[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

[Spartans92]

Thanks guys.. That made more sense. Its all about reading it more carefully. Got another one for y'all.

The profession's ethical standards most likely would be considered to have been violated when a CPA represents that specific consulting services will be performed for a stated fee and it is apparent at the time of the representation that the:
A.
actual fee would be substantially higher.

Incorrect B.
actual fee would be substantially lower than the fees charged by other CPAs for comparable services.

C.
CPA would not be independent.

D.
fee was a competitive bid.

Answer is A. I thought CPA can't charge anything higher than FMV but it seems like the other way around.. Logically speaking wouldn't it be unethical to charge outrageously high fees compared to others.. I dont see anything wrong with charging less than FMV. LOL.

I may have read the question wrong.

BEC- PASS

[JT]

Thank you for your reply Forem004. I think I’m going to need to think about this more to get a better understanding about it.

Spartans92, If you agree to do a deal with me for an estimated fee of $100, but in the back of your mind, you know that after the work is done, you’re going to bill me $1000, for you to initially give me an estimate of $100 and lead me to believe the fee will be around $100 is unethical.

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

[Spartans92]

Gotcha. So it is a deceptive act. That helps! Thanks JT

BEC- PASS

[JT]

Hypothetical question,…

An auditor concluded that no excessive costs for idle plant were charged to inventory. This conclusion most likely related to the auditor's objective to obtain evidence about the financial statement assertions regarding inventory, including presentation and disclosure and:

A. valuation and allocation.

B.completeness.

C.existence.

D.rights and obligations.

The answer is a.

But my hypothetical question is that if the question stated “An auditor concluded that the correct amount of costs for idle plant were charged to inventory.” Would the answer be B?

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

[GiniC]

@JT – The best answer is still valuation, since the amount of cost allocated to idle plant time would directly impact the indirect costs allocated to inventory. Completeness might also be evaluated in both cases, but completeness also feeds to valuation – if the costs are not all accounted for (complete) then the valuation of the inventory will be incorrect. I think when there is a “chain” of assertions like this, the one you count as most likely would be the last one in the sequence.

[JT]

Thanks for the response. I got to think about this one a little. lol

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

[jeff]

One winner will receive a NINJA MCQ section of their choice.

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

[Forem004]

My AR turnover formula in an old Becker book calculates it with net receivables. I just did a ninja MC that calculated it with gross when I was given information to calculate net receivables. Why??

[pharaoh]

hmmm… are the answers based on gross and net/ or gross only? Generally, it should be net

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

[JT]

I noticed that in several places, especially when I was studying for BEC.

Looking online, several sites use different formulas too!

I believe the correct way is to use net credit sales.

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

[user2701]

@ Jeff,

The answer is Option -B

a member may follow another country's rules if practicing outside of the United States

BEC- 43(Feb'16), Retake-June 10, (Wiley text book/WQB/NINJA MCQ)
REG- TBD
FAR- TBD
AUD- TBD

[Spartans92]

An auditor who uses statistical sampling for attributes in testing internal controls should reduce the planned reliance on a prescribed control when the:

A.
sample rate of deviation plus the allowance for sampling risk equals the tolerable rate.

Incorrect B.
sample rate of deviation is less than the expected rate of deviation used in planning the sample.

C.
tolerable rate less the allowance for sampling risk exceeds the sample rate of deviation.

D.
sample rate of deviation plus the allowance for sampling risk exceeds the tolerable rate.

Can anyone Simplify this? LOL. Audit is so hard to grasp cuz the wording sucks. Answer is D btw. Thanks

BEC- PASS

[Forem004]

80% of my work is audit and the wording for this exam is still so confusing to me. I have been able to get a lot of questions like this correct by process of elimination. It's not A bc your problems are equal to what's being allowed. It's not B bc your problems are equal to What's allowed. It's not C bc you could place more reliance on this control bc what's allowed exceeds your problem. Does that help?

[Spartans92]

Thanks Forem004. Kind of helps but I will say the wording is what trips me up. Appreciate the help. Another question

Based on the understanding of how management developed the estimate, the auditor would NOT use which of the following approaches in evaluating reasonableness?

Incorrect A.
Review subsequent events or transactions

B.
Review the process used by management to develop the estimate

C.
Review and test the process used by management to develop the estimate

D.
Develop an independent expectation of the estimate to corroborate the reasonableness of management's estimate

Whats up with B its similar to C. B is actually the answer. If C is an approach used I dont get why B isn't.

BEC- PASS

[pharaoh]

Review “and test” not only review.

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

[Author]

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