[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).

[pharaoh]

@rschwa46 – I see that you passed 3 parts as well, so your strategy is working, why would you change it?

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

[rschwa46]

@pharaoh… this part is very different than the other 3 as there is basically no math involved. when studying the other parts I could gauge my performance based on whether I got the computational questions correct… I may be completely overthinking it just want to see how people other people are gauging there studies and if they are going about this part differently than the others.

REG: 78
BEC: 78
FAR: 72(retake aug 30, 2016)
AUD:

[pharaoh]

Oh yeah!! I totally see your point. I hate studying for audit too because it is so vague and a change in one word can make the question or answer totally different. However, I still think that if you understand the material and practice with the questions, you should be good. Lots of people pass by using different reviews. I think just make sure that you cover your weak areas and know why the answers are right or wrong and If you memorized the question explain it to yourself why this answer is right and the others are wrong. Sometimes I imagine if I am explaining this to my wife, how am i going to say it ….This is how I know if I understand it enough to be able to explain it or not.

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

[rschwa46]

haha not a bad idea, I honestly sometimes just choose the right answer because the others just sound incorrect. This sounds kind of dumb, and definitely would not have worked on the other 3 parts, but that's what makes me worry about this part if that makes sense.

REG: 78
BEC: 78
FAR: 72(retake aug 30, 2016)
AUD:

[rschwa46]

it seems like this part is just testing your “test taking abilities” as well as having background knowledge of the material

REG: 78
BEC: 78
FAR: 72(retake aug 30, 2016)
AUD:

[Forem004]

@rschwa46, most of the audit questions are definitely like that, eliminate the incorrect answers. I feel maybe a little too confident on this part because I have had nearly five years of experience with audit as the major part of my work experience. I have completed the multiple choice questions over 3200 times, still working on an average passing score on each simulation (I don't think that's going to happen bc I test tomorrow), and four practice exams. I play with the choices on the questions as far as trouble, all or missed last time seen. Practice, practice practice is my strategy! I'm just very scared that all of the questions I continue getting wrong after not seeing for a while are going to make up the majority of my exam!

[Forem004]

This is one of the questions I continue to get incorrect!

How would increases in tolerable misstatement and assessed level of control risk affect the sample size in a substantive test of details?

A.
Increases in tolerable misstatement and assessed level of control risk would increase the sample size.

B.
An increase in tolerable misstatement would increase the sample size; an increase in assessed level of control risk would decrease the sample size.

C.
An increase in tolerable misstatement would decrease the sample size; an increase in assessed level of control risk would increase the sample size.

D.
Increases in tolerable misstatement and assessed level of control risk would decrease the sample size.

[pharaoh]

I suck in everything related to Sampling but according to Roger inverse relation for the tolerable rate and acceptable rate (I think this one is for control risk) based on that I would say answer D

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

[Forem004]

I guessed that too without reading too closely. Biggest mistake for this portion of the test! It's C.

As tolerable misstatement increases, you're allowed more errors, so you can afford to decrease the sample size. But as control risk increases, you can't rely on the control as much, so your sample size will increase.

I totally get all of this, I just don't read some of it carefully enough!

[rschwa46]

thank you for your input @Forem004

I wish you the best of luck tomorrow!! just be confident when you walk in!

REG: 78
BEC: 78
FAR: 72(retake aug 30, 2016)
AUD:

[pharaoh]

Here is a question on everyone's favorite topic

Field, CPA, is auditing the financial statements of Miller Mailorder, Inc., (MMI) for the year ended January 31, 20X1. Field has compiled a list of possible errors and fraud that may result in the misstatement of MMI's financial statements, and a corresponding list of internal controls that, if properly designed and implemented, could assist MMI in preventing or detecting the errors and fraud. Select the internal control that most likely could assist MMI in preventing invoices from being sent to allies in a fraudulent scheme, and sales from being recorded for fictitious transactions.

A.Sales invoices are compared with shipping documents and approved customer orders before invoices are mailed.

B.Shipping documents are compared with sales invoices when goods are shipped.

C.Shipping clerks compare goods received from the warehouse with approved sales orders.

D.Approved sales orders are required for goods to be released from the warehouse.

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

[Anonymous]

D.Approved sales orders are required for goods to be released from the warehouse.

[pharaoh]

It is A. Here is the explanation

Comparing sales invoices with shipping documents and approved customer orders before invoices are mailed is the best control in preventing invoices from being sent to allies in a fraudulent scheme, and sales from being recorded for fictitious transactions.

Fraudulent sales would not appear with the approved customer orders, but they would have a sales invoice and possibly a shipping document (depending on the scheme). Fictitious sales may have an invoice, but they would not have a shipping document. Comparing these three documents would highlight discrepancies and alert management to the sales schemes. This procedure is an example of authorization and documentation being used as a control.

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

[Forem004]

A client’s lawyer is unable to form a conclusion about the likelihood of an unfavorable outcome of pending litigation because of inherent uncertainties. If the litigation’s effect on the client’s financial statements could be material, the auditor most likely would:

A.
issue a qualified opinion in the auditor’s report because of the lawyer’s scope limitation.

B.
withdraw from the engagement because of the lack of information furnished by the lawyer.

C.
disclaim an opinion on the financial statements because of the materiality of the litigation’s effect.

D.
add an explanatory paragraph to the auditor’s report because of the uncertainty.

[Forem004]

Which of the following procedures would an auditor most likely complete to test the existence assertion of property, plant, and equipment?
A.
Obtaining a listing of all current-year additions, vouching significant additions to original invoices, and determining that they have been placed in service

B.
Obtaining a detailed fixed-asset register and ensuring items are appropriately capitalized

C.
Obtaining a listing of current-year additions and verifying that items are recorded in the proper period

D.
Obtaining a detailed fixed-asset register and ensuring depreciation methods are applied consistently

[Author]

Replies