[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

[jeff]

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

[pharaoh]

A

FAR 8/2016
AUD 1/2017
REG TBD
BEC TBD

[Sticky Nicky]

gotta go with A also,,,sounds like a scope limitation and therefore would require either a qualified or disclaimer…i guess B is wrong because an unmodified report could be issued for restricted use if the company is in conformance with the special reporting framework?

[pharaoh]

Yes. You are correct

FAR 8/2016
AUD 1/2017
REG TBD
BEC TBD

[pharaoh]

This is the type of questions that I struggle with, how would you guys approach this one

Knowledge of the client's “industry, regulatory, and other factors” includes an understanding of all of the following, except:

A.broad economic environment in which the client operates.

B.relevant accounting pronouncements.

C.supplier and customer relationships.

D.the entity's accounting policies and procedures.

FAR 8/2016
AUD 1/2017
REG TBD
BEC TBD

[Sticky Nicky]

hmmm its either c or d…wat is it?

[pharaoh]

I picked C but it is D.
This is the explanation of the question, I didn't see this in any material

The auditor's understanding of the entity and its environment consists of an understanding of the following aspects:

Industry, regulatory, and other external factors
Nature of the entity
Objectives and strategies and the related business risks that may result in a material misstatement of the financial statements
Measurement and review of the entity's financial performance
Internal control, which includes the selection and application of accounting policies
The relevant industry, regulatory, and other external factors include industry conditions, such as the competitive environment, supplier and customer relationships, and technological developments; the regulatory environment, which encompasses, among other matters, relevant accounting pronouncements, the legal and political environment, and environmental requirements affecting the industry and the entity; and other external factors, such as general economic conditions.

The only choice that does not fit into the category of industry, regulatory, and other external factors is “the entity's accounting policies and procedures.”

FAR 8/2016
AUD 1/2017
REG TBD
BEC TBD

[GiniC]

@CPAWarrior, I hope your exam went well! Now the hard part – waiting for the score…

[GiniC]

I'm having trouble identifying scope limitations – can anyone give me a conceptual approach? I've hit many questions like the one below, and I usually don't identify the issue correctly as a scope limitation. I thought this one was about the auditor's judgment vs. management's, since estimates are purely about judgment. Help?

If an auditor is unable to determine whether management's estimate of the effects of future events is reasonable, and the effect of those events is believed to be material, he or she should express:
a. An unmodified opinion with no additional paragraphs.
b. A qualified opinion or an adverse opinion.
c. An unmodified opinion with an emphasis-of-matter paragraph following the opinion paragraph.
d. A qualified opinion or a disclaimer of opinion.
Explanation
Choice “d” is correct. This is a scope limitation, which results in either a qualified opinion or a disclaimer of opinion. (Note that the question does not say that management's estimate is unreasonable, just that the auditor is unable to determine whether the estimate is reasonable.)
Choice “b” is incorrect. An adverse opinion is not expressed for scope limitations.
Choices “c” and “a” are incorrect. A scope limitation believed to have a material effect would not result in an unmodified opinion.

[Sticky Nicky]

this one is a lil tricker than most scope questions because is vague…but you can argue that its a scope limitation because to express an opinion on the F/S you need to make sure that managements estimates are reasonable under the circumstances. Any auditor unable to determine the reasonableness is therefore a scope limitation and requires an adverse or qualified opinion..I would probably lean toward qualified if I had to pick one of the two because I dont think it would be client imposed limitation

[Sticky Nicky]

if you were at the gastroenterologist and he was unable to obtain sufficient appropriate evidence as to whether or not your large intestines contained material polyps,,would u consider it a scope limitation?

[George]

Took it this morning. All I can say is that this testing experience was definitely harder than the last 2 retakes. I felt like I got Hard testlets on all three. The Sims were actually not that bad. I advise everyone to study everything because my test was evenly distributed. I know people say don't do the sims because it is a waste of time. But do the damn sims !!! You might be surprise and actually see one somewhat similar to what is in your test bank. I don't think I passed because the MCQ were just worded so weird, that it didn't make sense.

Best of luck to everyone else. Hopefully you guys pass.

[GiniC]

@Sticky Nicky – gastro – polyps – scope – ha ha! I'd call that insufficient planning/preparation!

Maybe I'm thinking of “scope” from the wrong perspective. As an engineer, my project scopes are negotiated before I start – my client and I agree beforehand what is expected, what they are to provide and what I am to deliver. If the client estimates the wells he hired me to install can provide X gallons of water per day and the information I collect supports a yield of Y gallons, he didn't limit or change my scope – we just estimated differently. Trouble is, in my example we're not working from the same data – I collected “better” data at the start of my work than the client had when I was hired.

In an audit situation (one I have never experienced), how does such a situation occur – where the client has used some information in his books to generate an estimate, and I have access to his books, I must be able to generate some range of estimates from the client's data, or from general industry information. Either my estimate is reasonably close to his, or it isn't. I don't see how my lack of ability to come up with an estimate equates to a limit on the scope of work.

As I said – maybe I need help seeing how an auditor would think about this, instead of how an engineer approaches it?

Thanks for any help!

[GiniC]

@CPAWarrior – so sorry you had a rough test day!!! I'm just starting to prep for this one – there seems so much room for interpretation in AUD!

[nk522]

Hey guys,
Is anyone also waiting a very long time to receive an NTS? I applied September 1, and still haven't received mine yet. Would love to know how long some of you guys who applied recently had to wait to receive it. I know everyone is applying now to take it, but it says up to 6 weeks, and its been longer than that!! Throwing off my schedule so much 🙁

[Author]

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