[jeff]

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

Free CPA Exam Survival Guide: https://www.another71.com/cpa-exam-survival-guide/

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

[Future Ninja]

off to work

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

[Mary 2496]

Same here. Have a great work day, Future Ninja.

[Iggy1985]

10 am rise and grind.. haha, I'm a late riser right now.. studying all day today, then preparing for two interviews I have scheduled tomorrow, including a big4 phone interview O.o

FAR - 89 (8/19/14) Wiley TB, Wiley Book, Books from School, Ninja Audio/Notes
AUD - 92 (10/14/14) Wiley TB, Wiley Book, Ninja Audio
BEC - 82 (5/8/15) Mostly Ninja MCQ, sprinkles of Becker lectures and Ninja Audio
REG - (8/14/15)

[Chris]

I'm a tad confused on the answer to this question.

An understanding with the client most likely would:

A identify specific internal control activities that are likely to prevent fraud.

B evaluate the reasonableness of the client's accounting estimates.

C discuss fees and billings.

D inquire of the client's attorney as to whether any unrecorded claims are probable of assertion.

Anyone care to give an explanation? I'm not shocked at the answer, but I thought there was a better choice among them. I'll post later.

NH CPA
REG: 07/03/2014 - 88
AUD: 08/30/2014 - 73 - Retake 10/16/14 - 86
BEC: 05/31/2015 - 77
FAR: 08/08/2015 - 64 - Retake 11/23/15 - 77

Becker*NINJA Notes/MCQ*

Now I could let these dream killers kill my self-esteem
Or use my arrogance as the steam to power my dreams ~ Kanye West

[Iggy1985]

Is the answer C?

My explanation would be because fees and billings are included in the engagement letter, which is used to obtain an understanding with the client. The rest comes later.

FAR - 89 (8/19/14) Wiley TB, Wiley Book, Books from School, Ninja Audio/Notes
AUD - 92 (10/14/14) Wiley TB, Wiley Book, Ninja Audio
BEC - 82 (5/8/15) Mostly Ninja MCQ, sprinkles of Becker lectures and Ninja Audio
REG - (8/14/15)

[Mary 2496]

Hmm… I've been through audit (waiting for retest score) but would love to try and help. We're talking about an understanding with the client.

A would be part of the actual audit so this can't be the right answer.

B would also be part of the audit and not used in an understanding of the client.

C would have been accomplished in the engagement letter and is never part of the understanding with the client (because it's already in the engagement letter and therefore settled)

D is also part of the audit.

Something's not right. Is this a Becker question? I don't remember seeing it.

[Fk]

Hi Guys , When is Commission and Referral Fees allowed

[Anonymous]

Mary, I remember you telling someone a few days ago some tricks that help you on Audit, can you please state them again?

[Anonymous]

I would go with C as well.

[Mary 2496]

@ CPA hopeful — oh wow, I'd love to. Do you remember at all what they had to do with?

[Chris]

The answer is C. Again, I'm not shocked, but I felt B was a better answer. It is a Ninja question. The explanation as follows, doesn't mention billing and fees.

“Audit planning involves the development of an overall strategy for an audit. During this phase, the auditor would discuss the type, scope, and timing of the audit with the client. Obtaining an understanding of internal control, evaluating client accounting estimates, and making inquiries of the client's attorney would be part of the audit program, which is the result of audit planning.”

An understanding with the client most likely would:

A identify specific internal control activities that are likely to prevent fraud.

B evaluate the reasonableness of the client's accounting estimates.

C discuss fees and billings.

D inquire of the client's attorney as to whether any unrecorded claims are probable of assertion.

NH CPA
REG: 07/03/2014 - 88
AUD: 08/30/2014 - 73 - Retake 10/16/14 - 86
BEC: 05/31/2015 - 77
FAR: 08/08/2015 - 64 - Retake 11/23/15 - 77

Becker*NINJA Notes/MCQ*

Now I could let these dream killers kill my self-esteem
Or use my arrogance as the steam to power my dreams ~ Kanye West

[Anonymous]

Something like when any question has EVERY in it then its usually wrong. I really don't remember to well either LOL.

[Iggy1985]

I'm under the impression that the engagement letter IS the understanding with the client (at least the documentation of it), so anything included in the engagement letter is part of establishing an understanding with the client before performing any work. Everything else in the question is a more thorough understanding OF the client done after establishing an understanding WITH the client of the responsibilities, fees, timing, etc. At least that's how I interpreted it.

From Wiley book:

“During planning auditors establish an understanding with their client as to the nature of services to be provided and the responsibilities of each party – this is ordinarily accomplished through the use of an engagement letter.”

This is in Step 1; planning the audit.

Step 2 is Obtaining an understanding of the client and its environment, including internal control. (Answer Choice A)

Step 3 is Risk Assessment which would include evaluating reasonableness of accounting estimates (Answer Choice B)

Hope this helps.

FAR - 89 (8/19/14) Wiley TB, Wiley Book, Books from School, Ninja Audio/Notes
AUD - 92 (10/14/14) Wiley TB, Wiley Book, Ninja Audio
BEC - 82 (5/8/15) Mostly Ninja MCQ, sprinkles of Becker lectures and Ninja Audio
REG - (8/14/15)

[Mary 2496]

Ah, I remember what you're talking about. I just tend to be weary of answers that use certain words, like “only” or “always.” I am not saying that they are always wrong but that I have found them to be the incorrect choice more often than not. For example, if a question asks you the proper procedure on something with an audit and choice C states “the auditor would ONLY do this in the review stage,” I'd look to other answers. Especially in auditing, I find that answers with the word ONLY usually aren't right.

Ah ha – I found it. We were talking about writing off A/R accounts and choice D had “only” in the answer, so I was guiding the OP on watching answers with the word “only.” Here's what I said —

Just as a few tips for questions like these for auditing, as I mentioned, watch the “only” answers. That's a pretty strong word (only) and usually isn't the answer. Also, try to link things. In this case, we're discussing A/R. Would the sales rep really have anything to do with A/R or would it create a problem with conflicts due to the sales rep being involved with AR? Same with the cashier. S/he takes in the $ so we wouldn't want that person to be able to write off accounts because s/he could pocket the incoming $ and then write off the account as uncollectible.

Hope this helps!

[Iggy1985]

@Fayas, Only when independence is not required, i.e. can't accept commissions under reviews, audits, or you lose independence. But you can accept commissions if you're just doing advisory or tax services.

Also not allowed when a compilation is done and expected to be used by a third party, or when performing any examinations of prospective financial info.

If a commission is to be received, the fact must be disclosed to the client.

FAR - 89 (8/19/14) Wiley TB, Wiley Book, Books from School, Ninja Audio/Notes
AUD - 92 (10/14/14) Wiley TB, Wiley Book, Ninja Audio
BEC - 82 (5/8/15) Mostly Ninja MCQ, sprinkles of Becker lectures and Ninja Audio
REG - (8/14/15)

[Author]

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