[jeff]

Welcome to the Q4 2016 CPA Exam Study Group for AUD.

If this is your first post in the study group – please post your target exam date (just the time frame to preserve your anonymity), and your past history with this exam (optional, of course).

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

[JT]

barfmode

Im in a similar situation.

I used Becker and Ninja for AUD and failed with a 69, though my score report looks like I did better. Regardless, Im thinking about switching review courses as well. I did a ton of reading and practice mcqs (6000+) for my first AUD attempt so im not sure where I can improve besides in the SIMS. I don't think Ninja does a good job with the sims though.

Im thinking about using either roger or wiley or something else.

REG-80-1X
BEC-80-1X
FAR-73-1X
FAR-75-2X
AUD-September 2016

[joffrey]

Is this the proper engagement letter that is needed to memorize it? I edited it from the AICPA site but I want to make absolutely certain this is correct before I study it. Am I missing anything? The reporting section calls for appropriate language but I haven't been able to find it. Is this info contained in the Ninja book? I may just buy the thing so I have a proper outline for this material because just going off the lectures and the MCQ is driving me insane.

[Intro Paragraph]

You have requested that we audit the financial statements of ABC Company, which comprise the balance sheet as of December 31, 20XX, and the related statements of income, changes in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial statements. We are pleased to confirm our acceptance and our understanding of this audit engagement by means of this letter. Our audit will be conducted with the objective of our expressing an opinion on the financial statements.

[The responsibilities of the auditor]

We will conduct our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the
auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Because of the inherent limitations of an audit, together with the inherent limitations of internal control, an unavoidable risk that some material misstatements may not be detected exists, even though the audit is properly planned and performed in accordance with GAAS.
In making our risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not
for the purpose of expressing an opinion on the effectiveness of the entity's internal control. However, we will communicate to you in writing concerning any significant deficiencies or material weaknesses in internal control relevant to the audit of the financial statements that we have identified during the audit.
1
[The responsibilities of management and identification of the applicable financial reporting framework]

Our audit will be conducted on the basis that [management and, when appropriate, those charged with governance] acknowledge and understand that they have responsibility

A.
for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America;

B.
for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; and

C.
to provide us with i. access to all information of which [management]is aware that is relevant to the preparation and fair presentation of the financial statements such as records, documentation,and other matters; ii. additional information that we may request from [management] for the purpose of the audit; and iii. unrestricted access to persons within the entity from whom we determine it necessary to obtain audit evidence.
As part of our audit process, we will request from [management and, when appropriate, those charged with governance], written confirmation concerning representations made to us in connection with the audit.

[Other relevant information]
[Insert other information, such as fee arrangements, billings, and other specific terms, as appropriate.]

[Reporting]
[Insert appropriate reference to the expected form and content of the auditor's
report. Example follows:]
We will issue a written report upon completion of our audit of ABC Company’s financial statements. Our report will be addressed to the board of directors of ABC Company.

We cannot provide assurance that an unmodified opinion will be expressed. Circumstances may arise in which it is necessary for us to modify our opinion, add an emphasis-of-matter or other-matter paragraph(s), or withdraw from the engagement. We also will issue a written report on [Insert appropriate reference to other auditor's reports expected to be issued.] upon completion of our audit. Please sign and return the attached copy of this letter to indicate your acknowledgment of, and agreement with, the arrangements for our audit of the financial statements including our respective responsibilities.

General Principles and Responsibilities
XYZ & Co.
Acknowledged and agreed on behalf of ABC Company by
___________________________
[Signed]
[Name and Title]
[Date]

[Smallwood]

Ran into this sim on my Wiley Test bank and its got me questioning my understanding of Consignment of goods.

Assume that you have completed your procedures and have found the following audit issues. Indicate the account balance financial statement assertion that may be impacted by each of the issues, using the following key:

1 It was discovered that a number of the items on hand and counted in the inventory were on consignment.
Answer is Rights & Obligations, If the items are on consignment they are not owned by Hillmart and therefore, there is a rights issue.

I thought that when goods were on consignment the company still owned them, until they were sold by the consignee? So if that is the case, there would not be issues relatint to Rights & Obligations, because the goods stay on Hillmart's books.
AccountingTools.com agrees with me…“Consignment occurs when goods are sent by their owner (the consignor) to an agent (the consignee), who undertakes to sell the goods. The consignor continues to own the goods until they are sold, so the goods appear as inventory in the accounting records of the consignor, not the consignee.” Accounting Tool's definition of consignment of goods

So which is true?

FAR - 76
AUD - 74, 72
REG - 62, 74, TBD
BEC - 09/2016

[Anonymous]

@smallwood I think in this scenario Hiltmart might be the consignee, which is why it has the custody of the consigned goods that was counted during the physical inventory by mistake. So technically, Hiltmart doesn't own that inventory and has no “right” over it so it shouldn't be included in Hiltmarts inventory.

