AUD Exam Format and Content

The auditing and attestation (AUD) test covers topics related to auditing financial statements. CPAs perform other work that is similar to an audit, such as reviews and compilations. Those concepts are also tested. The AUD Exam Format will consist of 90 multiple-choice questions and 7 simulations.


Audits and other engagements

An engagement refers to a written agreement between the CPA firm and a client. The agreement explains the type of work the CPA will perform. To succeed on the AUD test, it’s critically important for you to understand the difference between an audit- and everything else.

Now, I make that distinction because an audit is very different from the other work a CPA performs. When a CPA performs an audit, they are stating an opinion. An audit opinion states whether or not the financial statements are free of material misstatement. In other words, did the auditor find mistakes or errors that would change the opinion of a financial statement reader? That’s what is meant by “material”.

Other engagements do not require an auditor to state an opinion. Reviews and compilations, for example, require the financial statements to be put together in a certain way. Those engagements also require a certain amount of financial disclosure. However, the CPA firm is not required to give an opinion.


A reading test

The AUD test requires you to read and understate a variety of documents. The pass rates on the AUD test are slightly lower than several other tests on the CPA exam. I think that’s because of the focus on reading. So, here’s a method to study for this area of the test.

  • Memorize the unqualified audit opinion: The AUD test covers the language in an unqualified audit opinion. There are many questions on this topic. “Unqualified” means that the auditor didn’t find any material misstatements. This opinion is issued for the vast majority of audits. Memorize this report language.
  • Understand the exceptions: If you understand the unqualified opinion language, the exceptions to that language will make more sense to you. A qualified audit opinion is referred to as an “expect for” opinion. Say, for example, that the CPA firm could not perform an inventor count. The opinion might state something like: “expect for inventory, the financial statements are free of material misstatement”.

The AUD test spends a great deal of time on audit opinion language. Invest the time to digest this information.


Find someone with experience

Over the years, I’ve found that auditing concepts are difficult to teach and explain without real world examples. More than any other test on the CPA exam, auditing requires explanations based on experience.

Let’s continue with that inventory example. When an audit is preformed, the auditor works with assertions. One assertion is completeness. Completeness refers to the need for transactions to be posted in the correct period (month or year).

That probably sounds vague. OK- here’s an example to explain that assertion. Auditors count inventory as close to the end of an accounting period as possible. The count is performed to ensure that the physical count agrees to the accounting records. The best way to ensure that the value of inventory is properly stated at year-end is to count the inventory.

Real life examples can make all the difference on your study for this test. If you don’t have experience as an auditor, find someone who does. Ask them to provide examples on areas of the exam that are confusing to you. Those examples can help you understand the concepts.

Use these tips to succeed on the AUD test. If you do these two things, you’ll be well on your way.


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