[jeff]

Welcome to the Q3 2016 CPA Exam Study Group for AUD.

Some BLITZ videos to help your exams: https://www.another71.com/ninja-blitz

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

[sancasuki]

Does anyone know if there is any difference between negative assurance and limited assurance? I know that reviews give limited assurance. I forget what gives negative assurance.

[Anonymous]

@zyx11 – they have it worded in a confusing way – what they are really asking is “what is the effect on detection risk and substantive procedures if the risk of material misstatement increases”

If RMM goes up, then DR has to go down to offset it and keep AR at an acceptable level. Since DR is going down, substantive procedures go up.

[Anonymous]

@circadian malfunction – I'm not sure, but I don't think you can really compare negative and limited assurance. negative assurance v positive assurance is a change in how you phrase your opinion:

negative – “i'm not aware of any issues”
positive – “there are no issues”

that's not the actually wording used, but it's the idea of what is being said.

limited v reasonable assurance is more of a reflection of how much work/procedures went into coming to a conclusion.

Reviews give both limited and negative assurance. We did limited work to come to this conclusion and we are not aware of any issues.

edit…so I tried to find the place in the book where this is addressed to confirm, but of course I can't. Everything is referring to limited assurance, but some place in this stupid book they discussed negative assurance.

[sancasuki]

Thanks allaboard. I guess limited and negative assurance is the same thing.

[Zyx]

allaboard, thank you! I got it now. Wording always trip me over!

REG: 77 x2
BEC: 81 x3
FAR: 68 retake 10/1
AUD: 8/27

[patelhj1]

@zyx11 thanks, needed someone else to jump in and help explain. Look for condition that existed before balance sheet date.

I'm taking my test this friday, and i'm reviewing transaction cycles. So much information….. and I feel like I don't any any of it

BEC 78 08/2015
REG 71 11/2015, RETAKE 83 01/2016
FAR 75! 5/2016
AUD ? 8/2016

Becker with Nonstop NINJA MCQ
Google most difficult professional exam

[patelhj1]

@zyx11 Detection risk is inversely related to assurance provided by substantive test, and directly related to inherent and control risk.

BEC 78 08/2015
REG 71 11/2015, RETAKE 83 01/2016
FAR 75! 5/2016
AUD ? 8/2016

Becker with Nonstop NINJA MCQ
Google most difficult professional exam

[Larry]

Can you guys help me understand this? I missed this question because I don't think I am understanding it correctly by what its asking.

Holding other planning considerations equal, a decrease in the amount of misstatements in a class of transactions that an auditor could tolerate most likely would cause the auditor to:

Incorrect A. apply the planned substantive tests prior to the balance sheet date.

B. perform the planned auditing procedures closer to the balance sheet date.

C. increase the assessed level of control risk for relevant financial statement assertions.

Correct D. decrease the extent of auditing procedures to be applied to the class of transactions.

This is the explanation provided by Ninja

When an auditor lowers the amount of tolerable misstatement, a more careful audit is planned to detect small misstatements. Of the items listed above, only “perform the planned auditing procedures closer to the balance sheet date” results in a more careful audit. The other choices result in a less careful audit.

Can anyone give a different explanation. I am not seeing the picture.

REG - 82
FAR - 78
BEC - 76
AUD - 8/27/16

[Lou]

The answer should be B. decreasing the extent of auditing procedures would only be if you could tolerate more misstatements (meaning higher level of allowable detection risk)

Doing procedures closer to balance sheet date means you have less allowable detection risk and are done for riskier procedures

FAR- taken 8/11/16....now the wait begins
AUD- scheduled 9/8/16
BEC- scheduled 10/9/16
REG-scheduled 12/10/16

Live a few years like most people won't, to live the rest of your life like most people can't.

[Lou]

does anyone know why Promotions, compensation, or other rewards inconsistent with expectations are a fraud risk-misappropriation of assets, not fraudulent FS reporting.

My original thinking was going to be that if they are inconsistent with expectations, they have a greater likelihood of modifying the FS to meet their compensation. But the book said it was missapprpropiation of assets so I am not sure why? Anyone have a good explanation?

FAR- taken 8/11/16....now the wait begins
AUD- scheduled 9/8/16
BEC- scheduled 10/9/16
REG-scheduled 12/10/16

Live a few years like most people won't, to live the rest of your life like most people can't.

[HoosierCPA]

@lblacker I would say it's a payroll issue. If you are not expecting any promotions, compensation, etc and suddenly one appears in the payroll system then there is a possibility that payroll somehow fraudulently input this into the system and stole cash. Stealing cash = misappropriation of assets.

FAR - 78
REG - 72,74,71...please just go away REG nobody likes you!
BEC - 82
AUD - Aug 16

[HoosierCPA]

Little help —

Which of the following statements is correct concerning sampling in tests of controls?

Answer: Deviations from specific control activities at a given rate ordinarily result in misstatements at a lower rate

Please explain! My brain wants to tell me larger deviations = higher rate of misstatements!

FAR - 78
REG - 72,74,71...please just go away REG nobody likes you!
BEC - 82
AUD - Aug 16

[Zyx]

patelhj1; thanks!
I do not like transaction cycles at all and Im still struggling!

REG: 77 x2
BEC: 81 x3
FAR: 68 retake 10/1
AUD: 8/27

[Anonymous]

@dtatham10 – is that a SIM or MCQ? sometimes the answer is more based on the other choices being wrong and this one being the best one. but based on what you have there, my thought process is we're talking I/C and you expect to find more deviations in I/C than actual misstatements because not all I/C problems result in misstatements.

For example: I'm doing a test of control on a document having a signature each time. I find 10% of the time the document does not have the proper signature. However, this does not result in a 10% or larger misstatement because it's not the only control in the process and it really has nothing to do with what numbers are actually recorded. (i guess i shouldn't say NOTHING, since it's probably a step to ensure the right number is getting to where it needs to be…but hopefully this makes sense.)

I think if they were asking about sampling in test of details, then your logic would work.

[Anonymous]

@papogator24 that's weird, even the explanation says the answer should be B. Is that ninja?

[Author]

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