[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

[CPA2BEE]

I'm going back in tomorrow guys! The nerves have arrived

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

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

[CPA2BEE]

Which of the following procedures would an auditor most likely perform to obtain evidence about the occurrence of subsequent events?
a. Investigating changes in stockholders' equity occurring after year-end.
b. Confirming bank accounts established after year-end.
c. Inquiring of the entity's legal counsel concerning litigation, claims, and assessments arising after year-end.
d. Recomputing a sample of large-dollar transactions occurring after year-end for arithmetic accuracy.

Becker says C, NINJA says A. WHICH ONE IS IT!?!?!?! I think A is more correct.

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

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

[FAR_WARS]

to add to the confusion, wiley says the answer is:

“Inquiring as to whether any unusual adjustments were made after year-end.”

What is Ninja's Explanation?

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

[CPA2BEE]

NINJA's explanation is something along the lines of basically repeating the answer to the question with no real explanation why….but according to Becker's book, inquiring of the legal counsel is listed as part of the auditor's responsibility regarding subsequent events. Since that is the only backup I can find, I guess I'll go with that.

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

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

[Pete]

Subsequent period auditing procedures

1. Certain procedures are applied to transactions after year-end

a. To assure proper year-end cutoff
b. To help evaluate asset and liability valuation

2. In addition, the CPA should perform other procedures near completion of fieldwork to identify subsequent events

a. Read latest interim statements

(1) Make comparison with other data

b. Discuss with management

(1) Existence of contingent liabilities
(2) Significant changes in shareholders’ equity items
(3) Statement items accounted for on tentative data
(4) Unusual adjustments in the subsequent period

c. Read minutes of Board of Directors and other committees

(1) Make inquiries when minutes are not available

d. Obtain lawyer’s letter on

(1) Litigation
(2) Impending litigation, claims
(3) Contingent liabilities

e. Include in management representation letter representations on subsequent events

That's from wiley book, it's include both ??

[CPA2BEE]

The only thing I can think of is that answer A implies an active investigation of the changes to SE, rather than an “inquiry” or “discussion with management”. Since both apply, I think it is the difference between “Inquiry” and “Investigation” that sets it apart.

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

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

[FAR_WARS]

Bingo. “Investigating changes in stockholders' equity occurring after year-end” is not the same as “Discussing with mgmt significant changes in shareholders’ equity items.”

Also in AU-C 560 Inquiry is definitely in there, but I cannot find any mention of OE. So I am not sure why Wiley would even mention it.
(https://www.aicpa.org/Research/Standards/AuditAttest/DownloadableDocuments/AU-C-00560.pdf)

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

[Pete]

so when he does inquiries to the management regard to litigation .. so on ?

[FAR_WARS]

Actually, I just found this in AU-560

One of the inquiries we do make to mgmt:

“Whether there have been increases in capital or issuance of debt
instruments, such as the issue of new shares or debentures, or an
agreement to merge or liquidate has been made or is planned”

But, we are still making Inquiries and not actively “Investigating changes in stockholders' equity occurring after year-end.”

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

[Pete]

I got the list from one of Wiley's MCQs's Answer

[Pete]

are the flowcharts/memorandum/narrative for document understanding of internal control or organization structure ?

[Pete]

Cutoff tests designed to detect credit sales made before the end of the year that have been recorded in the subsequent year provide assurance about management’s assertion of

a-Presentation.
b-Completeness.
c-Rights.
d-Existence

[CPA2BEE]

B?

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

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

[FAR_WARS]

@peter

We are supposed to “obtain an understanding of entity and environment, including Internal Control”

Within Internal Control are five components, one of which is “Control Activities”. Documentation is then one of those Control Activities.

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

[Pete]

yes right cpa2bee 🙂

@far_wars i think i need to read au-c 300 really, that' one of my weakness too

did you read the attestation standard or just from material course ?

[Author]

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