[jeff]

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

[lauras]

I am working on AUD right now. Does anyone know where I can find a place that goes over ratio analysis in regards to understatement or overstatement of financial statement items? I was tested on this twice and still couldn't figure it out. Any help on this would be greatly appreciated. Also if anyone knows another review course, besides WileyCPA, great for their tasked based simulations, let me know!

[NeedsA75]

Can you be a little more specific? Becker has an appendix that list out some ratios but nothing about actually applying them. I've seen some MC in Ninja but it is few and far between…I'm freaking the F out about my exam next week

[lauras]

I apologize for it is not easy for me to explain. Lets says someone gives you an income statement and balance sheet for two years (year 1 and year 2). Then you are given formulas for all the ratios so all you have to do is calculate the ratios out and determine if certain elements on the financial statements maybe overstated or understated. We are not looking into how much an element is overstated or understated, just the concept.
For example, after calculating your inventory turnover ratio for year 1 and year 2, you realize it went up. This is an indication that their maybe embezzlement in the inventory account.
I found a great excerpt on this through Google that I think will point me in the direction on how to approach this issue.
Link: https://www.acfe.com/uploadedFiles/Shared_Content/Products/Self-Study_CPE/Financial-Statement-Fraud-2009-Chapter-Excerpt.pdf

[lauras]

I wouldn't freak out, NeedsA75. At least you are not researching darn ratios. Good luck!

[mooseonloose]

AR Ratio= sales/average rec

The company sales went up, how does that effect the ratio? will the Ratio go up or down?
A: Ratio will increase because sales went up. if the numerator increases, so will the ratio, if numerator decreases, so will the ratio
If the denominator decrease, the ratio will increase, if the denominator increase, the ratio will decrease.

lets say sales are 20 and average rec are 5

AR Ratio: 20/5= AR ratio will be 4

lets say sales go up to 40
40/5= AR ratio is now 8, which means it increased

lets say sales went down to 10

10/5= AR ratio is now 2 (decreased)

[Operation_CPA]

Anyone taking Becker final exams? (Just MCQ). I took one today and actually feel like it went pretty well. I didn't score THAT high, but the questions I got wrong can be easily fixed before my exam. In the meantime, more review!

[Spartans92]

When is your exam operation? and how long did it take u to do the MCQ? I honestly dont think time would be an issue for AUD

BEC- PASS

[Spartans92]

Which of the following procedures would be most appropriate for testing the completeness assertion as it applies to inventory?

A.
Scanning perpetual inventory, production, and purchasing records

B.
Examining paid vendor invoices

Incorrect C.
Tracing inventory items from the tag listing back to the physical inventory quantities

D.
Performing cutoff procedures for shipping and receiving

How is the answer NOT C!??!?!
We want to test completeness, so wouldn't going from the tag to the inventory tell me whether or not I properly recorded the items? Or I guess it proves existence more? Whether or not the items I have on the tag list exist since its physical quantities.. So confusing.

BEC- PASS

[Starved_Wolf]

hey guys for those of you working on the sims, i am having a hard time entering decimals.
its so weird. the answer is 13.77% but when i go and enter it, i get 1377%!!

Also i tried =1377 x .0001 = to get 13.77% but it still wont take my answer .. even though the answer is 13.77% its so frustrating.

[mooseonloose]

Starved_wolf try .1377 because that in decimals and it will convert it into percentage

[mooseonloose]

Spartan, the answer is D?

It cant be C, that's existence

Accounting record to source is existence
source to accounting is completeness.

[Operation_CPA]

@spartans92

My exam is actually tomorrow – I've been cramming since busy season concluded and I feel pretty good about the material. I thought that the last time though (ha). I definitely went through the MCQ's on the Becker final way too quickly. I think I need to slow down and make sure I read more carefully. You're exactly right – time is not an issue on this exam, I need to keep telling myself that. Best of luck to all those sitting this weekend!

[Operation_CPA]

Guys quick question – is failure to present a financial statement (such as a statement of cash flows) a scope limitation or inadequate disclosure?? Feel like I've seen conflicting questions on this. From my understanding it is considered inadequate disclosure and results in a qualified opinion. Just want to clarify.

[Spartans92]

Yes Moose, answer is D. @operation, failure to present a required financial is a departure from GAAP which requires qualified or adverse based on pervasiveness

BEC- PASS

[distracted]

It is inadequate disclosure therefore a departure from GAAP not scope limitation.

Inadequate disclosure. Information essential for a fair presentation in conformity with generally accepted accounting principles should be set forth in the financial statements (which include the related notes). If the financial statements, including accompanying notes, fail to disclose information that is required by generally accepted accounting principles, the auditor should express a qualified or adverse opinion because of the departure from those principles

[Author]

Replies