[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

[payaza2000]

Hi @ThisIsTheYear

From My understanding if we look at the example Report in AR-C 90 which is .A145 on pg 54 of 70

“A review engagement includes primarily applying analytical procedures to your
financial data and making inquiries of company management. A review engagement
is substantially less in scope than an audit engagement, the objective of
which is the expression of an opinion regarding the financial statements as a
whole. A review engagement does not contemplate obtaining an understanding
of the entity's internal control; assessing fraud risk; testing accounting records
by obtaining sufficient appropriate audit evidence through inspection, observation,
confirmation, or the examination of source documents; or other procedures
ordinarily performed in an audit engagement. Accordingly, we will not express
an opinion regarding the financial statements.
Our engagement cannot be relied upon to identify or disclose any financial
statement misstatements, including those caused by error or fraud, or to identify
or disclose any wrongdoing within the entity or noncompliance with laws
and regulations.”

Also

A3 “A review differs significantly from an audit of financial statements
in which the auditor obtains reasonable assurance, which is a high, but not
absolute level of assurance, that the financial statements are free of material
misstatement.”

I think this is one of those questions where you have to pick the “best” answer. I think an educated guess would be Choice C, but since C explicitly says “or any other form of assurance on the financial statements.” I think we can eliminate that. B would be the best answer in my opinion because of this paragraph in the Auditors Report that they used in the Standards:

“A review engagement does not contemplate obtaining an understanding of the entity's internal control; assessing fraud risk; testing accounting records by obtaining sufficient appropriate audit evidence through inspection, observation, confirmation, or the examination of source documents; or other procedures ordinarily performed in an audit engagement. Accordingly, we will not express an opinion regarding the financial statements.”

I failed Audit Once so I could be wrong, anyone else want to chime in?

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

[payaza2000]

Hi @ThisIsTheYear

From My understanding if we look at the example Report in AR-C 90 which is .A145 on pg 54 of 70

“A review engagement includes primarily applying analytical procedures to your
financial data and making inquiries of company management. A review engagement
is substantially less in scope than an audit engagement, the objective of
which is the expression of an opinion regarding the financial statements as a
whole. A review engagement does not contemplate obtaining an understanding
of the entity's internal control; assessing fraud risk; testing accounting records
by obtaining sufficient appropriate audit evidence through inspection, observation,
confirmation, or the examination of source documents; or other procedures
ordinarily performed in an audit engagement. Accordingly, we will not express
an opinion regarding the financial statements.
Our engagement cannot be relied upon to identify or disclose any financial
statement misstatements, including those caused by error or fraud, or to identify
or disclose any wrongdoing within the entity or noncompliance with laws
and regulations.”

Also

A3 “A review differs significantly from an audit of financial statements
in which the auditor obtains reasonable assurance, which is a high, but not
absolute level of assurance, that the financial statements are free of material
misstatement.”

I think this is one of those questions where you have to pick the “best” answer. I think an educated guess would be Choice C, but since C explicitly says “or any other form of assurance on the financial statements.” I think we can eliminate that. B would be the best answer in my opinion because of this paragraph in the Auditors Report that they used in the Standards:

“A review engagement does not contemplate obtaining an understanding of the entity's internal control; assessing fraud risk; testing accounting records by obtaining sufficient appropriate audit evidence through inspection, observation, confirmation, or the examination of source documents; or other procedures ordinarily performed in an audit engagement. Accordingly, we will not express an opinion regarding the financial statements.”

I failed Audit Once so I could be wrong, anyone else want to chime in?

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

[If I can, u can too!]

for a question like this we can go to the basics. review mainly consists of analytical reviews and inquiries and generally does not require understanding internal control (i know there are exceptions) or doing any internal control procedures so you can immediately eliminate D. C is eliminated b/c you give a limited/negative assurance in a review rather than an opinion. A is eliminated because that is the exact definition of what compilation is.

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).

[Oneday]

Thank you FARWARS.. I tried to find a relevant post but failed to find that one. I might need to re-learn Googling :/

Payaza2000// thanks for the extensive explanation! My knowledge is in-line with that statement. But the explanation example of the Ninja question blew me off when it stated “will not express opinion”.

I use two materials; Roger and Ninja MCQ and Roger clearly states that AR-C 90 states limited assurance with inquiry and analytical procedures.. So it got me confused.

[fuyuki]

Can anyone explain why D.the accountant did not obtain an understanding of the entity's internal control or assess control risk. is incorrect?
Review does not require an understanding of internal control or asses control risk. Review only require inquiry and analytical procedure. So it looks like D is correct

[FAR_WARS]

It is true that an accountant does not need to obtain an understanding of the entity's internal control or assess control risk for a review. However this is not a required statement in the review report itself.

