CPA Exam Focus - AUD - Auditing and Attestation

For the next few Wednesdays, we're going to highlight one section of the CPA exam and for today, Auditing and Attestation is our focus!

Don't worry if you don't have any audit experience in school or whether or not you plan on doing audits in your career; Audit is a requirement for all CPA exam candidates.

But let's break down Audit just a little bit and take a look at what exactly in entails.

Audit, like Regulation and FAR, contains multiple choice, simulations, and written communications. This may change if the AICPA BOE approves a measure to transfer all communications to the BEC section but for now, Audit has its own set of communications.

Since time management is an important issue when it comes to sitting for the CPA exam, you want to keep in mind that for Audit you are allotted 4.5 hours. That seems like forever when you're first considering the exams ahead of you as a brand new applicant but keep in mind that once you get in that test center and start answering questions, it will fly by!

Multiple choice questions in Audit are broken into three "testlets" of 30 M/C each. Remember that the subsequent testlets you receive after the first are based on your performance in the previous testlet; if you do well with the first set of M/C, your second set will be harder. So if you find yourself very challenged by your last testlet, you're probably doing pretty well!

You should allocate 60 minutes for each testlet, or about 2 minutes per question. The total point value for all three testlets is 70.

For the simulations, you will be given 2 simulations, each with a communication section. Only one of the communications will be tested (10 points) and each simulation is worth 20 points. You should give each simulation 45 minutes.

That leaves you with just enough time to pat yourself on the back for a job well done when you are finished! (Don't worry, Audit actually has one of the highest passing rates of the four sections! It's easier than you may think!)

For the communications, the AICPA BOE has set the following target weights for the testing of each skill set in Audit:
Communication: 10%-20%
Research: 6%-16%
Analysis: 12%-22%
Judgment: 12%-22%
Understanding: 35%-45%

So what about Audit content? Well obviously Audit covers audits! 22%-28% of the section covers planning the engagement and entering into an agreement with the client. Broken down further, this covers determining the scope and nature of the engagement, assessing engagement risk, analytical procedures, and preliminary engagement materiality.

12%-18% of the section covers internal controls in both manual and computerized environments; understanding business processes and information flows, limitations of internal control, tests of controls, and risk assessment.

32%-38% of the section deals with using document information to form a basis for conclusions; performing planned procedures, audit sampling, inventory examination, data analysis, evaluating contingencies, review, and identifications of any control deficiencies as well as performing procedures for attestation engagements.

8%-12% of the section is dedicated to reviewing the engagement to provide reasonable assurance that objectives have been achieved and to evaluate information obtained to reach and document engagement conclusions; analytical procedures, competence of audit evidence, considering substantial doubt, and reviewing work performed.

12%-18% of the section is strictly for communications (reports) to satisfy engagement objectives; reports on audited financial statements, reports on compliance with laws and regulations, reports on procedures, communications on errors, fraud, and/or illegal acts, and other matters like discovery of facts and consideration after the report date of omitted procedures.

And that, my friends, is Auditing and Attestation!

Don't miss our post next week on everyone's favorite: Financial Accounting and Reporting!