[jeff]

Welcome to the Q4 2017 CPA Exam Study Group for AUD. 🙂

Introduce yourselves and let your fellow NINJAs know when you plan to take your AUD exam.

The Five Steps (NINJA Framework): https://www.another71.com/pass-the-cpa-exam/

[QueenCPA]

AUDIT 🙂

[famh110]

Hello…Just cracked open the book for Auditing and am using Becker. Initially, planned on tackling it during Q3 but had way too many things going so couldn't study for any section at all. Hoping to stay focused and motivated through this process! Applied for NTS already and its expiring 10/26 so really have to get serious now.

All the best to everyone here!!

[CanPassAttitude]

Waiting for FAR and REG scores so I can reschedule my AUD test. Don't feel the greatest about FAR and REG, but we will see. Hopeful cause there are many people have no idea how they did and end up passing. Shooting for October for my AUD retake. Need to get 3 points higher. Good luck to all.

[kelam81602]

Taking exam for the 4th time October 2nd. Start new job as Controller on Oct. 3rd. I'm hitting the Ninja books pretty hard the next 3 weeks. Wish me luck.

[Teal]

Can anyone tell me when SSARS applies versus when SSAEs apply? I thought a review was an attest engagement, so maybe SSARs and SSAEs apply to reviews? Just wanted to make sure I had that correct in my head…. thanks!

FAR (66,68) Aug 26
REG (66) July 25
AUD (66) December 1st
BEC - October 3rd

[Teal]

Also, can anyone help me understand this question? I could have sworn that compilations were NOT at an attest engagement because independence is not required.

A CPA in public practice is required to comply with the provisions of the Statements on Standards for Attestation Engagements (SSAE) when

I. Testifying as an expert witness in accounting and auditing matters given stipulated facts.

II. Compiling a client's financial projection that presents a hypothetical course of action.

YOUR ANSWER WAS INCORRECT:
Both I and II.
I only.
II only. *correct answer
Neither I nor II. * my answer
INCORRECT ANSWER EXPLANATION:
Incorrect. Testifying as an expert witness is serving as a form of consultant and is subject to Standards for Consulting Services. A compilation of prospective financial statements is an attest engagement subject to SSAE.
CORRECT ANSWER EXPLANATION:
Correct! Testifying as an expert witness is serving as a form of consultant and is subject to Standards for Consulting Services. A compilation of prospective financial statements is an attest engagement subject to SSAE.

FAR (66,68) Aug 26
REG (66) July 25
AUD (66) December 1st
BEC - October 3rd

[big_dolphin]

As far as calculations on the exam, do we need to know how to calculate attribute sampling, monetary-unit sampling, and variable?

Do we need to know all the ratios?

[gt1981]

Hi all. Been a lurker for a while. Waiting on my NTS right now, but started studying for AUD this weekend (I had scheduled earlier this year, but couldn't show up due to major life changes, but now I want to get this done!). Been over a decade since I graduated school….so haven't studied in ages!

[SONA]

Hi,

I started Audit this weekend, busy in extension returns this week, can't do much of the course material. I was trying to give FAR retake on 10/8/2017 NTS expiring) but don't know why couldn't focus after I gave my BEC on July 24th, 2017. So, now I switched my gears to Audit. I am using becker and right now on AUD-1 Module 3, I am liking it.
But, I need some motivation to be done this year. Next year, one more tax season again and my 4 months will be gone. April 14 one of my scores is expiring. So mad on myself, i think i did not use my time well. 🙁

But now 2.5 months of this year to finish at least 2 monsters.

Let's do it.

[SheilaTX]

I'm finding that the Becker skills practice help me quite a bit. They are sometimes a pain, but if it helps reinforce the information, it's worth my time. Especially if I do as Becker suggests, watch the lecture, do the skills practice, then do the MCQ for each module before moving onto the next module. I've taken AUD before and for some reason, this time the info seems to be sinking in. Hopefully at least enough to make a 75 or higher.

