[jeff]

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

[sulaiman]

How important to know what flowchart symbols means? And to understand how it works?, like would it come in sim question?

[thebigguy1992]

^^no it wouldn't come at all. all you need to know i think is that if the client doesn't have a flowchart for internal control, then you would need to document your understanding of internal control somewhere in the workpapers.

pretty sure the flowchart symbols are only for BEC

[Forem004]

@thebigguy, I was looking back over your question and I see what you're saying now. Under GAAS, written communication is only required when significant deficiencies are noted. Sorry, I tend to skim this forum in between review questions!

[Holly]

@thebiggguy1992 I chose it because it's the only analytical procedure I saw – the whole ‘plausible relationships' part. Analytical procedures can be used with either financial or nonfinancial data.

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

[Forem004]

Has anyone found any information about derivatives that is easier to understand than the guidance?

[Forem004]

I have been studying 90% of my time for over a year. I admit I was not as focused when I began, or maybe I would not be in this boat. But I am SICK of this! I am horribly disappointed with failing audit the first time, because I specifically saved this for last because I thought it was going to be the best. I can't imagine how I am going to feel if I fail again on the 16th. 🙁 Please let me get “my” test!

[Forem004]

Has anyone in practice had experience with prospective financials? I understand better when I look at the actual documents, especially if I'm familiar with the client. I've never prepared forecasts or projections.

[Forem004]

I usually only post the questions I repeatedly get wrong, but in the 2016 forum, people kept asking questions on this subject: ( I added the ninja number because I may post more before anyone answers)

62. As a condition of obtaining a loan from First National Bank, Maxim Co. is required to submit an audited balance sheet but not the related statements of income, retained earnings, or cash flows. Maxim would like to engage a CPA to audit only its balance sheet. Under these circumstances, the CPA:

A.
may not audit only Maxim's balance sheet if the amount of the loan is material to the financial statements taken as a whole.

B.
may not audit only Maxim's balance sheet if Maxim is a nonissuer.

C.
may audit only Maxim's balance sheet if the CPA disclaims an opinion on the other financial statements.

D.
may audit only Maxim's balance sheet if access to the information underlying the basic financial statements is not limited.

[Holly]

d

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

[thebigguy1992]

the rule is that you are allowed to audit a single financial statement as long as your access to all of the financial statements is not limited. if you disclaim an opinion on the whole financial statements, that means you cant have an opinion on a single financial statement because that would be considered a piecemeal opinion. HOWEVER, if you do disclaim an opinion on the whole financial statements, and say you want to present an opinion on a single financial statement, and that report is presented separately from the combined financial statements, that would not be considered a piece meal opinion since they are reported separately and therefore would be allowed.

i have a question. analytical procedures are required in the planning and review stage of an audit. when are they required in a review? just planning?

[thebigguy1992]

also, why is a compilation an attest engagement when you dont have to be independent to do one? is it because if you aren't independent you have to state the fact?

[Forem004]

correct, HRSexton

@thebigguy, thanks for the details. For your question, analytics should be designed in a review to detect unusual rships that could lead to material misstatements. The procedures include:
1 – comparing current financials with prior financials or current ratios with prior ratios
2 – comparing actual financials with budgets or forecasts when available
3 – comparing financial & relevant nonfinancial info
4 – comparing rships among elements in the financials within the period & with the corresponding prior rships

So to put it the way you worded the audit, it would be during planning and throughout the actual performance of the review. Due to the smaller service of a review compared to an audit, I don't think they are required during the review stage of the reviewed financials. Does that make sense and answer your question?

When I prepare a review, I perform analytics throughout, which would be the same as at during the review stage. I just don't wait for completed financials to realize there's a problem. The analytics provide a list of questions for us to pose to the client unless we can come up with the answer on our own.

[Forem004]

@thebigguy, I was unsure on that one but I found this excerpt in an article by the AICPA.

“Basically, the CAA says compilations should not be classified as an attest service,” said Young, who practiced public accounting for nine years before becoming a professor. In fact, Young said that compilation services do not fit the conceptual definition of attestation services provided by the Auditing Standards Board. “When I teach auditing, I point out that the compilation report states that no form of assurance is expressed on compiled financial statements,” he said. “The framers of the UAA and many states, however, believe there exists an ‘aura of assurance' conveyed by the compilation language (particularly the indication that the compilation was prepared in accordance with SSARS) and the implicit representation of skill necessary to perform this service. This implicit assurance is the reason many states consider compilations an attestation service.”

– See more at: https://www.journalofaccountancy.com/issues/1999/may/special.html#sthash.T2HTFqfZ.dpuf

[Forem004]

I don't know why I keep getting this wrong.

847: The procedure, “The accountant should perform specific procedures to evaluate whether there is substantial doubt about the entity's ability to continue as a going concern,” is:

A.
required for a review only.

B.
required for both a compilation and review.

C.
not required for a review but required for a compilation.

D.
not required for either a compilation or a review.

[thebigguy1992]

^^that is just a fact. you dont have to consider ability to continue as a going concern with a compilation or a review. for an audit you do.

[Author]

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