[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

[Anonymous]

Thanks Mary!

[Mary 2496]

You betcha. 🙂

[Anonymous]

I have a few questions I'm having little trouble with.

One, if an auditor was present for only half the year and comparative FS are being presented, does the auditor only give an opinion for the six months or the entire year?

Two, do agreed-upon require engagement letters? I know attestation engagements require an engagement and management representation letter, but I do remember a question saying it is not required so it confused me.

[ruggercpa2b]

@CPAHopeful11 If an auditor is present for only six months they can give an opinion on the whole year. You can be hired at any time of the year for the audit as long as there is no scope limitation. The client would allow you access to documents you need for the whole year that you are auditing.

I am not too sure about the second part regarding agreed upon procedures.

AUD - 73, 72 retake 7/2/2016
BEC - 8/20/2016
REG - TBD
FAR - TBD

I am so ready for this nightmare to be over. Been at this way too long.

[Anonymous]

Great, but obviously the auditor wouldn't be able to give an opinion on the prior year. I go through these random scenarios all the time so forgive me if some of my questions seem off Ha.

Yeah, the second one I have yet to get down either. And I still don't understand how a compilation is considered an attest engagement even though you give no assurance and don't have to be independent.

[Iggy1985]

@cpahopeful, rugger is right, you can even be hired after the end of the year before F/S are released.

Here's what I found in the standards relating to agreed-upon procedures, it suggests the agreement can be oral or written?

AT 201

“To satisfy the requirements that the practitioner and the specified parties agree upon the procedures performed or to be performed and that the specified parties take responsibility for the sufficiency of the agreed-upon procedures for their purposes, ordinarily the practitioner should communicate directly with and obtain affirmative acknowledgment from each of the specified parties. For example, this may be accomplished by meeting with the specified parties or by distributing a draft of the anticipated report or a copy of an engagement letter to the specified parties and obtaining their agreement. If the practitioner is not able to communicate directly with all of the specified parties, the practitioner may satisfy these requirements by applying any one or more of the following or similar procedures.”

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]

@ CPAHopeful

The prior year's report would be needed for the comparison – correct.

The best answer I've come to on the attest – compilation issue – because the AICPA says so. Seriously. Yes, the compilation is an attest engagement and if you are not independent, you can still perform the compilation as long as you state in the compilation report that you are “not independent with respect to the entity.” For all attest engagements, yes, independence is required. I know, I know …

Do you take AUD soon? At least hopefully this section will be over soon for you!

[Iggy1985]

@cpahopeful11

I thought compilations were just a public accounting service and not an attest engagement 😮 because you're right, attestation is reporting on a subject matter, which you don't do in a compilation,

The definition according to SSARs is “Attest engagement. An engagement that requires independence, as defined in AICPA Professional Standards.”

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)

[LilEngineThatCan]

SO much going on! Ill catch up later though…. Wanted to post a question that came to my attention

Not Material vs. Immaterial vs. Material

A client decides not to make an auditor's proposed adjustments that collectively are not material and wants the auditor to issue the report based on the unadjusted numbers. Which of the following statements is correct regarding the financial statement presentation?

A. The financial statements are free from material misstatement, and no disclosure is required in the notes to the financial statements.

B. The financial statements do not conform with generally accepted accounting principles (GAAP).

C. The financial statements contain unadjusted misstatements that should result in a qualified opinion.

D. The financial statements are free from material misstatement, but disclosure of the proposed adjustments is required in the notes to the financial statements.

Answer is A!

The key to this question is that the misstatements are collectively not material, and therefore they do not cause the financial statements to be materially misstated. The auditor can issue a standard report with an unmodified opinion that states, “In our opinion, the financial statements…present fairly, in all material respects,” the financial position, results of operations, and cash flows of the company “in conformity with accounting principles generally accepted in the United States of America.” No disclosure would be required.

[Anonymous]

Mary, my exam is next week on the 16th.

Thanks Iggy, so if an agreement could be done orally, I guess an engagement letter is not needed?

Wow, so you could still give an opinion after the year end? But you still wouldn't give an opinion on the prior year since it was audited by someone else?

[Iggy1985]

@cpahopeful11 I did find where in the literature it states compilation is an attest engagement.. this might be one of those things we just can't understand and have to accept as fact LOL

If the prior year was already audited by someone else, you wouldn't accept the engagement to audit it again.

If it's after the close of the period, before financial statements are released, you can accept an engagement to audit those statements. Hopefully I worded that right haha

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)

[Iggy1985]

Here you go; AU 311 .07 – talk about research practice 🙂 I'm glad @tarheelgirl shared the fact that you can access the literature for free for 6 months using your cpa exam section ID!

APPOINTMENT OF AUDITOR NEAR OR AFTER THE YEAR-END DATE

.07

Although early appointment is preferable, an independent auditor may accept an engagement near or after the close of the fiscal year. In such instances, before accepting the engagement, he should ascertain whether circumstances are likely to permit an adequate audit and expression of an unqualified opinion and, if they will not, he should discuss with the client the possible necessity for a qualified opinion or disclaimer of opinion. Sometimes the audit limitations present in such circumstances can be remedied. For example, the taking of the physical inventory can be postponed or another physical inventory can be taken which the auditor can observe. (See section 331.09-.13.)

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)

[Anonymous]

Are the research questions formatted the same way as the exam on that site? If so, I will sign up today and hopefully be approved by Friday so I have a few days to practice.

What I meant is when comparative FS are presented, you could still give an opinion on the current year even if the engagement was accepted in six months, right?

And thanks for that find, good stuff.

[Iggy1985]

It's the same content, just looks different than the actual exam (you have to dig through more stuff to get to what you want, so it's harder than the actual exam), but it's been very helpful for me – couldn't hurt, right? When is your exam? Mine's next Tuesday >_> /panic

the rules would be the same for the current year as with accepting any audit engagement, so you could accept halfway through the year, neard the end, or after the year. If you were the auditor on the prior year's statements you would describe in the report the prior year opinion and if it was a modified report, the reasons why it was modified, etc. Or if you did not audit the prior year you would be sure to state that in the report, or state that a predecessor audited the prior period. So yeah the time when you accept the engagement still doesn't matter, as long as you can obtain ‘sufficient appropriate audit evidence' to provide ‘reasonable assurance' haha

is it just me or are the most repeated phrases in auditing are ‘sufficient appropriate audit evidence' and ‘nature, timing, and extent' XD

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)

[Anonymous]

Mine is on the 16th, so I'm right with you. All of us in this group are taking exams within a four day period which is good.

Well, this is your first time taking exam? The format is different than FAR, so maybe it is exactly the same as the exams. Need to sign up for it ASAP! Though, they gave me a free six month period last year so will that impact my attempt this time around?

Don't forget to take the AICPA practice exam either

[Author]

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