[SONA]

Compilation of all audit mnemonics…you're welcome!

A1

Unmodified Report—MR DIM REPORT CRAME

• MR—Management Responsibilities:

o DIM- Design, Implementation, & Monitoring of Internal Controls

• R-auditor’s Responsibilities—Refers to GAAS

o E-Express and opinion on the financial statements based on the audit

o P-Plan and perform the audit to obtain reasonable assurance about whether the F/S’s are free form material misstatement

o O- Obtain audit evidence about the amounts and disclosures in the F/S by performing procedures

o R-Risks of material misstatement assessment affects the procedures selected

o T-Test internal controls relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in circumstances

o C- internal CONTROLno such opinion is expressed on the effectiveness of controls unless the auditor does have responsibility over reporting on the effectiveness of internal controls in conjunction with the audit of the financial statements, then ignore above

o R- Reasonableness of

♣ A- accounting estimates

♣ M- made by management and

♣ E- evaluating the overall presentation of the financial statements

Procedures—Auditor should evaluate evidence obtained from the following procedures—ADMITS

• A- Analytical procedures

• D- Debt compliance—the auditor should review the terms of debt and loan agreements

• M- Minutes—the auditor should review minutes from the stockholder and board of director’s meetings

• I- Inquiry of client’s legal counsel

• T- Third parties—The auditor should confirm the details of financial support arrangements

• S- Subsequent events review

Conditions and Events—Based on the procedures performed, the auditor identifies conditions and events that may be indicative of substantial doubt—FINE

• F- Financial difficulties

• I- Internal matters

• N- Negative trends

• E- External matters

Mitigating factors—Auditor is required to consider mitigating factors in managements plans when they believe there is substantial doubt about an entity’s ability to continue as a going concern—BIDS

• B- Borrow more money or restructure debt

• I- Increase ownership equity

• D- Delay or reduce expenditures

• S- Sell assets or liquidate

Updating/Changing Prior Opinions—disclose reasons in the “emphasis of matter” or “other matter” paragraph that discloses—DORCS (only DORCS change their mind)

• D- Date of the auditor’s previous report

• O- Opinion type previously issues

• R- Reason for the prior opinion

• C- Changes that have occurred

• S- Statement that the “opinion…is different”

Auditors responsibility for subsequent events—perform the following procedures—PRIME

• P- Post balance sheet transactions: review proper cutoff and to better evaluate year-end balances

• R- Representation letter should be obtained from management regarding whether any events occurred during the subsequent period that require adjustments to or disclosures in the financial statements

• I – Inquiry of management of whether any subsequent events effect the F/S

• M- Minutes of stockholders, directors, and other committee meetings should be read during the subsequent period

• E- Examine latest available interim financial statements; compare them with F/S’s under audit

A2

When performing a compilation, accountant is required to have a general understanding of client’s business—STAFF

• S- Staff qualification

• T- Transaction types and frequency

• A- Accounting basis used to prepare F/S

• F- Form of the accounting records

• F- Financial statements’ form and content

Review Requirements—U LIAR CPA

• U- Understanding with client

• L- Learn/obtain sufficient knowledge of entity’s business

• I- Inquiries should be addressed to appropriate individuals/ inside management

• A- Analytical procedures should be performed

• R- Review—other procedures should be performed

• C- Client representations letter should be obtained from management

• P- Professional judgment should be used to evaluate results

• A- Accountant (CPA) should communicate results

11 attestation standards—general, fieldwork, reporting—TIPPY PASSER

• General standards:

o T- Training and proficiency

o I- Independence

o P- Performance/due professional care in planning and performance

o P- Professional, adequate knowledge of subject matter

o Y- Your belief that subject matter is capable of evaluating criteria that is suitable and available to users

• Fieldwork standards:

o P- Planning and supervision

o A- Appropriate, sufficient evidence to provide a reasonable basis for the conclusion

