AUD Task Based Simulations – What to Expect

Having the right expectations is key when it comes to the Uniform CPA Exam. On test day, you do not want to be blindsided and have a truckload of anxiety. To help you mitigate any potential test day stress, we are going to discuss what to expect on the task based simulations of the Auditing and Attestation (AUD) portion of the CPA Exam. As a reminder, the AUD task based simulations make up 40 percent of the AUD section and is comprised of seven unique simulations.
 

AUD Task Based Simulations Example

For each of the blanks in the Report of Independent Registered Public Accounting Firm, fill in the underlined cells and select from the list provided the appropriate word or phrase to complete the indicated sentence in the accountant’s report.

Report of Independent Registered Public Accounting Firm

We have audited the accompanying balance sheets of W Company as of December 31, 20X8 and 20X7, and the related statements of income, stockholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 20X8. We also have audited W Company’s internal control over financial reporting as of December 31, 20X8, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). W Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to (1)_____________ over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we (2)_____________ about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and (3)_____________ based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes (4)_____________. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

(5)_____________ Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

(6)_____________ the financial position of W Company as of December 31, 20X8 and 20X7, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 20X8 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, W Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 20X8, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Signature ]
City and State or Country ]

Date ]
 

AUD Task Based Simulation Example Fill in the Blank Options

(1)

  1. express an opinion on the company’s internal control
  2. express an opinion on these financial statements
  3. provide assurance on these financial statements and an opinion on the company’s internal control
  4. express an opinion on these financial statements and an opinion on the company’s internal control

(2)

  1. plan and perform the audits to obtain absolute assurance
  2. plan and perform the audits to obtain reasonable assurance
  3. plan and perform the review to obtain reasonable assurance
  4. plan and perform the compilation to obtain reasonable assurance

(3)

  1. testing and evaluating the design and operating efficiency of internal control
  2. testing and examining the design and operating effectiveness of internal control
  3. testing and evaluating the design and operating effectiveness of internal control
  4. testing and evaluating the design and operating effectiveness of substantive procedures

(4)

  1. in accordance with generally accepted accounting principles
  2. in accordance with international auditing standards
  3. in accordance with generally accepted auditing standards
  4. in accordance with accounting standards generally accepted in the United States

(5)

  1. As a result of inherent limitations, internal controls over financial reporting may prevent or detect misstatements.
  2. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
  3. As a result of inherent limitations, internal controls over financial reporting may not prevent or detect misstatements.
  4. Because of its inherent limitations, internal control over financial reporting may prevent or detect misstatements.

(6)

  1. In our opinion, the financial statements referred to above present fairly, in all absolute respects,
  2. The financial statements referred to above present fairly, in all material respects, in our opinion,
  3. In our opinion, the financial statements referred to above present fairly, in accordance with materiality,
  4. In our opinion, the financial statements referred to above present fairly, in all material respects,

 

AUD Task Based Simulation Example Solution

Report of Independent Registered Public Accounting Firm

We have audited the accompanying balance sheets of W Company as of December 31, 20X8 and 20X7, and the related statements of income, stockholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 20X8. We also have audited W Company’s internal control over financial reporting as of December 31, 20X8, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). W Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of W Company as of December 31, 20X8 and 20X7, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 20X8 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, W Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 20X8, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Signature ]
City and State or Country ]

Date ]
 

AUD Task Based Simulation Suggestions

In the above example task based simulation, you could have approached the problem using a combination of process of elimination, educated guessing, and blunt memorization. Although you may have been successful, there is a more efficient approach that can you save you both time and incremental effort. On several, if not all, task based simulations, you should reference the Authoritative Literature tab to help you find appropriate guidance on the task based simulation that you are currently working on. Using appropriate search terms can help you improve your accuracy on this section tremendously. With your test prep product, practice, practice, practice. I understand that at first it may feel unnatural and may take more time to use the Authoritative Literature; however, after attempting many simulations, using search terms will become second nature to you and your accuracy will most likely improve substantially. As always, remember to breathe.

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