[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

[mvttie]

An accountant has compiled the financial statements of a nonissuer but declines to issue a compilation report. This is an example of:
a.
An appropriate reporting decision, as long as the financial statements are prepared in conformity with GAAP.
b.
An inappropriate reporting decision, because SSARS require that a report be issued when an accountant has compiled financial statements.
c.
An appropriate reporting decision, if the accountant is not independent with respect to the nonpublic entity.
d.
An appropriate reporting decision, if the compiled financial statements are not expected to be used by a third party.

correct answer is B, but I thought if third parties won't be an intended user, then a plain paper report (engagement letter) could be issued and NOT a compilation report? can someone please clarify

FAR - 71, 78 (Becker Self-Study)
AUD - 63, 74, 90 (Becker Self-Study + Ninja MCQ)
REG - 75 (Becker Self-Study + Ninja MCQ)
BEC - 80 (Becker Self-Study)

[EuroAddict]

I believe if you have done the work and completed the compilation, you have to present it.

Why couldn't you do a compilation just for the client alone?

-----------------------------
BEC - 77, 03/2015 (first try)
FAR - 79, 05/2015 (second try)
REG - 83, 12/2015 (first try)
AUD - 84, 03/2015 (first try)

I got 99 problems but the CPA ain't one.

[Char143]

@mvttie yeah that's really confusing if the answer is really B. According to SSARS AR-80.16 it says “When the accountant is engaged to report on compiled financial state- ments or submits financial statements that are reasonably expected to be used by a third party, the financial statements should be accompanied by a written report. The accountant's objective in reporting on the financial statements is to prevent misinterpretation of the degree of responsibility the accountant is assuming when his or her name is associated with the financial statements.”

And AR-80.05:
“If the compiled financial statements are not expected to be used by a third party and the accountant does not expect to issue a compilation report on the financial statements, the accountant should include in the engagement letter an acknowledgment of management's representation and agreement that the financial statements are not to be used by a third party. The engagement letter also should address the following additional matters if applicable..”

So I think the right answer is D, but maybe when it says “the accountant declines to issue a compilation report” it's like a trick question and that means something? The wording on these questions really tries to confuse you.

so hopefully someone else can help answer this, cause I'm thinking D is the right answer.

AUD (2/16)-84
REG (05/16)-69 Retake (7/16)-79 (ty ninja MCQ)
BEC-TBD
FAR-9/8/16

[cdn]

@mvttie – Mine understanding for this questions is – The correct answer is B, why? Because auditor is doing compilation and he has to issue report. Auditor cannot DECLINE to issue compilation report. The D – for me is a catch as it doesn't matter if 3 party or not – compilation report HAS to be issued. I hope I helped.

[If I can, u can too!]

@mvttie
I second CharleneR's opinion (sorry capri1032, but feel free to find an AR which contradicts CharleneR's). The answer has to be D due to the AR's she's quoted.

When you're solving questions, you should read the pronouncement because all questions are based on SAS, PCAOB, AR, AU-C etc. I have been questions where incorrect answers were given in Ninja MCQ/SIM and I had Jeff corrected it in the past for REG. I also have seen an incorrect answer in AUD in a SIM question as well.

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).

[pyacpa49]

@mvttie @hokinizeu: My thought on this would be that the auditor should not decline to issue the report. As far as AR-80.05 goes if they were to not issue a report it would be a matter that is discussed in the engagement letter. I'm reading this question to mean that it looks like the client was expecting a report to be issued, but now after the fact the auditor is saying they refuse to provide one. I guess it depends what you infer when you read the question? I feel like B is right, but I do see a case for D as well.

[cdn]

@hokinizeu – You are right, I am wrong. Sorry – Now I know why I failed. 🙁
This is from: AR-80.22
“When the accountant submits compiled financial statements to his or
her client that are not expected to be used by a third party, he or she is not
required to issue a compilation report.”

[cdn]

What got me wrong was the word “DECLINE” (this so negative/strong word )- if they would different word such “are not required to provide compilation report” than I would go for D.

[EuroAddict]

Only 6 nights sleep left till tests are released (5 if you don't sleep tuesday lol).

-----------------------------
BEC - 77, 03/2015 (first try)
FAR - 79, 05/2015 (second try)
REG - 83, 12/2015 (first try)
AUD - 84, 03/2015 (first try)

I got 99 problems but the CPA ain't one.

[Char143]

@euroaddict I will not be sleeping Tuesday!! Time goes by so fast except when you're waiting for exam results 🙁

AUD (2/16)-84
REG (05/16)-69 Retake (7/16)-79 (ty ninja MCQ)
BEC-TBD
FAR-9/8/16

[If I can, u can too!]

NP capri1032, we are all learning here. it's great we all can discuss a question and interpret the pronouncements.

can't wait until the exam result early wednesday am! still so nervous. it's a make or break moment moment b/c my FAR is to expire unless i had passed Audit.

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).

[marqzho]

I just started preparing for AUD. I use Roger review and I have a 3m free access to Ninja MCQ (thanks to Jeff). I've finished watching the first chapter on Audit Standards & Engagement Planning and now half way on the 2nd chapter on Professional Responsibilities And Ethics. I want to say……What the hell is going on !? Do I really have to remember all those code ?

REG 90
FAR 95
AUD 98
BEC 84

[Claudia408]

marqzho – roger's first section is planning the engagement meaning auditor's want to know if they have something to audit (records), is management cooperative/shady, does the company have internal controls so they can rely on the F/S (or does the auditor have to do a lot of work to confirm the F/s balances), does the auditor have staff that knows the client industry. The auditor considers this before they accept the company as an audit client.

second section is more about the auditor (training, education, who do they report to) audit standards in an audit (auditor does more work for an audit versus just consult or attest for a client)

Does this help?

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[CPATG17]

I just started AUD, And I am using Becker materilas and was told by CPA friend not to spend much time on watching the lectures instead focus more on the questions and from the questions refer back to the lectures, Book and make my own notes.

Does this method work did someone use this method before?

AUD - 08/23/2016
REG - TBD
BEC - TBD
FAR - TBD

[Claudia408]

CPATG17 – audit is where you need to learn in sequence, from planning an audit to the actual fieldwork then the FS. also that method of starting with just MCQ is really a strategy one uses when pressed for time and you gotta basically piece things together which I don't think works well for audit. but it also depends on how you learn but i think for most, either reading the book/ watching lecture comes before the MCQ.

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[Author]

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