[jeff]

Free Study Planner, Notes, Audio, Flashcards: https://www.another71.com/cpa-exam-study-plan/

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

[LilEngineThatCan]

wow totally drawing a blank..

[Anonymous]

@Future Ninja I think the HR department should approve the salary.

Who calculates the total hours worked? Why D is wrong?

[Anonymous]

An entity prepares its financial statements on its income tax basis. A description of how that basis differs from GAAP should be included in the

A. Introductory paragraph of the auditor’s report.

B. Notes to the financial statements.

C. Management representation letter.

D. Auditor’s engagement letter.

[LilEngineThatCan]

@cpaby2015 thats what i was thinking also

[LilEngineThatCan]

B

[Future Ninja]

@cpaby2015 – Who calculates the total hours worked? Why D is wrong? I think the one who calculates the hours worked is the team supervisor or the one who oversees the employee and can vouch that the hours paid were really the hours worked for.

AUD - 79 (expired) retaking July 28,2016
FAR - 76 expiring July 31, 2016
BEC - 85
REG - 74,74,74,74,59,70,

[LilEngineThatCan]

Since the question is asking about fraud, you wouldnt want an employee to have access or get paid

[Future Ninja]

@cpaby2015 – is it B?

An entity prepares its financial statements on its income tax basis. A description of how that basis differs from GAAP should be included in the

A. Introductory paragraph of the auditor’s report.

B. Notes to the financial statements.

C. Management representation letter.

D. Auditor’s engagement letter.

AUD - 79 (expired) retaking July 28,2016
FAR - 76 expiring July 31, 2016
BEC - 85
REG - 74,74,74,74,59,70,

[Future Ninja]

I got excited and nervous at the same when I know the concepts behind but then my answer was wrong. maybe because i'm conscious and overconfident.. mixed feeling..

AUD - 79 (expired) retaking July 28,2016
FAR - 76 expiring July 31, 2016
BEC - 85
REG - 74,74,74,74,59,70,

[LilEngineThatCan]

Which of the following auditing procedures most likely would assist an auditor in identifying conditions and events that may indicate substantial doubt about an entity's ability to continue as a going concern?

A. Inspecting title documents to verify whether any assets are pledged as collateral

B. Confirming with third parties the details of arrangements to maintain financial support

C. Reconciling the cash balance per books with the cutoff bank statement and the bank confirmation

D. Comparing the entity's depreciation and asset capitalization policies to other entities in the industry

[Anonymous]

Answer is B.

@Future Ninja Thanks for clarifying. That's what I thought too. If I don't pay attention to the wordings I might possible pick D because of the word supervisor but the word “payroll” made it incorrect.

[Anonymous]

@LilEngine Is it B? A is good too because of the words “pledge” and “collateral” but I think B is better.

[LilEngineThatCan]

@CPAby2015 Yep! B is correct!

Explanation: Arrangements to maintain financial support of an entity by third parties may indicate substantial doubt about an entity's ability to continue as a going concern. The auditor should confirm the details of the arrangements. Evidence of pledging assets as collateral is found in a review of financing statements filed in the Secretary of State's office. Reconciling cash using a cutoff bank statement and the bank confirmation provides auditor control over the year-end reconciliation, not substantial doubt about an entity's ability to continue as a going concern.

[LilEngineThatCan]

In accordance with the AICPA Audit Guide: Special Considerations in Auditing Financial Instruments. a primary consideration in determining the appropriate classification of investments depends on:

A. the dollar amount of the investments.

B. management's intent in purchasing and holding the investments.

C. the ability of management to negotiate favorable sale terms in relationship to the entity's needs in the area of cash flow.

D. the structure of the entity's investment portfolio and whether the securities are purchased “rights-on” or “ex-rights.”

[Anonymous]

I'm doing Ninja MCQ simulations and lets just say I have yet to score over 70 on any of them and I have attempted at least 8 or 9. Heck, I just received a 30% where there were only two options LOL.

[Author]

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