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December 19, 2016 at 6:26 pm #1396514
jeff
KeymasterWelcome to the Q1 2017 CPA Exam Study Group for AUD. π
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February 12, 2017 at 11:24 am #1476505
zestes92
ParticipantTook AUD for the 3rd and, hopefully last, time yesterday. Felt like I really nailed the MCQs this time and had at least 4 TBS I felt confident on though I find myself second guessing now whether or not I selected the correct standards on the research even though I got the right section and paragraph π.
February 12, 2017 at 12:11 pm #1476529mooseonloose
ParticipantGood luck! I am taking mine in exactly three weeks. What did you differently this time around?
February 12, 2017 at 1:07 pm #1476543zestes92
ParticipantFebruary 13, 2017 at 11:15 am #1477173Scared-cpa
ParticipantHey, guys! Can you all help clarify a few things I'm confused about right now to do with sampling?
1. The tolerable rate is supposed to be HIGHER than the likely rate of deviation, correct?
2. In determining the sample size, you need to know the tolerable rate of deviation, likely rate of deviation, and the risk of assessing control risk too low. Does this mean they don't consider the risk of assessing control risk too high, just too low only?
3. What exactly does ‘risk of assessing control risk too low' even really mean? Does this mean that the auditor is putting too much faith in internal controls, thereby reducing substantive tests when the control risk is actually higher than they think it is? When this comes to rates of deviation, if risk of assessing control risk is too low, does that mean the auditor thinks the tolerable rate is higher than the likely rate of deviation when in all actuality, the likely rate of deviation is greater than the tolerable rate? And vice versa for if the risk of assessing control risk too high?This sampling stuff has really been more of a struggle to comprehend than most sections so far. I don't think it's what I'm actually learning that is difficult as much as the terminology is just confusing me because I don't really know what it means. Never taken an auditing class in my life and I am using Wiley CPAexcel.
February 13, 2017 at 9:10 pm #1477636mooseonloose
Participant@scared-cpa sampling is really confusing along with transaction cycles. I am confused as well.
1) Uper deviation rate = sample deviation rate +allowance for sample risk (cushion) =upper deviation rate
Tolerable deviation great than upper deviation=we can rely on
Tolerable deviation less than upper deviation=do not rely on2) to determine sample size you need to know:
1)Risk of assessing control risk too low. want less risk, increase sample size. want more risk, decrease sample size. (inverse relationship)
2)tolerable deviation. want less deviation, increase sample size. want more deviation, decrease sample size (inverse relationship)
3)expected deviation. less deviation, decrease sample size, more deviation, increase sample size (direct relationship.
4)population size (not an issue)I think I saw a questions regarding assessing control risk high, i got it wrong. It suppose to be only low
Bleh 3 more weeks left, i hope this stuff clicks.
February 14, 2017 at 7:08 pm #1478236Scared-cpa
ParticipantThank you, Moose!
When do you have your exam? I notice you said 3 weeks from now…I'm taking AUD 03/08. May I ask what you're using to study with and how far through the material you are? I'm hoping I can compare where I am to you in how much I'm behind. I'm scheduled to be through all the material by the 3rd of MArch which doesn't leave much time for review but it doesn't seem like I can go much faster.
February 14, 2017 at 11:14 pm #1478346mooseonloose
ParticipantMy exam is scheduled for March 5th. I just finished chapter 3 using only becker. I'll try finishing chapter 4 by friday, chapter 5 saturday, and 6 on sunday. How many hours to do you study per day? I can do about 4-5 hours a day.
February 14, 2017 at 11:50 pm #1478368mooseonloose
ParticipantCan someone please explain the concept behind kiting? I can't visualize how kiting works.
February 15, 2017 at 7:12 pm #1478862mooseonloose
ParticipantStandard auditing procedures β FIVE CARROTS
F β Footing, crossfooting, recalculation β verify mathematical accuracy β Valuation & Allocation
Subsequent events = investigate change in CAP/Stock records of YE
Statement of Cash Flow = Reconcile amount with other F/S Accounts
I β Inquiry β both internal and external
V β Vouching β directional testing; auditor examines support for existence and occurrence assertions Authorization β (Vouch GL to Invoice)
E β Examination/Inspection β provides evidence about the existence assertion β understand/classify)
C β Confirmation β Type of inquiry obtained from third party β Existence/Occurrence/Cut-off rules)
A β Analytical procedures β evaluate financial information through the study of data relationships
R β Reperformance β auditor re-performs procedures or controls originally performed by the client
R β Reconciliation β substantiates the existence and valuation of accounts
O β Observation β auditor looks at a process or procedure performed by others (direct knowledge β exist/occurrence)
T β Tracing β directional testing; examines support for the completeness assertions (Accuracy)-Invoice/fixed asset to G/L
C- Cut-off Review β Y-E transaction review
A – Auditorβs Related Account Stimulation β Loan/Interest β
R β Representation Letter
S β Subsequent events review β perform certain procedures after balance sheet dateFebruary 15, 2017 at 9:55 pm #1478947Spartans92
Participant@moose, if I remember correctly Kiting occurs when you have 2 banks. For instance, I have bank accounting with Comerica and one with Chase. I write a check to Chase. Technically that check is in transit and should reduce my balance from Comerica after I cut the check. But instead of reducing my balance my check amount shows up in both banks. That is when Kiting happens, essentially overstating the cash balance. An audit procedure to detect this fraud is to look at cutoff statements. Hope that helps.
BEC- PASS
February 15, 2017 at 9:56 pm #1478949Spartans92
ParticipantIm currently working on Chapter 6.. Don't underestimate this. Not saying it is hard but its heavily covered. I scored in the 80's on Becker's HW but on my breakdown I got weaker both attempt so Idk what's wrong with me. Ch 6 could be done in 1 full day. 5 is also possible. 4 would be a killer to fit 1 day.. I would try to really understand the transaction cycles and all the assertions.
BEC- PASS
February 16, 2017 at 9:01 am #1479159mooseonloose
ParticipantThanks Spartan, I get it. I still don't know how it will work since it usually it takes couple of days for the check to clear.
Transaction cycles are confusing. I worked in the AP, AR, purchasing, and receiving department and I find some of the example totally opposite of what I deal with. For assertions, I have memorize Five carrot cars and the cover u mnemonic, but still working on how its applied.
February 16, 2017 at 9:39 am #1479168zestes92
ParticipantThe check will take a couple of days to clear the bank but on the books of the company writing the check the transfer should be near simultaneous I believe. Kiting is an overstatement of cash on the books of a company not necessarily within the bank statement.
February 16, 2017 at 1:41 pm #1479373evs212
ParticipantHi,
The Ninjas sent us some free <3 Valentines Day MCQ <3 and I could use some help figuring out the below question:
In making risk assessments, the auditor should identify and document the controls that are likely to prevent or detect and correct material misstatements in specific relevant assertions. Controls can either be directly or indirectly related to an assertion in which of the following ways?
A. The more indirect the relationship, the less effective that control may be.
B. The more indirect the relationship, the more effective that control may be.
C. The more direct the relationship, the higher the overall control risk may be.
D. The more direct the relationship, the lower the overall control risk may beThe answer is A:
In making risk assessments, the auditor should identify and document the controls that are likely to prevent or detect and correct material misstatements in specific relevant assertions. Controls can either be directly or indirectly related to an assertion. The more indirect the relationship, the less effective that control may be in preventing or detecting and correcting misstatements in that assertion.
Why is C wrong?
February 16, 2017 at 5:41 pm #1479549mooseonloose
Participant@Zestes thanks for you input, it all makes sense now.
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