AUD exam tips to pass the test the first time

Two challenging areas on the AUD test are audit reports and assertions. If you have a strategy for these two areas, you can have more success on this test. The AUD test material is easier to learn if your have a variety of examples. If you don’t have experience as an auditor, find a mentor who can answer questions for you. Use these AUD exam tips for success on the test.


Engagement report language

Engagement report language is a difficult topic on the AUD test. Here’s a strategy to approach this part of the test:

  • Define an audit: Everything starts with the definition of an audit. An audit is an opinion. The auditor states whether or not the financial statements are free of material misstatement. In this context, “material” means an error that is large enough to change the opinion of the financial statement reader. No other engagement requires the auditor to give an opinion.
  • Unqualified audit report: Memorize this report language. Most of the questions in the audit report section address an unqualified opinion. Unqualified means that the financial statements are materially correct, according to the auditor’s opinion. I wouldn’t be surprised if you have an AUD question that tests every sentence in an unqualified report.
  • Qualified audit reports: The vast majority of audit opinions are unqualified. Qualified opinions, on the other hand, are referred to as “except for” opinions. Say, for example, that the auditor was not able to perform a physical count of inventory. That missing procedure would prevent an auditor from issuing an unqualified opinion. The report language will state that the auditor cannot provide an opinion on inventory. If you understand the language of an unqualified report, these exceptions are easier to digest.

Take this approach when you study audit report language.


Audit assertions

When you perform an audit, you’re forming an opinion about financial statements created by company management. When management creates their financial statements, they must follow some rules of the road. Those rules are referred to as assertions.

Here’s why I bring up assertions: If you understand the assertions covered on the AUD test, you’ll understand why many audit procedures are performed.

The cutoff assertion, for example, means that the accounting transactions are posted to the proper time period (month or year). Say, for example, that a sporting goods company posts revenue when goods are shipped to clients.

If an auditor wanted to ensure that revenue was posted to the correct period, he or she would compare the shipping records to the accounting entries for revenue. If you understand the assertion, the audit procedure should make more sense to you.


Find an experienced auditor

The AUD test can only be understood using examples from actual audits. Students can benefit by finding an auditor who can answer questions. Let’s go back to that cutoff example. An experienced auditor may have 4 or 5 good examples to explain cutoff. That may help the student clear up any confusion about the cutoff assertion.

As you start to study for the AUD test, keep these tips in mind. Go over the audit report concepts and audit assertions in detail. Find an experienced auditor to help you clear up any confusion. These tips will help you succeed on the AUD test.


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