AUD Study Group Q1 2017 - Page 4

  • Creator
    Topic
  • #1396514
    jeff
    Keymaster

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

Viewing 15 replies - 46 through 60 (of 569 total)
  • Author
    Replies
  • #1402350
    JT3113
    Participant

    I am having difficulty with the ratio sections. Does anyone know of any good sources to really help me understand each ratio. I want to know how each ratio is affected based on different circumstances. Thanks!

    #1402551
    Nodira
    Participant

    I am taking Audit for the 4th time on 01/16/2017. I have had worst luck with Audit and this is my LAST window before two of my exams expire

    If I don't get it this time, I lose everything. It will be busy season(TAX) and FAR will expires too. #PrayingtotheCPAGods

    AUD – 55/60/63 currently using Becker, Roger, Gleim and now looking into Ninja
    BEC – 76 expired 01/31/17 – used Becker
    FAR- 71/77 – Used Becker
    REG- 89 expires 01/31/17 – Used Becker

    #1402800
    rc5190
    Participant

    Does the Ninja AUD study material or MCQ include the document review question types that are tested in the newly formatted CPA exams? I am studying with older Becker materials, and those do not include any document review questions. Thanks!

    #1402856
    Holly
    Participant

    @rc5190 I don't think so. I'd like to know this as well because I plan on starting to study for FAR 1/10.

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

    #1403160
    ineeda75please
    Participant

    Help PLEASE! Ok I am working on inherent risk and control risk. I am not sure if you have a increase/decrease in one of the risk it will affect the other. I have just seen a simulation that had control risk and inherent risk and a situation and you had to say if it increased, decreased, or didn't effect this risk. Is it a situation by situation determination or can it safely be said if it affect one it will not affect the other?
    Thanks in advance!
    This one got me on my last attempt and I am not letting it get me again.

    BEC - 71, 76 PASSED! Becker
    FAR - 70, 08/2016 Becker and Ninja Notes (2nd)
    REG - 7/2/2016 Becker and Ninja Notes
    AUD - 7/27/2016 Becker and Ninja Notes

    #1403348
    Anonymous
    Inactive

    Audit Risk = Risk of Material Misstatement * Detection Risk

    Audit Risk = Inherent Risk * Control Risk * Detection Risk

    The overall purpose of an audit is to reduce audit risk to a low level, so you can look at it from a numbers perspective too. So if inherent risk is a high number or it is increasing, control risk has to be lower, so the overall probability is lower. Otherwise by just increasing inherent risk, the entire audit risk increases which defeats the purpose of an audit.

    If you remember from math class 1,000,000 * .001 = a small number.

    Hope that makes a little sense to you. Cheers!

    #1403355
    ineeda75please
    Participant

    Makes sense @cessnapilot30! Thank you!

    BEC - 71, 76 PASSED! Becker
    FAR - 70, 08/2016 Becker and Ninja Notes (2nd)
    REG - 7/2/2016 Becker and Ninja Notes
    AUD - 7/27/2016 Becker and Ninja Notes

    #1403367
    Forem004
    Participant

    What exactly do you mean by increasing inherent risk since thaTs out of our control?

    #1403373
    Anonymous
    Inactive

    @Forem004

    I was just approaching it from a numbers perspective..the formula is too conceptual.

    So if we are assuming our judgement of inherent risk increases( crappy internal control) then to maintain the same numerical value of audit risk, then control risk has to decrease

    Example

    AR = IR*CR*DR
    (.006) = .1*.3* .2 (numbers assumed)

    if in our judgement we think inherent risk is higher (now .3 instead of .1,then to maintain the same .006 for audit risk then

    .006 = .3*.1*.2 so now control risk has to decrease if we increase judgement for inherent risk.

    Sorry for the long winded post, but does it make sense?

    P.S. I am so sick of studying for Audit and I just started… I would rather take FAR again

    #1403381
    Forem004
    Participant

    Yes. I thought you were saying as “we” increase it. I loved studying this for the first bit. But then I had a Terrible exam and I'm sick of studying too!

    #1403423
    thebigguy1992
    Participant

    does anyone know why “auditors first cause on Balance Sheet accounts, then associated Income Statement items”?

    I remember from the ninja MCQ that there were questions saying that income statement items are more predictable, so its better to use those items first because of that reason. why should auditors first focus on balance sheet accounts?

    #1403427
    Rhunter
    Participant

    Inherent Risk and Control Risk are independent in the way that you're asking. An increase in IR will not increase CR, nor vice versa. IR x CR is actually the Risk of Material Misstatement (RMM). Now and increase in IR or CR will increase both RMM and Audit Risk (AR).

    Inherent risk is how likely a relevant assertion is to be materially misstated in the absence of internal controls.

    Control risk is the risk that the Control Activities won't prevent or detect those misstatements.

    Put another way, IR is the likelihood that a misstatement will occur, while CR is the likelihood that Internal Controls won't prevent or detect the misstatement when it does occur.

    An increase in Inherent Risk would not affect Control Risk, but it is part of the consideration in determining the N,T,E of the audit procedures to obtain evidence that controls are working properly.

    Remember, the auditor can only change Detection Risk in response to IR and CR. This is done through Substantive Procedures. Higher IR x CR (RMM), the more reliable, relevant evidence you need to reduce your Detection Risk. One trick to remember this is to rearrange the audit risk formula to isolate DR, like this:

    AR/IRxCR = DR

    This also helps to demonstrate the inverse relationship DR has to both IR and CR.

    IR and CR are given, they exist as part of the client's business. AR is a judgment call by the auditing firm. It's how much risk they're willing to take that they will sign off on materially misstated financial statements. If the nature and environment of the client's business is risky, and their Internal Control is weak, the only thing the auditor can do in response is modify the Nature, Timing, and Extent of their audit procedures to reduce both DR and AR.

    Hope this helps!

    #1403652
    Holly
    Participant

    I'm trying to get to the Review Phase of NINJA MCQ. There are so many questions!!

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

    #1403853

    @ HRSexton – you can do it. I did it 5 questions at a time….little by little and then *poof* you're done!

    What are you trending at now?

    REG: 5/30/15 - 77
    FAR: TBD
    BEC: 8/31/15 - 70, 73, 1/8/16 - 77
    AUD: 6/1/16- 73, 8/2/16

    #1403912
    Holly
    Participant

    @didato I'm trending 98% with 82% of all questions answered correctly. I am doing the 5 question thing, too! I do the regular MCQ, then go down the list of ‘questions selected from' option under the custom button. What happens once you reach Review?

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

Viewing 15 replies - 46 through 60 (of 569 total)
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