[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

[FAR_WARS]

a.

almost said D but D would only be right for a test of controls. This is a substantive test.

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

[Pete]

yes right 🙂

[FAR_WARS]

An auditor's purpose in reviewing the renewal of a note payable shortly after the balance sheet date most likely is to obtain evidence concerning management's assertions about:

a. Occurrence.
b. Understandability and classification.
c. Valuation and accuracy.
d. Completeness.

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

[Pete]

b?

[FAR_WARS]

b is correct- classification of the NP between current and noncurrent.

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

[Pete]

what are the difference between reporting on subject matter and report about subject matter ?

[If I can, u can too!]

Subject matter is the overall assessment whereas the report about subject matter regards the assertion (much more specific) on the subject matter.

Licensed CPA since Apr 16
Order in sequence of passing
FAR-71,71,79
BEC-80
REG-72,77
AUD-56,72,72,72,80! Thank you, thank you, thank you Lord!
FAR/BEC/AUD: Becker & Yaeger lectures (Wiley & Ninja MCQs). REG: Becker lectures (Ninja MCQs).

[Pete]

When auditing prepaid insurance, an auditor discovers that the original insurance policy on plant equipment is not available for inspection. The policy’s absence most likely indicates the possibility of a(n)

A. Deficiency in the coinsurance provision.
B. Lien on the plant equipment.
C. Insurance premium due but not recorded.
D. Understatement of insurance expense

why B ?

[FAR_WARS]

a lien is a right to keep possession of property belonging to another person until a debt owed by that person is discharged. The holder of the lien may also in certain circumstances maintain the original insurance policy. I doubt this will be tested.

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

[Anonymous]

Can not seem to understand the idea behind Comfort letters. I know Positive assurance for audited FS and negative assurance for unaudited FS. Review is required and letter is restricted. Can anyone help further my understanding please.

[Trying to pass]

Q. Which of the following characteristics most likely would heighten an auditor's concern about the risk of Material misstatement in an entity's Financial statements?

a. The Entity's industry is experiencing declining customer demand

b. Employees who handle cash receipts are not bonded

c. Equipment is often sold at a loss before being fully depreciated

d. Bank reconciliations usually include in-transit deposits.

Why B? Can anyone explain? Thanks

[Trying to pass]

Sorry ‘A' is correct answer

[FAR_WARS]

@Dmb2stepper:

Comfort Letter's have less to do with Audit Reports, and more to do with Stock Securities. Before a company issues stock securities to investors, the CPA will review the interim statements and provide negative assurance that “nothing came to our attention” that might conflict with SEC requirements. They are not required by SEC, and not part of the registration statement, but they do provide additional “comfort”.

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

[FAR_WARS]

@Trying to pass:

a. The Entity's industry is experiencing declining customer demand

because in this situation, mgmt might feel inclined to engage in fraudulent reporting to make performance look better than it actually is.

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

[Jdn9201]

@ Trying to pass – I agree with the above poster. Also, this is one of those questions where the choice that sticks out is the correct answer. The other 3 choices are entity specific, but A sticks out because it has to do with bigger picture (in this case, the client's industry).

BEC - 88 8/29/15
REG - 82 11/14/15
AUD - 83 1/8/16
FAR - 80 2/29/16

[Author]

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