[jeff]

Free Study Planner, Notes, Audio, Flashcards: https://www.another71.com/cpa-exam-study-plan/

Free CPA Exam Survival Guide: https://www.another71.com/cpa-exam-survival-guide/

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

[MC Guesser]

The element of the audit planning process most likely to be agreed upon with the client before implementation of the audit strategy is the determination of the:

A. Evidence to be gathered to provide a sufficient basis for the auditor's opinion.

B. procedures to be undertaken to discover litigation, claims, and assessments.

C. pending legal matters to be included in the inquiry of the client's attorney.

D. timing of inventory observation procedures to be performed. (correct)

I'm a little confused by this one, as I thought inventory observation should be “surprise” and not discussed with client beforehand.

FAR: 7/1/14 (85)
REG: 7/28/14 (88)
AUD: 8/22/14 (84)
BEC: 8/28/14 (83)

CPAExcel, WileyTB, Ninja Notes and Blitz

[Ssbknyc]

@lvr21, thanks for the vote of confidence! I'm going to keep crushing through this material.

Done 08/2014-08/2015

[Anonymous]

Hi guys, I have a question regarding the impairment of independence!

If the auditor A has the opportunity to audit the parent company while holding immaterial amount of stock in its subsidiary,

and the audit B has the opportunity to audit the subsidiary company while holding immaterial amount of stock in its parent company,

are auditor A&B both independent?

I'm really confused with this one.

[willpassby2014]

Choicpa- This is what i think is the correct answer. A&B are not independent.

Reason according to me: CPA's financial interest in non clients may impair independence when those non clients have financial interest in CPA clients. Also the principal auditor of parent company may need to report on subsidiary audit. They are kind of interrelated.

BEC Passed
FAR Passed
AUD Passed
REG Passed

[Anonymous]

willpassby2014, i am on the same boat.

It all depends on if non-client is material to CPA's client.

If non-client (say, parent company) is material to client (subsidiary), then having financial interest impairs independence.

In contrary, if non-client (say, subsidiary) is immaterial to client (parent), then it does not impair the independence unless CPA's financial interest gives him / her a significant influence, regardless of materiality.

So i think both A&B are not independent, assuming Subsidiary is material to a Parent company.

Thanks for your input!

[Anonymous]

@ MC Guesser- look at what the question is asking…. “element of the audit planning process” and “before implementation of the audit strategy”…. that is what makes the inventory question correct.

The inventory can still be a surprise but the auditor must determine the wheres and whens of the inventory!

Hope that helps!

[Anonymous]

can someone dumb down the upper deviation rate? I'm having trouble with the audit sampling section

[greg422]

Upper deviation is just the sample deviation + allowance for sampling risk. Its also called the Upper Precision Limit I believe.

Allowance was best described to me as the 2-3% margin of error you see at the bottom of political polls.

If UDR>Tolerable Dev than you can't rely on the control

If UDR<Tolerable Dev than you can rely on the control

REG - 82
AUD - 97
BEC - 81
FAR - 84
DONE!

[Anonymous]

Thanks @Greg.

I have to say that I absolutely hate the Becker audit sampling questions. So difficult. And I'm an auditor!

[Anonymous]

I recently started studying for AUD and I have to think this is the toughest section for non-native english speakers. I think conceptually this is a really easy test. Figure out what everyone's responsibility is, dont make accusations, document everything, if it doesn;t work out…leave.

But man, the actual word usage and the amount of jargon words and phrases is kind of mind blowing.

[Anonymous]

Yeah I can see how this test could be really difficult for someone whose first language is not English. It's just so wordy. I think this section is tough just because of how detailed it can be. The details are what kills me

[lvr21]

I agree! I think this is my hardest test due to the lack of “numbers”!

Anyway.. tomorrow is the day!! Good luck to those finishing out this window!

{R: PASSED!! (I passed one!)}
{B: PASSED!! (Halfway there!)}
{F: PASSED!! (1 left!!!)}
{A: PASSED(I am done!!)}

[Anonymous]

No kidding- I was soo excited when I got to the tiny section about financial ratios haha. Finally something to calculate! Good luck tomorrow!

[shankysays]

@MC Guesser – I agree with you, they usually try to teach you that audit procedures should be “unpredictable”, but in this case I just used process of elimination. The other three have nothing to do with planning; they're things that should be done at the end of fieldwork. Tricky question.

BEC - 72, 82! ✓
FAR - 80! ✓
AUD - 70, 92! ✓
REG - 74, 78! ✓

Licensed CPA 5/2015

[shankysays]

@Amanda_88 you're so right. The systems they describe are so archaic, even as an auditor it's hard to apply it to real world scenarios.

BEC - 72, 82! ✓
FAR - 80! ✓
AUD - 70, 92! ✓
REG - 74, 78! ✓

Licensed CPA 5/2015

[Author]

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