[jeff]

Welcome to the Q1 2016 CPA Exam Study Group for AUD.

Some BLITZ videos to help your exams: https://www.another71.com/ninja-blitz

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

[Pete]

An auditor compares year 2 revenues and expenses with those of the prior year and investigates all changes exceeding 10%. By this procedure the auditor would be most likely to learn that

a-An increase in property tax rates has not been recognized in the client’s accrual.
b-The year 2 provision for uncollectible accounts is inadequate because of worsening economic conditions.
c-Fourth quarter payroll taxes were not paid.
d-The client changed its capitalization policy for small tools in year 2.

[payaza2000]

@Peter

C?

FAR 5/6/2015- 84
REG 8/3/2015 - 87
AUD 10/25/2015- 69 1/20/2016 -75
BEC 2/26/2016- 80

Thank you God

[FAR_WARS]

@Payaza:

Further Audit Procedures= Test of Controls & Substantive Procedures

Test of Controls= Inquiry, Reperformance, Observation, Inspection

Substantive Procedures= Test of Details and Analytical Procedures

Test of Details= Whatever is left. Some can be either TOC's or TOD's depending on circumstance.

FAR- 80
BEC- 75
AUD- 78
REG- ?

[Pete]

The answer is D

This answer is correct because a change in a capitalization policy is likely to have a large dollar effect, even for small tools. Thus, an investigation would occur and the auditor would learn of the change in policy regarding small tools.

[FAR_WARS]

@Peter

explanation?

c could be wrong because the expenses were not paid, but may have still been accrued.
d is better because changing the capitalization policy will result in changed expenses/revenues.

FAR- 80
BEC- 75
AUD- 78
REG- ?

[Pete]

I moved now to review test of controls and substantive test and sample

and reading the standard, really FAR is easy than audit lol

[Pete]

that's for you FAR_WARS 🙂

Which of the following most likely would give the most assurance concerning the valuation assertion of accounts receivable?

a-Tracing amounts in the subsidiary ledger to details on shipping documents.b-
b-Comparing receivable turnover ratios to industry statistics for reasonableness.
c-Inquiring about receivables pledged under loan agreements.
d-Assessing the allowance for uncollectible accounts for reasonableness.

[Pete]

1-In evaluating the overall effect of audit findings on the auditor's report, the auditor should document all of the following except:

A.
the levels of materiality and tolerable misstatement, including any changes thereto, used in the audit and the basis on which those levels were determined.

B.
a summary of all uncorrected misstatements related to known and likely misstatements.

C.
the auditor's conclusion as to whether uncorrected misstatements, individually or in aggregate, do or do not cause the financial statements to be materially misstated, and the basis for that conclusion.

D.
all known and likely misstatements identified by the auditor during the audit, other than those that are trivial, that have been corrected by management.

2- For uncorrected misstatements, the auditor should document all of the following, except:

A.
all misstatements accumulated during the audit and whether they have been corrected.

B.
the amount below which misstatements would be regarded as clearly trivial.

C.
the size and nature of the misstatement.

D.
the auditor's conclusion about whether uncorrected misstatements are material, individually or in the aggregate, and the basis for that conclusion.

[FAR_WARS]

d-Assessing the allowance for uncollectible accounts for reasonableness.

is valuation.

FAR- 80
BEC- 75
AUD- 78
REG- ?

[Pete]

Yes right Far_Wars

for that two MCQs something wrong, because the trivial will be documented but shouldn't be communicated

[FAR_WARS]

1. B?

FAR- 80
BEC- 75
AUD- 78
REG- ?

[Pete]

right far_wars, but we document trivial errors too right?

[FAR_WARS]

2. C

We would not include the trivial errors. We would however state what we consider to be “clearly trivial”

example: We do not care about any errors below $100. They would be clearly trivial.

**so $1 could be trivial and immaterial. $101 immaterial but not trivial, and $500 material.

FAR- 80
BEC- 75
AUD- 78
REG- ?

[Pete]

yes right C

[CPA2BEE]

An auditor compares annual revenues and expenses with similar amounts from the prior year and investigates all changes exceeding 10%. This procedure most likely could indicate that:

A.
fourth quarter payroll taxes were properly accrued and recorded, but were not paid until early in the subsequent year.

B.
unrealized gains from increases in the value of available-for-sale securities were recorded in the income account for trading securities.

C.
the annual provision for uncollectible accounts expense was inadequate because of worsening economic conditions.

D.
notice of an increase in property tax rates was received by management, but was not recorded until early in the subsequent year.

FAR - 80
AUD - 82
BEC - 80
REG - 85

ETHICS - 90
EXPERIENCE - COMPLETE
Application for California license mailed 8/4/2016

[Author]

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