[FK122]

Hello fellow CPA friends, looking for some guidance here. As you already know from the title of the post, got AUD (hopefully last exam, waiting on FAR score June 28) June 9.. I’m feeling alright overall.. one thing that I’ve seen come up in other threads is emphasis on Analytical Procedures and making sure to practice them going into the exam as they’re likely to show up in SIMs. What is meant by this? Are we talking studying ratios?? How am I to practice Analytical Procedures? I’m currently using Becker Review material. Any guidance on this is greatly appreciated.

[amens]

Use the AICPA sample test simulations as a guide. I mean know every question and the correct answer and why it is corrrct, this is so important. I don’t recall encountering much emphasis on analytics per say, kind of just how they relate to certain topics, such as a Review.

[Joetse]

No, it means more like understand transactions and how they affect each different account. Throughout the year. Anyone can calculate a ratio. It's about knowing for example, what impact an inventory write-down would have on the balance sheet relative to the income statement. The ratios themselves, are not testing if you can calculate a ratio, they're testing if you know how to do an accrual, or account for a weighted average shares outstanding (like stock split 2/12 the way through the year), or an increase in employee salary or head count 1/4 way through the year, and use that as a basis for a benchmark, like cost per employee, for example. It's knowing how to APPLY analytical procedures, application, more than anything, and mostly reading comprehension. So they might ask, what is the average cost per employee in year 2, but 1/4 way thru the year the salary goes up 10%, and then half way thru the year, the headcount goes up 20%..they'll give you cost/employee in year 1 and headcount. So you gotta be able to break that down since it can get confusing if you don't slow down and separate it out on a timeline cause there's moving parts. Then they'll ask you why revenue was going up slower than expenses or something like that, and it will be because obsolescence and COGS was more than expected or something. Just be well rested cause if you're tired, you won't be able to read fast and it's just all about reading comprehension.

[Author]

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