[jeff]

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

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Spartans92]

@helphelp, that question is just poorly worded but A is not right because almost always the options with “should” “all” “always” are wrong answers. D and B both should be documented. Hence, process of elimination C is the “correct” answer. Sorry can't come up with a better reason LOL. That's AUD use best judgement 🙂

BEC- PASS

[HelpHelpHelp :)]

@Spartans – that's one of the reasons why I thought A would be right – because the questions asks for which of the following is incorrect (should not be documented), and A includes the word “all”!

Oh well… guess I'd better just pray that I don't get a question like that on the real thing! Thanks! 🙂

The happiest people don't have the best of everything, they just MAKE the best of everything!

We can do it!! 🙂

[ruggercpa2b]

For uncorrected misstatements, the auditor should document all of the following, except:
A. all misstatements accumulated during the audit and whether they have been corrected.
B. the amount below which misstatements would be regarded as clearly trivial.
C. the size and nature of the misstatement.
D. the auditor’s conclusion about whether uncorrected misstatements are material, individually or in the aggregate, and the basis for that conclusion.
A is incorrect because during an audit you document all the misstatements that you find whether or not they have been corrected. The reason behind this is that you can note in your documentation if the misstatement is below or about materiality. Usually anything above materiality has to be corrected unless the client can give you a valid reason of why it was not corrected. And also, when you document all misstatements that you find you have that information for the next time you audit a client.
B would be documented as well because you have to have some form of documentation of what your materiality threshold is and any misstatements you encounter that are below materiality would be considered as trivial but still need to be documented.
D would be documented as well in your workpapers.

AUD - 73, 72 retake 7/2/2016
BEC - 8/20/2016
REG - TBD
FAR - TBD

I am so ready for this nightmare to be over. Been at this way too long.

[mperez102204]

Please help me understand this question… I was able to get the answer simply because it was the only one that made sense (sort of).

A CPA is required to comply with the provisions of Statements on Standards for Attestation Engagements when engaged to
A Provide assurance on investment performance statistics prepared by an investment company on established criteria.
B Issue a letter for an underwriter, also known as a comfort letter, to a broker or dealer of securities.
C Compile financial statements in conformity with a comprehensive basis of accounting other than GAAP.
C Communicate with an audit committee regarding management's consultations with another CPA.

A is correct because the Statements on Standards for Attestation Engagements do apply to such investment performance statistics.

I thought any type of assurance was to use SSARS? Hence, why A seemed to be a bit weird to me since they are providing assurance for a company..

[Anonymous]

I had neither background nor actual experience with auditing. But just based on the audit preparation I had done with AUD, the way I understand and differentiate SSARs vs. SSAE is this.

Let’s say Charles Schwab has contracted you as a CPA to conduct a review and/or an accounting service of their FS for annual reporting or for any other purposes. That should fall under SSARs guidelines and compliance. Let’s say on the other hand, C/Schwab has contracted you to provide assurance on the investment performance statistics which they prepared on established criteria (exactly like the example you gave), then the procedures applied should be in compliance with SSAE.

I hope that helps.

SSAE

[mperez102204]

Okay, i think i get it now. So, i should look at this as something that is agreed-upon with management based on information supplied by management. Thus, following SSAE.

Great notes, it did clear things up. I think i was reading a little to much into the question and concentrating on the word “assurance”.

Thanks again!

[Operation_CPA]

Joining this study group! Just took FAR and I am waiting for my score (Feb 7th). Doing my best to get AUD done in Q1 while working full time / busy season. Looking forward to hopefully helping out as much as I can in here.

[HelpHelpHelp :)]

@ruggercpa thank you! Now I get why A is wrong. But don't they still have to document the size and nature of uncorrected material misstatements?

The happiest people don't have the best of everything, they just MAKE the best of everything!

We can do it!! 🙂

[mperez102204]

Welcome to the group @operation_cpa! I am testing this upcoming Friday.

Hope you passed!!

[HelpHelpHelp :)]

Here's another one:

Which of the following is an example of nonsampling risk?
A. The auditor selecting inappropriate auditing procedures
B. The internal control being more effective than the auditor believes
C. The auditor concluding the account balance is not materially misstated, but is, in fact, materially misstated
D. The internal control not being as effective as the auditor believes

You answered C. The correct answer is A.

Nonsampling risk is the risk that the auditor reaches an erroneous conclusion for any reason not related to sampling.
Examples of nonsampling risk include the use of inappropriate audit procedures or misinterpretation of audit evidence and failure to recognize a misstatement or deviation.

I understand why A is right, but I don't understand why C is wrong. In C, didn't the auditor fail to recognize a material misstatement? …Which would be a nonsampling risk?

The happiest people don't have the best of everything, they just MAKE the best of everything!

We can do it!! 🙂

[Spartans92]

@helphelp I haven't gotten to sampling risk yet and can't really recall much since it has been a while. But C relates to incorrect/acceptance or rejection (either one). I always mix those up. But that is part of sampling risk. Does that help?

BEC- PASS

[HelpHelpHelp :)]

@Spartan – incorrect acceptance/rejection = sampling risk when the evidence supports a statement incorrectly. But in that question I thought it was the auditor's mistake, not a failure of evidence?

The happiest people don't have the best of everything, they just MAKE the best of everything!

We can do it!! 🙂

[Operation_CPA]

For those using Becker, are you using the 2017 materials or 2016 for your Q1 exam? I feel like the 2017 version is growing on me. Its a nice change of pace and I honestly may stick to using it – the material should be consistent right? Would love to hear some other thoughts.

[Operation_CPA]

Like for example…. I just noticed there are two different types of auditors reports. One for issuers (unqualified opinion = clean) and one for non issuers (unmodified opinion = clean). The auditors report is different for issuers vs non issuers. I don't recall this from my previous audit studying.

[sonja90]

the auditor concluding the account balance is not materially misstated, but is, in fact, materially misstated @helphelp that is word for word definition of sampling risk of incorrect acceptance, beta risk.

@operation_CPA they are pretty much same but they do have slight differences, last sas issuance has changed audit reports for non issuers where report is required to include titles of each separate paragraph check https://www.aicpa.org/Research/Standards/AuditAttest/DownloadableDocuments/AU-C-00700.pdf

vs. PCAOB does not have those titles as of yet, they have intro, scope, opinion type of deal.

[Author]

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