[jeff]

Welcome to the Q2 2015 CPA Exam Study Group for AUD.

World Premier: “Unmodified” (Audit Reports Rap Video) 🙂

Posted by Another71 on Thursday, November 13, 2014

Free NINJA: https://www.another71.com/cpa-exam-study-plan/

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

[ladybossxo]

@Jimmy: You're right and your explanation too! 🙂

CPA Exams Done.

[ladybossxo]

@Trish: Is it C?

CPA Exams Done.

[trish_1234]

happy friday!!! I dont understand the answer at all….

Answer (C) is correct.

The test data approach uses the computer to test the processing logic and controls within the system and the records produced. The auditor prepares a set of dummy transactions specifically designed to test the control activities that management claims to have incorporated into the processing programs. The auditor can expect the controls to be applied to the transactions in the prescribed manner. Thus, the auditor is testing the effectiveness of the controls over the payroll data.

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[ladybossxo]

@Trish: Happy Friday!

The question is about whether the payroll data is altered during processing, by using test data, the auditor can enter invalid numbers to the payroll data to see if the controls will detect it. Test data falls in the category of CAAT (Computer Assisted Audit Techniques) – emphasis is on the input and processing stages of transaction processing

CPA Exams Done.

[ladybossxo]

Which of the following statements is correct regarding a review engagement of a nonpublic company's financial statements performed in accordance with the Statements on Standards for Accounting and Review Services (SSARS)?

A.

An accountant must establish an understanding with the client in an engagement letter.

B.

An accountant must obtain an understanding of the client's internal control when performing a review.

C.

A review provides an accountant with a basis for expressing limited assurance on the financial statements.

D.

A review report contains an accountant's opinion of the financial statements taken as a whole.

CPA Exams Done.

[NoraU]

ladybossxo

C?

BEC 05/12/14 77
REG 08/25/14 82
FAR 11/25/14 80
AUD 02/25/15 72, 05/15/15 98! DONE!!!!!!!!!!!!!!!!!!!!!!

[Anonymous]

I think it's C too

[oceansister]

c?

[ladybossxo]

@Nora, CPA and Ocean: C is correct!

Explanation:

A review is substantially less in scope than an audit. It involves applying inquiry and analytical procedures to obtain a basis for providing limited assurance that there are no material modifications that should be made to the financial statements for them to be in conformity with generally accepted accounting principles.

Unlike an audit, a review does not involve obtaining an understanding of internal control, assessing control risk, assessing fraud risks, testing of accounting records, obtaining corroborating evidence (such as confirmations), or expressing an opinion on the financial statements taken as a whole.

The accountant should establish an understanding with the client, preferably in writing, prior to a review. However, the standards do not mandate that an engagement letter be used for this purpose.

CPA Exams Done.

[trish_1234]

@ lady,

I understand why C is correct however, y is A not correct?? an engagement letter is needed right?

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[NoraU]

I am still trying to figure out sampling. My book (Wiley) says that in variable sampling both increases of risk of incorrect acceptance and risk of incorrect rejection decrease sample size. I understand the risk of incorrect acceptance.

Why increase in risk of incorrect rejection decreases the sample size? If somebody can explain it to me I will appreciate.

BEC 05/12/14 77
REG 08/25/14 82
FAR 11/25/14 80
AUD 02/25/15 72, 05/15/15 98! DONE!!!!!!!!!!!!!!!!!!!!!!

[Anonymous]

Sorry everyone, I thought I had already posted the answer already!!

The answer was C – you guys are good! And your explanations are right…it has to do with credit sales being collectible:

“Valuation asserts that the credit sales have been disclosed at appropriate amounts. In other words, the entity has properly valued the credit sale for its full amount, and the customer is creditworthy and is likely to pay.”

To me, valuation means that something has been valued at the proper amount…not that it is actually collectible. Need to change my thinking on that one!! 🙁

[Anonymous]

How long do you guys plan/believe it will take to prepare for audit? I took about a month off after passing Reg due to taking a break (longer than I planned) and other matters I had to take care of. After one week, I just finished going through A2 for the first time and I am getting used to the “language” of audit. I am hoping to take the exam in a month (while going to school full time and working part time). I really only have time to study on the weekends and maybe 2-3 hours max on some weekdays. Taking the exam early may wouldnt be the end of the world also, but I do have finals than so it wouldnt be smart for me to mix those up.

[trish_1234]

@ nora: Hope this helps!

By increasing the risk of incorrect acceptance (which is the compliment of desired level of assurance) the auditor is reducing the desired level of assurance….

Ilustrate:

The auditor increases the risk of incorrect acceptance from 5% to 10% results in a decrease of desired level of assurance from 95% to 90% which means the auditor can test less accounts bc the sample has to have less precision when results projected to population..

The auditor is willing to be less precise

?

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[trish_1234]

@CPAsucks, looking at ur scores I think you will do fine!!! I read in this forum that auditing has the lowest passing rate. Just do all you can and sit for it, worst case you will have to retake it no biggie 🙂

edited: CPA is pass or fail …GPA matters A B C

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[Author]

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