[jeff]

Post by Another71.

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/

[jackaroe]

Q. A newly hired purchasing agent was not obtaining competitive bids for major purchases. How would this effect or not effect Control/Inherent/Audit Risk?

A. Increase Control Risk.

Why wouldn't this increase Inherent Risk?

[Anonymous]

Inherent risk=Error, override, collusion. Or that transactions are complex and so there is risk with their complexity.

Control risk is “are the controls working correctly”. In this case, the controls would require for competitive bids to be obtained for each purchase. They are not being obtained, thus the controls have been compromised/aren't working correctly

Inherent risk would be if a manager told the PA to purchase from a vendor without taking a bid. Management override.

[LKD CPA]

Inherent risk could also be a human judgement issue. I see this one as the new purchasing agent had no clue, no training and just the best he/she could. In other words, their judgement on what to do was lacking.

FAR: 74, 83
REG: 76
BEC: 77
AUD: 89

[mvrcdntx]

Question about independence…

This is from WIley SIMS (Mod 1).

Can a CPA design a new payroll system and base future billings on savings for the next 3 years?

My thought is that a CPA may not provide this service. The answer provided was that the CPA may provide the service and Independence is not required. Does it matter if the service is for public versus non-public company.

Thanks!

REG

[ruggercpa2b]

mvrcdntx I would say that the service the CPA is providing is a non attest service. Where the CPA is a consultant and comes in to design and implement controls for a client and that is all the work they are doing.

AUD - 73, 72 retake 7/2/2016
BEC - 8/20/2016
REG - TBD
FAR - TBD

I am so ready for this nightmare to be over. Been at this way too long.

[jackaroe]

Inherent risks are those that would occur even if there there weren't any controls.

But – They include business risks. AU-C 200.A42 – “External circumstances giving rise to business risks may also in-

fluence inherent risk…Factors .. lack of working capital…declining industry…”

Types of transactions (routine, nonroutine, estimation) affect the level of inherent risk which is correct.

However, since one of the components of an entity's internal control is ‘risk assessment' which includes “how management identifies internal and external events (business risks) relevant to financial reporting” (AU-C 315 A.82), that would help make the answer to this question an increase of control risk rather than an inherent risk.

Why this exam focuses attention on this this and even GAAS doesn't bother to spend much time on the differentiate between Inherent and Control risk is beyond me.

200.A44 – GAAS do not ordinarily refer to inherent risk and control risk separately, but rather to a combined assessment of the risks of material misstatement.

[RTCPA]

hellooo

can anyone tell us what is the best way to use the search tools in the research authoritative literature

thnx

[RTCPA]

hellooo

can anyone tell us what is the best way to use the search tools in the research authoritative literature

thnx

[Anonymous]

@RTCPA – I am not a huge fan of the AL for AUD. The FASB ASC for the FAR exam is spoiling. The only thing that has worked for me with the AUD AL is to search as specifically for keywords as possible and then look through the suggested links and pay attention to their locations in the AL for links that should be the most relevant to the topic and read through what I expect is the most relevant first.

I know that's not much help, but hopefully someone has the secret answer!

[RTCPA]

@ ARCPA2B , thanks

[mariam almas]

Does use of specialist needs management permission ??

AUD: 81 (Done)
REG: Currently studying
FAR: TBD
BEC: TBD

NH

[Anonymous]

No. Management does not need to approve the use of a specialist.

[LKD CPA]

Will someone share their thoughts on why the correct answer is not C? I was really swaying between B and C and chose B, but I feel C is correct too. Is it not C because it says “in writing”?

Which of the following statements is correct about an auditor's required communication with those charged with governance?

A.

Any matters communicated to those charged with governance also are required to be communicated to the entity's management.

Correct B.

The auditor is required to inform those charged with governance about significant errors discovered by the auditor and subsequently corrected by management.

C.

Disagreements with management about the application of accounting principles are required to be communicated in writing to those charged with governance.

D.

Weaknesses in internal control previously reported to those charged with governance are required to be communicated to those charged with governance after each subsequent audit until the weaknesses are corrected.

FAR: 74, 83
REG: 76
BEC: 77
AUD: 89

[ruggercpa2b]

I think the key for that question is that it says “required to be in writing” I dont think disagreements with management are required to be in writing. You can communicate them orally or in writing but neither format is a required format.

AUD - 73, 72 retake 7/2/2016
BEC - 8/20/2016
REG - TBD
FAR - TBD

I am so ready for this nightmare to be over. Been at this way too long.

[smazthespaz]

Good day

This is my first post ever. I took took the exam earlier today, and l'm feeling pretty confident that I crushed the sims. Let me just say (without disclosing any information), I'm really happy I got familiar with navigating through the search tools via Becker. MC was difficult, but it seems like I didn't drill questions as much as some commenters have.

Just wanted to wish everyone good luck!

REG - 83 11/24/14
AUD - 94 2/17/15
FAR - 93 5/26/15
BEC - 90 8/10/15

[Author]

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