• Reporting standards:

o S- Subject matter or the assertion being reported on and the character of the engagement (nature and scope) must be identified

o S- Significant reservations about the engagement must be disclosed

o E- Express conclusions about the subject matter or the assertion in relation to the established or stated criteria

o R- Restrict use of report to specified parties when:

♣ Criteria only appropriate for or available to limited number of parties

♣ Reporting on subject matter and a written assertion has not been provided

♣ Reporting on agreed-upon procedures engagement

Agreed-upon procedures engagement conditions—I AM SURE

• I- Independent of the practitioner

• A- Agreement of the parties

• M- Measurability and consistency

• S- Sufficiency of procedures

• U- Use of report is restricted to specified parties

• R- Responsibility for the subject matter by client/client states 3rd party

• E- Engagements to perform agreed-upon procedures on prospective financial statements MUST include a summary of significant assumptions

A3

Assessing the Risks of Material Misstatement—perform series of steps—IM A CPA

• I- Internal control—obtain and understanding of the entity and its environment, including its internal control

• M- Material misstatement—assess the risks of material misstatement

• A- Assessed level of risk—respond to the assessed level of risk by designing further audit procedures based on this assessment

• C- Controls testing—test internal controls to evaluate their operating effectiveness

• P- Perform substantive procedures

• A- Audit evidence—evaluate the sufficiency and appropriateness of audit evidence obtained

Five components of internal control—CRIME

• C- Control environment—PHRASED C— (Philosophy and operating style of mgmt., HR, responsibility over reporting—EBOCA—ethics values, board oversight, organizational structure, commitment to competence, accountability)

• R- Risk assessment—management’s identification of risk

• I- Information and communication systems—a means of recording transactions and communicating responsibilities

• M- Monitoring—assessment of internal control performance over time

• E- Existing control activities—control policies and procedures—PAID TIPS

o P- Pre-number documents

o A- Authorization of transactions

o I- Independent checks to maintain asset accountability

o D- Documentation

o T- Timely and appropriate performance reviews

o I- Information processing controls

o P- Physical controls for safeguarding assets

o S- Segregation of duties

Documentation—the auditor must document the understand of the design and implementation of the entity’s internal controls—FIND

• F- Flowchart—depicts auditors understanding of I.C. systemuse for complex structure

• I- Internal control questionnaire or checklist

• N- Narrativeuse for less complex control structures

• D- Documentation from the client, including copies of the entity’s procedures manuals and organizational charts

Segregate the following I.T. duties—COPAL

• C- Control group

• O- Operators

• P- Programmers

• A- Analysts (systems)

• L- Librarians

Audit evidence hierarchy—AEIO

• A- Auditor knowledge

• E- External evidence

• I- Internal evidence

• O- Oral evidence

A4

Standard Auditing Procedures—used in every audit as risk assessment procedures, tests of controls, or substantive tests—FIVE CARROT CARS

• F- Footing, cross-footing, and recalculation

• I- Inquiry

• V- Vouching back from F/S to supporting documents existence/occurrence

• E- Examination/inspection

• C- Confirmation

• A- Analytical Procedures

• R- Reperformance

• R- Reconciliation

• O- Observation

• T- Tracing forward from source documents to accounting records completeness

• C- Cutoff Review

• A- Auditing related accounts simultaneously

• R- Representation letter at end of fieldwork

• S- Subsequent events review

Account balance assertions—CVER

• C—Completeness

• V—Valuation, allocation, and accuracy

• E—Existence and occurrence

• R—Rights and obligations

Transactions and events—COVEU

• C—Completeness

• O—cutOff

• V—Valuation, allocation, and accuracy

• E—Existence and occurrence

• U—Understandability and classification

Presentation and disclosure—CVRU

• C—Completeness

• V—Valuation, allocation, and accuracy

• R—Rights and obligations

• U—Understandability and classification

Determine if estimates are reasonable—SSSD

• S- Significant

• S- Sensitive to variation

• S- Subjective/susceptible to management bias

• D- Deviation from historical patters

Contingencies from litigation, claims or assessments may arise from—GAPPI

• G- Guarantees of the indebtedness of others

• A- Actual or possible claims and assessments

• P- Product warranties

• P- Pending and threatened litigation

• I- Income tax disputes

A6

Quality Control Standards—HELP ME

• H- Human resources

• E- Engagement/ client acceptance and continuance to minimize likelihood of associating with a client whose management lacks integrity

