[jeff]

Welcome to the Q1 2017 CPA Exam Study Group for AUD. 🙂

[Holly]

5-2d. more than the deviation rate in the auditor’s sample

BEC - 79
REG - 85
AUD - 5/27/16

[Forem004]

That's correct!

5-9

An auditor's letter issued on significant deficiencies relating to a nonissue's internal control observed during a financial statement audit should:

a. include a brief description of the tests of controls performed in searching for significant deficiencies and material weaknesses

b. indicate that the significant deficiencies should be disclosed in the annual report to the entity's shareholders

c. include a paragraph describing management's assertion concerning the effectiveness of internal control

d. indicate that the audit's purpose was to report on the financial statements and not to provide an opinion on internal control

This one threw me for a minute. I didn't realize they were using “letter” interchangeably with “report.”

[sulaiman]

5-9
D ?

Also, I have a question regarding transaction cycle, is it normal to score 45-50% in first try doing mc? This is the first sub topic in audit that throw me off! I usually score 70-80% in first try in audit so I am not sure if I should review the materials again or just do more mc to get familiar with this topic.

[Forem004]

My co-worker, CPA of nearly twenty years, continues to remind me to just continue doing questions! Correct on 5-9

[sulaiman]

Regarding 5-9, I think the reason it is not because it's a letter or a report, more actually because it is “non issuer” since we are not required to do “integrated audit”. I mean even in our report, we don't express opinion about internal control of non issuer.

[sulaiman]

2009 released question..
54 -In auditing an entity's computerized payroll transactions, an auditor would be least likely to use test data to test controls concerning:
a.
Control and distribution of unclaimed checks.
b.
Withholding of taxes and Social Security contributions.
c.
Missing employee identification numbers.
d.
Overpayment of employees for hours not worked.

The answer is A and I don't know why!

[Forem004]

About your response to 5-9, when it says letter in the question I think it's referring to the report that it references in the answer. Bc if not, what is an IC letter??

Your question has to do with that is asking specifically about test data. You would be unable to use test data to check the process in A.

[Holly]

I test today!!!!!!

BEC - 79
REG - 85
AUD - 5/27/16

[Forem004]

I thought you said the 15th! Good luck!

[thebigguy1992]

i took the test/just posted a thread about it

[Forem004]

NINJA 681: This also D, which is why I chose B on the second question.

In evaluating the reasonableness of an accounting estimate, an auditor most likely would concentrate on key factors and assumptions that are:

A. consistent with prior periods.

B. similar to industry guidelines.

C. objective and not susceptible to bias.

D. deviations from historical patterns.

This is the explanation for this one:

In evaluating the reasonableness of an accounting estimate, the auditor focuses on the key factors and assumptions that are deviations from historical patterns. Also of concern to the auditor are key factors and assumptions that are significant, sensitive to variations, and subjective and susceptible to misstatement and bias. Estimates are more likely to be reasonable if they are consistent with prior periods, similar to industry guidelines, and objective and not susceptible to bias.

AND THEN THERE'S THIS…

NINJA 678: This is D

Which of the following procedures most likely would assist an auditor in determining whether management has identified all accounting estimates that could be material to the financial statements?

A.Inquire about the existence of related party transactions.

B.Determine whether accounting estimates deviate from historical patterns.

C.Confirm inventories at locations outside the entity.

D.Review the lawyer’s letter for information about litigation.

Yet this is the explanation for this one:

Of the listed procedures, reviewing the lawyer's letter for information about litigation would most likely assist the auditor in determining whether management has identified all accounting estimates that could be material to the financial statements. Related party transactions and inventories outside the entity are not estimated amounts. Reviewing the historical pattern of accounting estimates will not usually reveal an unidentified accounting estimate.

[Forem004]

And now I see it…nevermind!

[sulaiman]

@forem004

I hate those questions… Just one word in the question change the answers! I guess the one who gets over 95% in the exam, is the one who realizes all these minutiae issues!

[Forem004]

I'm good with a 75!!

[sulaiman]

Lol, me too believe me!

CPA-02529

Which of the following is an audit procedure that an auditor would most likely perform concerning litigation, claims, and assessments?
a.
Request the client's lawyer to evaluate whether the client's pending litigation, claims, and assessments indicate a going concern problem.
b.
Examine the legal documents in the client's lawyer's possession concerning litigation, claims, and assessments to which the lawyer has devoted substantial attention.
c.
Discuss with management the controls adopted for evaluating and accounting for litigation, claims, and assessments.
d.
Confirm directly with the client's lawyer that all litigation, claims, and assessments have been recorded or disclosed in the financial statements.

[Author]

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