10/13 REG Passed - 75
11/07/13 BEC 77!!! I am DONE!!!!!!!!
12/13/2013 Received my CPA license on my son's 6th birthday in the mail! My son is always a blessing!!

BS - Environmental Science
BBA - Accountancy

Becker Lectures and MCQs. Click on my avatar for my LinkedIn page.

[kevinco]

My trick to cram the two major assertions that examiners look at (Existence and Completeness) was to use the two acronyms EV and CT

Existence – Trace

Completeness – Vouch.

But one still to know what vouching and tracing is.

Boise State Alumni

05/08/13 FAR Passed - 80
07/09/13 AUD Passed - 96
10/10/13 REG Passed - 75
11/07/13 BEC 77!!! I am DONE!!!!!!!!
12/13/2013 Received my CPA license on my son's 6th birthday in the mail! My son is always a blessing!!

BS - Environmental Science
BBA - Accountancy

Becker Lectures and MCQs. Click on my avatar for my LinkedIn page.

[kevinco]

Sorry that was

Existence – Vouch

Completeness – Trace

Boise State Alumni

05/08/13 FAR Passed - 80
07/09/13 AUD Passed - 96
10/10/13 REG Passed - 75
11/07/13 BEC 77!!! I am DONE!!!!!!!!
12/13/2013 Received my CPA license on my son's 6th birthday in the mail! My son is always a blessing!!

BS - Environmental Science
BBA - Accountancy

Becker Lectures and MCQs. Click on my avatar for my LinkedIn page.

[kevinco]

Sorry that was

Existence – Vouch

Completeness – Trace

Boise State Alumni

05/08/13 FAR Passed - 80
07/09/13 AUD Passed - 96
10/10/13 REG Passed - 75
11/07/13 BEC 77!!! I am DONE!!!!!!!!
12/13/2013 Received my CPA license on my son's 6th birthday in the mail! My son is always a blessing!!

BS - Environmental Science
BBA - Accountancy

Becker Lectures and MCQs. Click on my avatar for my LinkedIn page.

[Anonymous]

sigh, i'm at that point where i feel i really know the information very well and it leads me to overthinking in certain areas that should be simple. so if someone would be so kind as to answer this simple question for me.

a review of interim financial statements on an issuer is done under SASs or PCAOB standards?

[Author]

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