• L- Leadership responsibilities

• P- Performance of engagement

• M- Monitoring

• E- Ethical requirement

[Josh]

@greytowel Welcome! I can relate, but I believe these reviews prepare people to pass! When are you taking AUD? And how are you preparing?

I often wonder why I didn't start taking the exam 16+ years ago when my room mate who I took auditing and intermediate accounting with and whom I considered genius asked me about the claims my 2000 Bisk book had in it?

Good times.. however, now it the time – now and until the 23rd of October. We can do it!

Does adding the required evaluation skills to the AUD exam change things much?

[gt1981]

Welcome! I can relate, but I believe these reviews prepare people to pass! When are you taking AUD? And how are you preparing?

Thank you Josh!

I worked my way through college, and after graduation I wanted work/life balance and didn't see the benefit to going into public accounting or going through the CPA slog. I don't necessarily regret that decision, but now after my life experiences this exam is possibly exactly what I need to hunker down and focus and discipline myself. I've scaled back on almost all my commitments now aside for work, so I think that I can tackle this beast.e

I haven't scheduled AUD yet, but planning on mid Oct or thereabouts. I'm using Becker, but this website's advocacy got me to purchase the NINJA notes/audio as well so I can have this 24/7 on my brain. My attention definitely wanders while highlighting and red marking my Becker textbook and I constantly have an urge to nap! But between the videos and other motivation I'm finding here and elsewhere – we can get through this!

[gt1981]

So here is a profoundly lame question. I've been googling lots but coming up empty…

How to study? I am using Becker but I also got the NINJA MCQ package. Do(did) you watch the Becker lectures, module by module, then do the MCQ, then the SIM at the end, repeat until done, and then do the NINJA stuff after you're done with all the Becker modules?

I finished Module 1, then got the NINJA audio but the equivalent audio (Audit Reports) seems really short? Like there was no discussion of Subsequent Events, or the specific order of the Audit Report and what gets modified – are they part of some other NINJA chapter? Becker has 6 modules, NINJA has 8 chapters. From my very prelim scan: B1 = N5, B2=N2, 1, B3=N4, 6, B4=N??, B5=N??, B6=N7. I am not seeing where NINJA's Auditing & IT, and International Auditing match with Becker- am I just blind and not seeing equivalent modules or chapters in Becker?

I am one of those people who can master the people only if I understand what on earth I'm mastering, so right now I'm trying to screen for patterns so I can memorize the stuff. Please help. Thank you.

[Josh]

@greytowel Becker's pretty comprehensive, in my opinion. I was using Ninja audios more; but when I started falling behind in class and primarily for timing issues, I started using lectures and skills practice for audios granted Ninja Audio is better made for listening and videos for watching and taking notes; but what I spend the majority of my time on is doing the work such as MCQ's, Skill Practice, and Simulations. Don't neglect Progress Tests and Flashcards if you have them. I think for A1, it benefits to memorize the standard modified report for non-issuers. I did that with Gleim without a mnemonic. I think Becker's mnemonic makes things a little easier to recite.

I'm sure I have room for improvement, but I picked live on-line because that's the pace I want to go at – every exam in 8 weeks or less including final review, and for some other reasons as well. Still, I was doing self-study for a long time with other reviews. Each style has pro's and con's, and I don't think one's superior over the other. It's just got to match how you study best. Keep up the good work, folks!

[Author]

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