[Smallwood]

@Annie, I think you're probably right…Ugh I hate when they confuse you with wording of questions! Nonetheless, none of the other assertions made sense so if it was exam day I would have chosed Rights & Obligations…Just wanted to make sure I understood correctly. Thanks!

FAR - 76
AUD - 74, 72
REG - 62, 74, TBD
BEC - 09/2016

[cpa007]

Hi, I have last window left. And I need to pass BEC and AUD in this window else I will loose REG. These are my previous score.
BEC 69,66 (of course i did not study as i was sick)Weak on every thing except Economics.
AUD 73. score weak on Evidence and reporting and sim.
I am planing to take AUD on OCT 30 and BEC on NOV 30 (which is my last day to take all exams.)Do you guys think i have a chance of passing if i study 1 month for each exam. BEC is night mare for me. I hated to study for this part of exam.
I had been studying for BEC since 1 week and did only wiley test bank.Score low as 60% to 80%. Average score is 80% after redoing wrong Question. I do not have NTS yet so i cannot schedule for AUD . From tomorrow i will study for AUD. I wanted to switch AUD last but i may not get NOV 30 as dates get filed very fast.
Please give me advice how to prepare for sims for AUD and attack BEC. Should i give more time to BEC as my scores are low.
People who had taken BEC more than twice ,what is your advice to pass this beast. Also English is my second language and you know by now after reading my story. ANY advice is greatly appreciated .

[Moeshow]

Would someone be kind enough to explain the difference from the clarity standards for non public companies and GAAS for public?

This is how I see it.

I assume the clarity standards still use GAAS but just clarify GAAS for non-public companies, correct? Both promote GAAS but clarity standards are issued by ASB/ AICPA, whereas GAAS is issued by the PCAOB for public companies? Public companies do not follow the clarity standards but GAAS. So, as a general example, if i'm looking for a standard for a non-public company it would be under the clarity standards and GAAS for a public company, correct?

Is the general idea?

BEC 2/26/2016 81
FAR 05/2016

Purely Roger CPA Review, for now!

[Just3Letters]

is there a partner rotation requirement for private clients? I know public is 7 years for lead audit partner and 5 for other partners. Is private different or not requirement?

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[Anonymous]

@Just3Letters SEC requires for lead and Concurring partner to rotate after 5 years and 7 years for other partners. You switched the two I think.

I'm not sure about the rules for private though.

[Anonymous]

There's no rotation rule when auditing non-issuers as required by the AICPA Code of Professional Conduct.

Proof:

[Candace]

An auditor discovers that a client’s accounts receivable turnover is substantially lower for the current year than for the prior year. This trend may indicate that
A: An employee has been lapping receivables in both years.
B: Employees have stolen inventory just before year end.
C: The client recently tightened its credit-granting policies.
D: Fictitious credit sales have been recorded during the year.

Can someone please shed some light on how to tackle questions like these.. simply knowing the ratios will not help..

REG- 69- Felt discouraged.. took a break.
AUD- 69, 74- The worst feeling ever. Far more painful than a break up.

[cpaMD86]

@CPA_Ready

FAR: 9/3

[cpaMD86]

@CPA_Ready

Knowing and using the ratios does help me with these question. AR TO = Net Credit Sales/ Avg AR Bal

So, if AR TO is going down that means that the denominator must be increasing. Fictitious credit sales recorded during the year (D) would be my answer.
(C) seems like a good choice as well, but if credit sales are decreasing due to stricter policies that would mean the A/R balance would decrease as well.

Hope this helps

FAR: 9/3

[Incoming91]

Good luck to everyone this quarter!

REG: 80
FAR: 78 (x2)
AUD: 6/10
BEC: 7/20

[Just3Letters]

Hey folks,

anybody have a good way to answer questions like this? I get the ARC separation of duties, but I never seem to get these questions correct.

A company employs three accounts payable clerks and one treasurer. Their responsibilities are as follows:

Employee Responsibility
——– —————————————————–
Clerk 1 Reviews vendor invoices for proper signature approval
Clerk 2 Enters vendor invoices into the accounting system and
verifies payment terms
Clerk 3 Posts entered vendor invoices to the accounts payable
ledger for payment and mails checks
Treasurer Reviews the vendor invoices and signs each check
Which of the following would indicate a weakness in the company's internal control?

Incorrect A.
Clerk 1 opens all of the incoming mail.

B.
Clerk 2 reconciles the accounts payable ledger with the general ledger monthly.

C.
Clerk 3 mails the checks and remittances after they have been signed.

D.
The treasurer uses a stamp for signing checks.

Correct answer = C.

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[Author]

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