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

[fuyuki]

@FAR_WARS that makes sense. Thank you

[CPAlife04]

I received my score report today. I was STRONG in MCQs and WEAK in Sims. Go figure!

Well that's what I needed to boost my confidence because I knew I knocked those MCQs out the park. Now to get through all the NINJA Sims.

Lesson learned, do not underestimate any part of the exam and stay focused on the goal.

Audit: 11/28/15 (72) April 2016
Regulation: 2016
Financial: 2016
Business: 2016
NINJA

"The CPA exam is not a test of my ability, it is a test of my will. I have the will!"

[danner]

Mailing my exam application today. I'm shooting for a tentative exam date of January 18, which gives me about a month cram. This is also right around the time that extended hours start at my office. I started re-writing my Ninja notes Sunday, and I'm about to start hitting the Ninja MCQs really hard. I think this time around, I'm going to much more diligent about stopping to take notes on each question I get wrong.

FAR - 74 (7/20/15), 81 (10/12/15)
AUD - 72 (11/30/15), 81 (1/18/16)
BEC - 87 (6/6/16)
REG - 8/8/16

[danner]

I'm a little confused by this question:

Which of the following is true?

A. A review is an assurance engagement, as well as an attest engagement.
B. A compilation is an assurance engagement, but not an attest engagement.
C. A review is an attest engagement, but not an assurance engagement.
D. A compilation is an assurance engagement, as well as an attest engagement.

D is correct. Here is the explanation provided:

“An assurance engagement is when a CPA undertakes to provide assurance regarding financial statements. (A review provides limited assurance that there are no material modifications that should be made to the financial statements in order for the statements to be in conformity with the applicable financial reporting framework. An audit provides reasonable assurance about whether the financial statements are free of material misstatement.)

***An attest engagement is an engagement that requires independence***, as set forth in the AICPA Statements on Auditing Standards (SASs), Statements on Standards for Accounting and Review Services (SSARS), and Statements on Standards for Attestation Engagements (SSAEs) (ET 0.400.04).

A review engagement is both an assurance and an attest engagement.

***A compilation is an attest engagement only, not an assurance engagement.***”

This last sentence confuses me. My understanding is that a compilation does not require independence. If this is the case, why would it be considered an attestation?

FAR - 74 (7/20/15), 81 (10/12/15)
AUD - 72 (11/30/15), 81 (1/18/16)
BEC - 87 (6/6/16)
REG - 8/8/16

[SaveBandit]

The auditor shall determine the appropriate person(s) within the entity's governance structure with whom to communicate. The term “those in charge of governance” refers to which of the following?

A. The subgroup in charge of governance

B. The entity's management

C. Both the subgroup in charge of governance and the entity's management

D. None of the answer choices are correct.

Answer C.
The auditor is required to communicate certain information to those charged with governance in the engagement letter or in another form of communication. The term “those charged with governance” usually refers to an audit committee or the board of directors. In some cases, those charged with governance and management are the same people.

Is it just me or is this a terrible question? If management is part of governance then the answer would still be A because they would be INCLUDED with governance already. Plus, not all of management would be part of governance – usually it's just the CEO, if at all. So, if we go with C then I'm communicating matters to governance, plus the rest of the management team, which is wrong.

I feel like this question takes a giant leap in terms of assumptions.

4 for 4

FAR 85
AUD 94
BEC 86
REG 90

[Kelsie]

@SaveBandit, I think there's something specifically in Ninja book or audio (or somewhere doggone it) that mentions that those charged with governance may exclude management, include members of management, or management in general. In that case, I think it's just a carefully worded question, but I still think C is clearly the answer. If A already includes B, and B is an option, too, then the answer is probably A & B (so…C).

[FAR_WARS]

@Dan:

A is clearly the correct answer in my opinion. Where is that question from?

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

[danner]

@FAR_WARS – I checked the question again, and you're totally right. I have no idea how I got it in my head that D was the solution. Answer A is the right one, which makes much more sense.

Move along, folks. Nothing to see here!

FAR - 74 (7/20/15), 81 (10/12/15)
AUD - 72 (11/30/15), 81 (1/18/16)
BEC - 87 (6/6/16)
REG - 8/8/16

[FAR_WARS]

@SaveBandit:

I think we just need to know that “those in charge of governance” COULD refer to either. I agree with you about the assumptions. The wordiness of these aud questions drives me nuts!

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

[Author]

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