[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/

[Iggy1985]

From the professional literature:

Subsequently Discovered Facts That Become Known to the Auditor Before the Report Release Date

“The auditor is not required to perform any audit procedures regarding the financial statements after the date of the auditor’s report. However, if a subsequently discovered fact becomes known to the auditor before the report release date, fn 3 the auditor should

a. discuss the matter with management and, when appropriate, those charged with governance.

b. determine whether the financial statements need revision and, if so, inquire how management intends to address the matter in the financial statements

If management revises the financial statements, the auditor should perform the audit procedures necessary in the circumstances on the revision. The auditor also should either

a. date the auditor’s report as of a later date; extend the audit procedures to the new date of the auditor’s report on the revised financial statements; and request written representations from management as of the new date of the auditor’s report, in accordance with the requirements of section 580 Written Representations, or

b. include an additional date in the auditor’s report on the revised financial statements that is limited to the revision (that is, dual-date the auditor’s report for that revision), thereby indicating that the auditor’s procedures subsequent to the original date of the auditor’s report are limited solely to the revision of the financial statements described in the relevant note to the financial statements. In this circumstance, the auditor should request written representations from management as of the additional date in the auditor’s report about whether

i. any information has come to management's attention that would cause management to believe that any of the previous representations should be modified.

ii. any other events have occurred subsequent to the date of the financial statements that would require adjustment to, or disclosure in, those financial statements.

If management does not revise the financial statements in circumstances when the auditor believes they need to be revised, the auditor should modify the opinion (express a qualified opinion or an adverse opinion “

tldr; So I interpret that as, scenario #1 – inquire with management if they will revise the F/S, and if they won't but you think they should, modify report (qualified or adverse)

and scenario #2 – no responsibility

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]

A lawyer's response to an auditor's inquiry concerning litigation, claims, and assessments may be limited to matters that are considered individually or collectively material to the client's financial statements. Which parties should reach an understanding on the limits of materiality for this purpose?

A.

The auditor and the client's management

B.

The client's audit committee and the lawyer

C.

The client's management and the lawyer

D.

The lawyer and the auditor

Same question in Wiley and the answer is A there, and for Ninja MCQ the answer is D. Smh………..

[Iggy1985]

@cpahopeful11 I believe Wiley is the correct one; found this in professional literature

It also includes a separate response section with language that clarifies the auditor's expectations regarding the timing of the lawyer's response.

“In connection with an audit of our financial statements as of (balance-sheet date) and for the (period) then ended, please furnish our auditors, (name and address of auditors), with the information requested below concerning certain contingencies involving matters with respect to which you have devoted substantive attention on behalf of the Company in the form of legal consultation or representation.” [When a materiality limit has been established based on an understanding between management and the auditor, the following sentence should be added: This request is limited to contingencies amounting to (amount) individually or items involving lesser amounts that exceed (amount) in the aggregate.]

mainly because the lawyer knows nothing about materiality since they are not in the business and they are not a CPA. and choice A is the only one not involving the lawyer

I learn a lot by answering other people's questions lol.. bed time for me now.. don't feel like I got much done today, only 100 mcqs :/

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 questions worded exactly the same? I found one question “almost” similar to this. The difference is the the question was worded as follows:

“Which parties may reach an understanding on the limits of materiality for this purpose that are stated in the letter of inquiry?” The answer was A because of the additional phrase “that are stated in the letter of inquiry” which is prepared by client's management.

There's another question worded as “An auditor should obtain written representations from management about litigation, claims, and assessments. These representations may be limited to matters that are considered either individually or collectively material provided an understanding on the limits of materiality for this purpose has been reached by”

Again the answer was A because the question is for the purpose of the management representation.

However, in you question above, since it's for the purpose of the lawyer's response, the answer will be D. I found this explanation “The legal counsel and the auditor (not the client) jointly determine the limits of materiality for purposes of legal counsel’s response, not management’s.”

This is another tricky question, I'm glad you brought it up!

[johnny_debt]

@CPAHOPEFUL11, I always thought the Auditor determined the materiality level and not client management. But I did run into a question in the Ninja MCQ that explained the answer as the following:

“Management's representations to the auditor may be limited to matters that are considered either individually or collectively material to the financial statements, provided management and the auditor have reached an understanding on materiality for this purpose.”

In the above statement, it kind of implies that management has a say in what is material and what is not. In that case maybe A could be correct?

AUD - 91
BEC - 84
FAR - 91
REG - 91

[Anonymous]

Exactly johnny, that's what I figured but not really sure.

