Chapter 3 - Audit of Historical Financial Statements (Internal Control and Substantive Tests)

We hope your studying is going well. We understand that Chapter 2 of BOOST had a significant amount of material in it and you may be feeling overwhelmed at this point, but remember to just take this step-by-step! Work the hardest you can each day and understand that this is a significant sacrifice that will absolutely be worth it. You will feel incredible when you pass audit (and even more incredible when you pass all four sections of the CPA exam) and can put this experience behind you. Then, you will be a CPA for the rest of your life and we can tell you, unequivocally, that the CPA will pay significant dividends for you in the future. 

If you are studying full time, our hope is that you are studying 6 to 8 hours a day, 5 days a week. Remember, if you are planning to study six weeks (full-time) for audit, you should be working through the six chapters in about four weeks and have about two weeks for final review. If you are studying part-time, you should be studying about 15 to 20 hours per week. Remember, these are just averages. The most important thing is not meeting these deadlines. THE MOST IMPORTANT THING IS LEARNING THE MATERIAL, RETAINING THE MATERIAL, AND APPLYING THE MATERIAL TO THE MULTIPLE CHOICE/SIMULATIONS AS YOU GO THROUGH THIS PROCESS!

Related to retaining the material, we hope around the end of your studies for Chapter 2 of BOOST, you took a practice test on the previous material to provide you feedback regarding how well you understand this material and are retaining it (remember, if you are not retaining it, you need to consider changing your study plan).

Also, you should be placing into memory a subsection of the BOOST outlines. This process may involve reading the outlines or creating a subsection of the outlines that you read over and over again, creating your own flash cards, or something else (remember, we do not recommend creating your own flashcards unless absolutely necessary). The key is that your approach to placing this information in your memory should be efficient (i.e., not taking too much time to adapt our outlines) and effective (i.e., seeing in the practice tests that you are scoring well).

Overall, at this point in your studying, you should be in a good rhythm with the material. This means that you have your study process down and are seeing positive results. If this is not the case, you need to reassess your study approach. 

So, are we ever going to get to the actual material for Chapter 3? The answer is yes. At this point in the audit BOOST program, we are in the middle of our discussion of the detailed requirements regarding how an auditor conducts an audit of historical financial statements from the beginning to the end. In Chapter 2 of BOOST, we concluded with step #3 (gaining an understanding of internal control). In these notes for Chapter 3, we will discuss steps 4, 5 and 6 in Appendix D of Chapter 2. It is important that you look at Appendix D of Chapter 2 to understand where we are in the audit process and continue to keep in mind the logical sequence of an audit of historical financial statements.

As we mentioned in Chapter 2 of BOOST, please don't rush through this material and take your time to understand it. This is especially true for Chapters 3 and 4 of BOOST because many of the simulations in these two chapters are very difficult (please keep in mind that all CPA candidates feel this way about these simulations. So don’t get too concerned).

Remember, an additional week of studying (if needed) will be well worth it if the additional time is the difference between passing and failing the audit section of the CPA exam! Also, it is significantly more effective and efficient to address weaknesses in a specific topic when working on that topic rather than waiting until final review to address those weaknesses.

When you are close to completing Chapter 3 of BOOST, you should take a practice test (with only multiple choice) for the content noted on page one or two of the document "Content Comparison of BOOST and Becker, Roger and Wiley CPAexcel". This practice test will help you determine how much of the Chapters 1 and 2 BOOST information you have retained and how well you have integrated the various topics in Chapters 1 and 2. You should review your notes (which are a subsection of the BOOST outlines) periodically during the week to keep this information fresh in your mind. 

Good luck as you begin your studies of Chapter 3! Some of the page numbers in the videos are not the same as the page numbers in the BOOST textbook. Please use the page numbers in the BOOST textbook.

Remember, please contact BOOST CPA Review by email if you have any questions as you work through Chapter 3.

AFTER WATCHING EACH VIDEO BELOW, please complete the appropriate multiple choice and simulations related to each of these videos. Please refer to the document with content comparisons of BOOST and Becker, Roger, or Wiley CPAexcel to determine which multiple choice and simulations to complete.

Here are the six lecture videos for Chapter 3 (only six lecture videos compared to the 12 videos for Chapter 2. Things are looking up!). GOOD LUCK!