[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/

[Anonymous]

@cpasucks

Any suggestions on how to learn using the AL? Do you practice that through SIMS on the test banks or is there another way?

[zvs1]

I have been studying using Roger and just started with Ninja today. The SIMS from Roger seem way longer and more difficult. Is this more like what is on the exam or have I just not seen the difficult and lengthy SIMS yet.

[Anonymous]

@CPAbefore40…I am not too sure honestly. Some things you can probably look up word for word but I am pretty sure I use the AL not as much as most people do. Plus time is a factor and using the AL too much can hurt you there.

[rachnabangia]

Can somebody explain the difference between Test of Internal Control And Testing operating effectiveness of Internal Control? Some reading material states that the auditor is not required to test the operating effectiveness of IC while other chapters it discuss how to. I am really confused!! Please help!

[okcpa2015]

@rachanbangia, to me they are one in the same.

But, I think the two concepts we need to understand is the difference between gaining an understanding of internal controls and testing controls (their operating effectiveness) to reduce control risk and as a result allowing more detection risk and less substantive procedures.

Auditing standards require that the accountant gain an understanding of Internal Controls. If they determine that the controls should not be relied upon or they would inefficient to test then they would document the assessment of control risk at a maximum level and rely completely on substantive procedures. (Also, remember per AICPA standards the auditor is not required to test controls or provide any opinion on them).

Also, consider PCAOB standards for issuers that require an integrated audit that requires Test of Controls and an opinion on their operating effectiveness.

FAR - 91
REG - 88
AUD - 98
BEC - 88

[rachnabangia]

Thank you so much @okcpa2015 for your response. It was very helpful. 🙂

[Anonymous]

Maybe I'm missing something obvious, but does anyone understand why C isn't the right answer? “A” is correct (which is what I picked), but can't “C” be right as well since you have to have an engagement letter for an audit & a review?

Which of the following is required of an accountant in reviewing a company's financial statements under the Statements on Standards for Accounting and Review Services (SSARS)?

A. Obtain knowledge of the client's industry

B. Send bank confirmations

C. Obtain a signed engagement letter from the client

D. Observe client's physical inventory

[Anonymous]

To further my point, the correct answer for this is D.

Under which of the following circumstances would an accountant most likely conclude that it is necessary to withdraw from an engagement to review a nonissuer's financial statements?

A. The entity does not have reasonable justification for making a change in accounting principle.

B. The entity prepares its financial statements on the income tax basis of accounting.

C. The entity requests the accountant to report only on the balance sheet, and not on the other statements.

D. The entity declines to provide the accountant with a signed representation letter.

Explanation given:

A management representation letter is required for both a review and an audit. Without the representation letter, the review is not complete, and the CPA does not have an adequate basis for issuing the review report. The CPA should withdraw from the engagement.

The other answer choices would not necessitate the CPA withdrawing from the engagement, but they may require a modification of the review report.

I AM SO CONFUSED.

[okcpa2015]

@Cpatitle, I have no clue on the first one. I would have gone with A as well because I know that's required for sure. Did you get any explanation?

FAR - 91
REG - 88
AUD - 98
BEC - 88

[Anonymous]

Explanation given for the first question:

When retained to review financial statements, the accountant needs to acquire necessary knowledge of the client's industry, accounting principles and practices. This understanding is used to help determine the nature, timing, and extent of review procedures to be performed. While it is recommended, an accountant is not required to obtain a signed engagement letter. Bank confirmations and observation of physical inventory are outside the scope of a review engagement.

It seems like the explanations are contradicting themselves. Oy vey.

[okcpa2015]

Yeah, I just looked at the standards and a engagement letter is required as well as an understanding of the client, so I would go with both… but if I see the first question on the exam I guess I'll go with A.

FAR - 91
REG - 88
AUD - 98
BEC - 88

[okcpa2015]

Just took my second practice exam. First was on NINJA MCQ, 94%. Second was on CPAExcel 96%.

I moved my exam from the 26th to next Wednesday the 20th. Didn't want to study over Memorial Day Weekend.

Sure hope I'm doing the right thing here…

FAR - 91
REG - 88
AUD - 98
BEC - 88

[ewalk728]

Question on the research question: On the sims with Ninja they already have the AU-C in place for you. Is this how it is on the test or will you have to figure out which of the groups it's actually supposed to be in (AU, PCAOB, AT, AR…)?

[Anonymous]

@okc I would move it up too if you're feeling confident. No need to ruin your weekend if you can get it over with sooner. Good luck!

[Anonymous]

@ewalk not sure how the audit exam will be, but in the other sections, you had to know which literature to look in. I would assume audit is the same.

[Author]

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