Thanks CPAby2015, I hope I don't run into any question like this one the test LOL.

I finally did well on a 100 question practice session with evidence scoring 83%. Would like to get it a little higher before the exam and will be trying to hammer those down for the next four days.

Professional Responsibilities is a tricky section. It seems easy but there are so many regulations to remember from AICPA, SAS, PCAOB, IESBA.

[Anonymous]

@CPAHOPEFULL11 Glad to hear that you're doing better on your weak area(s). I'll be doing the exam rehearsal tomorrow, then hammer down my weak areas in the coming days, then the AICPA sample test, then take a peak on the NASBA Professional Literature, then more MCQs if I have time.

[Anonymous]

You seem ready, do you feel the same way you did when you took FAR?

[Anonymous]

I hope so too. I have few more days to wrap up things (getting 50-60s on few topics), but again, you'll never know. When I took FAR, I was not too confident on my preparation, I took the exam with the hope that I've known enough to pass. In AUD, I did all available MCQs in my materials but as other say, there are things that you just need to memorize, which is my weak point (I have limited memory space). So I guess I'll just have to keep practicing and hope that I've practiced enough to pass. Well. we've been posting in this forum until 4am so I think we will be fine! (-_^)

[Future Ninja]

I have few more days too to prepare and unlike you I'm worried. Finished A4 this morning and I got 70% on my first try. What should I do to have at least 5% increase?

Ninja mcq is harder and better than becker. Every item comes with applicable standard explanation but I got average of 66% on my first try. wt..

should i reschedule? originally on the 20th, reschedule to 18th. now im thinking of moving to the last testing window of q4. arggg

any thoughts is highly appreciated. thanks.

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

[Iggy1985]

@CPAby2015 that is confusing, because the paragraph I found in the professional literature is about the lawyer's response, and says that management and auditor add the materiality level in their request for a lawyer's response, requesting that the lawyer only include matters above that materiality level (AU 9337 – .11)

Then another sentence from AU 337 -.09 “Inquiry need not be made concerning matters that are not considered material, provided the client and the auditor have reached an understanding on the limits of materiality for this purpose.”

Then AU 337 – .12 “Also, a lawyer's response may be limited to matters that are considered individually or collectively material to the financial statements, provided the lawyer and auditor have reached an understanding on the limits of materiality for this purpose.”

lol…. >_>

I guess the last one is because the auditor and management decide materiality, ask the lawyer to only include those items, and that's presumed to be an “understanding” between the lawyer and auditor?

I don't think a lawyer ever has a say on what is material to the financial statements, as they are not a CPA or a preparer of the financial statements, they just have to ‘understand' what the auditor and management request for materiality..

I can't find anything in the professional literature where it says the lawyer has any part in the actual determination of materiality.

am I thinking about the question wrong? lets just hope its not on the exam I guess lol

https://pcaobus.org/standards/auditing/pages/au337.aspx

Here is the exact same MCQ from Gleim, in which they had the answer as D but then updated it to the correct answer A and provided explanation as to why. See page 3 of 9, #7

“such as when the entity and the auditor have agreed

on materiality limits, and management has stated the limits in

the letter of inquiry (AU-C 501).

NOTE: According to the American Bar Association’s

statement of policy, legal counsel may wish to reach an

understanding with the auditor about the test of materiality.

However, legal counsel need not do so if (s)he assumes

responsibility for the criteria”

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]

Honestly, you are never going to feel overly confident so just stick with the current date. You have six days to pound the MCQs. Getting 65-70 isn't trouble but make sure you go through every question and afterwards, start doing the trouble qestions. That is going to help you the most.

[Anonymous]

I guess somebody needs to clarify the MCQ in Ninja that has D as correct answer.

@Future Ninja You will never know when will you be ready until you actually do it. You still have time, focus, learn from your mistakes, take control of the exam and always tell yourself you can do this.

[Anonymous]

This question is not hard but for some reason it got me twice already.

Which of the following items is included when reporting on audited statements prepared in accordance with a basis of accounting other than GAAP?

A. An opinion on whether the statements are fairly presented in accordance with the basis of accounting used.

B. A statement that the auditor cannot express an opinion because the statements were not prepared in accordance with GAAP.

C. An auditor’s responsibility paragraph indicating that the audit was not in accordance with GAAS.

D. An opinion on the propriety of the basis of accounting used.

[Anonymous]

A?

[Author]

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