[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

[Forem004]

In my notes I made listed existence, completeness, rights and obligations….at the top of separate pages. Under each, I listed examples such as “tracing test counts to inventory listing” for existence. Every time I worked a problem with a test like this listed I added it to the applicable page.

[pharaoh]

@user2701 – I had the same idea like @forem004 but I did it by account. for example, I have a page for AR and then I put the assertions (Completeness, existence, etc..) and tests (confirmation, tracing, vouching,..) and same for Inventory, PP&E, etc..

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

[CPYay]

I feel the same. I test on Wednesday and I'm already burnt out on this section.

[GiniC]

@jaykayen –

As I recall from my auditing class, When conducting an integrated audit for an ISSUER the auditor (Brown) can issue a combined report on the audit and on internal control (see excerpt from AS 5 below), but for a NON-ISSUER the internal control is essentially a separate engagement (examination, under the AT standards) and a separate report.

HOWEVER, it's the details of the question that “got you”. Crow is the client company, so Crow's written assertion is “management's report on internal control”, not the auditor's evaluation. Management's assertion on internal control is a document written to the users, like the audit report (it isn't addressed to the auditor), and it accompanies the financial statements along with the audit report.

PCAOB Auditing Standard No. 5
86. The auditor may choose to issue a combined report (i.e., one report containing both an opinion on the financial statements and an opinion on internal control over financial reporting) or separate reports on the company's financial statements and on internal control over financial reporting.

[Forem004]

Oooh good catch Gini!

[QueenofWhales]

@ GiniC

Thank you so much Gini, that was very helpful!

[Forem004]

I wonder how the “trouble” questions are selected. Are they actual trouble questions for each person or just in general?

[HelloCPA]

Please help. I'm Not sure why the correct answer is d. Thx!

Which of the following questions would an auditor most likely include on an internal control questionnaire for notes payable?

A.
Are assets that collateralize notes payable critically needed for the entity’s continued existence?

B.
Are two or more authorized signatures required on checks that repay notes payable?

C.
Are the proceeds from notes payable used for the purchase of noncurrent assets?

D.
Are direct borrowings on notes payable authorized by the board of directors?

[Anonymous]

Wish me luck guys. I take my exam in a couple hours.

[CPYay]

Good luck Frisco!

@Forster

You want to know the controls in regard to Notes Payable.

A doesn't deal with controls. It has to do with going concern. Ignore this answer.
B has to do with Accounts Payable. Ignore this answer.
C deals with the proceeds of a Note Payable. The company doesn't have to use the proceeds to buy non-current assets. Ignore this answer.
D deals directly with a control of Notes Payable. Are the borrowings authorized? If so, how and by whom? Best answer.

[Forem004]

Good job CPYAY, I was waiting to see if someone else answered this, because the best I could do was process of elimination. I couldn't explain why I wouldn't choose the others. 🙂

[CPYay]

Thanks! I'm attacking the AUD exam with the process of elimination approach. I've gotten many MCQs wrong because I've honed in on an answer only to miss the “better option”. This is especially true with the assertions.

[Forem004]

Most definitely! The simulation that asks “which is the best” with an answer of all of the above really drives me crazy!

[pharaoh]

Yes. I only see those on Ninja. I got to the point that I am just picking “all of the above” or “none of the above” without reading

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

[Forem004]

I have only seen one!

[Author]

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