[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

[mtwst113]

@ARCPA2B One thing to focus on for bank confirms:

Ultimately, once a bank confirmation is sent to the bank, and the bank mails it back, it is sent directly to the auditor. Otherwise, there is a potential risk that the client could edit the confirmation if it were mailed to management.

BEC | √
AUD| √
FAR| Spring 2015

[Anonymous]

@ ARCP your question is highly subjective and below is my understanding about the area:

Client confirm auditor existence of litigation claim and details, Auditor then obtain a letter from the entity’s attorney describing any pending litigation, unasserted claims, or loss contingencies..

Confirmation letter, client shall prepare request, but it would always remain under auditor's control including sending the balance confirmation request to ensure the request has reached concerned party.

[jackaroe]

Return on Equity = NI/SE

Let's say that someone forgot to include inventory in the previous year and made an adjustment to Debit Inventory and Credit COGS. I understand that the extra cost of goods sold is going to bring net income down – but how does the adjustment affect stockholders equity.

1. Does the reduction in income mean that retained earnings takes a hit which means that SE is going to also take a hit?

2. Since inventory is an asset on the balance sheet – does this mean that it won't effect ROE for this example?

[willpassby2014]

Which of the following matters is an auditor not required to communicate to those charged with governance?

A.

Significant adjustments arising from the audit that were recorded by management

B.

The basis for the auditor’s conclusions about the reasonableness of management’s sensitive accounting estimates

C.

The level of responsibility assumed by the auditor under generally accepted auditing standards

D.

The degree of reliance the auditor placed on the written representations from management

BEC Passed
FAR Passed
AUD Passed
REG Passed

[Martin]

D?

Through God all things can happen!

“You never fail until you stop trying.”
― Albert Einstein
When I was young, I used to admire intelligent people;as I grow older, I admire kind people.
“Just keep swimming, just keep swimming.”

FAR= 72-84
Audit= 73-82
BEC= 74-75
Reg=77

[ruggercpa2b]

I am thinking D as well.

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.

[Anonymous]

I too would go with D

[Martin]

I know we talked about this before,but we did not come to an agreement.

When performing Risk assessment procedures, the procedures to be used should be=

Analytical procedures

Inquiry

Inspections

Observation

The debate a month ago was that Roger CPA includes Analytical Procedures AIIO,but Wiley test bank did not have Analytical procedure as one of the 4 to be used.

From AICPA=

.04 Analytical procedures are used for the following purposes:

a. To assist the auditor in planning the nature, timing, and extent of

other auditing procedures

b. As a substantive test to obtain audit evidence about particular assertions

related to account balances or classes of transactions

c. As an overall review of the financial information in the final review

stage of the audit

Through God all things can happen!

“You never fail until you stop trying.”
― Albert Einstein
When I was young, I used to admire intelligent people;as I grow older, I admire kind people.
“Just keep swimming, just keep swimming.”

FAR= 72-84
Audit= 73-82
BEC= 74-75
Reg=77

[Martin]

This was the question=

When performing risk assessment procedures to obtain an understanding of internal controls, the auditor may include all of the following except:

A.

observing the application of specific controls.

B.

performing analytical procedures.

C.

inspecting documents and reports.

D.

tracing transactions through information system relevant to financial reporting.

According to Roger, the answer should be D.

Through God all things can happen!

“You never fail until you stop trying.”
― Albert Einstein
When I was young, I used to admire intelligent people;as I grow older, I admire kind people.
“Just keep swimming, just keep swimming.”

FAR= 72-84
Audit= 73-82
BEC= 74-75
Reg=77

[Anonymous]

Martin, that's a tricky question. I guess they're saying it's D because that is more of a test of controls to be performed after gaining an understanding. The other's help gain an understanding while tracing is more of a test to see if the control is operating effectively. That's my best guess at why it's D. Roger doesn't provide any explanation as to why it is D?

[Anonymous]

I've learned it as…

Risk assessment:

Inquiry

Analytical Procedures

Observation

Inspection

Internal Control:

Inquiry

Reperformance (tracing, etc.)

Observation

Inspection

So I would think everything you posted above is true.

[Martin]

ARCPA2B,CTM, I agree with you both 100%, and this is the reason why I was confused a month ago, and im still are now that Im reviewing for Friday's exam. According to Ninja, the answer is B.

I dont get why it will be B if Anayticial procedures are part of Risk assessment procedures. I got it right based on Roger's explanation, but wrong according to Ninja. The above question was a from the ninja test bank.

Through God all things can happen!

“You never fail until you stop trying.”
― Albert Einstein
When I was young, I used to admire intelligent people;as I grow older, I admire kind people.
“Just keep swimming, just keep swimming.”

FAR= 72-84
Audit= 73-82
BEC= 74-75
Reg=77

[Martin]

This was Jeff's response, and he does not include Analytical procedures=

AU-C 315.A69 states: Risk assessment procedures to obtain audit evidence about the design and implementation of relevant controls may include

• inquiring of entity personnel.

• observing the application of specific controls.

• inspecting documents and reports.

• tracing transactions through the information system relevant to financial reporting.

NINJA is correct per the standard.

Through God all things can happen!

“You never fail until you stop trying.”
― Albert Einstein
When I was young, I used to admire intelligent people;as I grow older, I admire kind people.
“Just keep swimming, just keep swimming.”

FAR= 72-84
Audit= 73-82
BEC= 74-75
Reg=77

[Anonymous]

But the question isn't about obtaining audit evidence. It's about gaining an understanding of IC. Jeff seems to be talking about the testing of controls and not gaining an understanding of controls. Either way, this question is ridiculous and if I run across many of these on the exam I am screwed. This is what makes the AUD section so difficult. I can spend 30 minutes trying to figure out what they want to know. Completely irrelevant to real world situations.

[Martin]

So Guys, can we agree on Analytical procedure being one of the 4 risk assessment procedures to obtain an understanding of internal controls?

How did you guys do on Becker's final exams? Im doing sets of 10 questions, and I have already completed 75 of the 90 MC from the first exam. The second exam seems harder. I got a 73 on the first testlet of exam 2.

Through God all things can happen!

“You never fail until you stop trying.”
― Albert Einstein
When I was young, I used to admire intelligent people;as I grow older, I admire kind people.
“Just keep swimming, just keep swimming.”

FAR= 72-84
Audit= 73-82
BEC= 74-75
Reg=77

[Author]

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