NINJA Notes 2016 - Auditing & Attestation, Summaries of Auditing

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NINJA CPA REVIEW®

NINJA Notes 2016

Auditing & Attestation

Table of Contents

• I. Engagement Planning The N.I.N.J.A. Framework
• II. Internal Control
• III. Auditing & IT
• IV. Evidence & Risk
• V. Audit Reports
• VI. Audit Sampling
• VII. Professional Responsibilities
• VIII. International Auditing

Grab a stack of legal pads, put the highlighter down, and start writing.

Many people have said that instead of taking their own notes, they just re-write the material inside of this study guide , which is fine too.

NON-STOP MCQS

Now is the time to start working NINJA MCQ and do them with a focused frenzy. Do so many MCQs that you’re absolutely sick of them. As you encounter little “fact nuggets” that you didn’t know or are prone to forget, write it down and add it to your voluminous stack of notes.

JUST RE-WRITE IT

This is where it gets tedious. This is also where the payoff happens. You may be familiar with the fact that if you had a choice between $3 Million and 1¢ doubled daily for 31 days; the penny doubled for 31 days ends up tripling the $ Million. The payoff, however, doesn’t happen until the 31 st day. The road is long, but ends up being worth it in the end.

The same goes for re-writing your study notes. The thought of grabbing that stack of legal pads and going to town re- writing what you’ve already written may sound like a ridiculous suggestion at first, but I am a firm believer in its impact.

Merely writing down your notes and then reviewing them before your exam doesn’t have near the impact as taking your furious scribbles and converting them into re-packaged, easily-digestible “fact nuggets.”

Not only will your notes mean more when you’ve whittled away the non-essentials, but you are actually learning the

material twice. Re-processing the material by re-writing your notes is like letting the information marinade in your mind. Just like a well-prepared steak, you will taste the payoff of this extra step.

Don’t like taking notes? No problem. Re-write these NINJA Notes instead. You will absorb the material better vs. reading only.

Plan wisely because this will likely take a week to complete.

“I have found this to be unbelievably helpful! This is now my second section that I have followed this piece of advice and, once again, I am amazed at how much the material "clicks" as I review and write the notes a second time.

Sure, it's time-consuming, but for me, it is worth it. No questions asked. Not only does it help with processing and understanding the material, but it also results in a better, more organized set of study notes to use for review up until exam date.” – Sandy

ALL COMES TOGETHER

You have watched the videos. You’ve taken ridiculous notes and have done hundreds (thousands?) of multiple-choice questions. You’ve re-written your notes.

Now, study that stack of review Gold in your hands multiple times, aim for a NINJA MCQ Trending Score of 85% heading into exam day, study your notes even more, and then go in and PASS the CPA Exam.

RE-WRITING

This step is optional, but it won over a lot of skeptics with its results. This is not mainstream advice. This is the NINJA way. The mainstream way of studying for the CPA Exam is old-fashion and outdated.

Forget the old way. You are a NINJA now.

Now is the time to either

1. Re-write your own CPA Exam notes or
2. Re-Write the NINJA Notes.

Plan on investing a week doing this and you should expect to get through 15 pages a day (Approx. 103 pages / 7) in order to stay on track.

I. Engagement Planning

THE AUDITOR

Ø Provides users of financial information with reasonable assurance that the financial statements as a whole are

o Free from Material Misstatement

§ Due to fraud or error

Ø Expresses an Opinion on the Financial Statements

o They are prepared in accordance with an Applicable Financial Reporting Framework

§ In all Material respects

Ø NOT responsible for detecting theft or fraud

o Instead, provides reasonable assurance

Ø The earlier the auditor is hired prior to the Balance Sheet Date, the better for audit planning and efficiency

o Audit procedures can be carried out at interim dates if Control Risk for the accounts/transactions is low

§ Review changes in balances at year-end

§ If the year has already been closed, an auditor can take the engagement if they are able to overcome the limitations of the engagement

GENERALLY ACCEPTED AUDITING STANDARDS (GAAS)

The 10 GAAS Standards are no longer referred to by the Clarified Audit Standards. However, the principles conveyed are still important and are foundational to the Standards. For this reason, they will remain in the NINJA Notes.

Ø Materiality and Audit Risk are foundations of GAAS

o Measure Auditor’s

§ Professional Qualifications & Judgment

General Standards (TIP)

• Education and Audit Experience

T raining and ProEiciency

• In Fact and Appearance
• Honest
• No Direct Financial Interest
• No Indirect Material Financial Interest

I ndependence

• Technical abilities mirror those held by peers in the profession
• Follow GAAS Standards
• Obtain a Reasonable Level of Assurance
• Maintain Reasonable Level of Skepticism
• Supervise Audit Staff
• Review judgment at every level

P rofessional Care