Chapter 5 - Auditing Beyond the Audit of a For-Profit Entity's Historical Financial Statements and Other Attestation Services

You have just completed Chapter 4 of BOOST and are probably beginning to think about your strategy for your final review period. During the Audit BOOST program, we have consistently noted that you should dedicate two weeks (full-time) for final review. BOOST participants’ typical reaction to this is “do I really need two weeks of final review?” If you are ready to consider the approach you will take during final review, go to the final review module on this site to download the document and watch the related video. In these resources, we provide specific guidance on how to structure your final review period. PLEASE TAKE THE TIME TO DOWNLOAD THE DOCUMENT AND WATCH THE VIDEO!!!

As you get closer to your actual exam and have recently completed the most difficult simulations in Chapters 3 and 4 of BOOST, you may be thinking about the types of simulations you can expect on your actual CPA exam. Overall, on your actual CPA exam, we predict that you will get four to five fairly straight forward simulations, two to three that are really hard, and one hard simulation that does not count towards your grade (i.e., the pre-test simulation). So, maximize your points in the multiple choice and the fairly straight forward simulations, and then fight for as many points as you can on the really hard ones. 

Related to preparing for your actual CPA exam, we hope around the end of your studies for Chapter 4 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).

Now to Chapter 5! Chapter 4 completes our discussion of an audit of historical financial statements ONLY. Chapters 5 and 6 of BOOST discuss a bunch of different topics. The overall game plan with Chapters 5 and 6 is keeping all of these different topics straight and then knowing the specific rules for each topic. We will guide you through this process as well as making you aware of the most important rules for each topic.

THE NUMBER TWO REASON CPA CANDIDATES FAIL THE AUDIT SECTION OF THE CPA EXAM WITH A SCORE BETWEEN 70% AND 74% IS NOT KEEPING ALL OF THESE DIFFERENT SERVICES STRAIGHT IN THEIR MIND. EACH TOPIC BY ITSELF IS NOT DIFFICULT BUT THERE ARE SLIGHT DIFFERENCES IN THE RULES BETWEEN CERTAIN TYPES OF SERVICES IN CHAPTERS 5 AND 6. DO YOU THINK THE CPA EXAM TRIES TO TRIP YOU UP WITH THESE SLIGHT DIFFERENCES? ABSOLUTELY YES! PLEASE DON'T FALL INTO THEIR TRAPS. IN FACT, AT LEAST 50% OF THE TIME, WE HEAR FROM FORMER AUDIT BOOST STUDENTS THAT THEY WERE SURPRISED BY HOW MUCH OF THEIR ACTUAL AUDIT CPA EXAM INCLUDED MATERIAL FROM CHAPTERS 5 AND 6 OF BOOST!

Please don't rush through this material and take your time to understand it. 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.

Also, when you are close to completing Chapter 5 of BOOST, you should take a practice test (with only multiple choice) for the content noted on page one or two of the document with content comparisons of BOOST and Becker, Roger, or Wiley CPAexcel. This practice test will help you determine how much of the Chapters 1 to 4 BOOST information you have retained and how well you have integrated the various topics in Chapters 1 to 4. 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 5! 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 5.

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 seven videos for Chapter 5 of BOOST:

Units 5–6, 5–7, and 5–8 of BOOST discuss the four different types of compliance audits. As with most items in chapter 5 of BOOST, it is important to keep these different types of engagements straight. This is especially true for compliance audits. As you look at each of these topics, please make sure you can recognize which specific type of compliance engagement the question is referring to and how the rules for each are different. The following are the types of compliance audits tested on the audit section of the CPA exam and where they are discussed in the BOOST program:

1.    Compliance attestation engagement under Statements on Standards for Attestation Engagements (SSAEs) – page 137 in the BOOST textbook.

2.    Compliance reporting in conjunction with a financial statement audit under U.S. GAAS – page 137 in the BOOST textbook.

3.    Compliance reporting in connection with Government Auditing Standards (GAGAS) – pages 138 to 140 in the BOOST textbook.

4.    Compliance reporting in connection with the Single Audit Act – pages 140 to 142 in the BOOST textbook.

Also, on page 137, item 4(b)(ii) notes that an examination expresses an opinion (i.e., reasonable assurance). This should state that an examination expresses an opinion (i.e., a positive assurance). Further, on page 148, item 5(a) notes that an audit provides “positive/reasonable assurance”. This should only state that an audit of historical financial statements provides a reasonable assurance. Although a positive and a reasonable assurance provide very similar levels of assurance, the phrase “positive assurance” is used in the context of an attestation engagement under Statements on Standards for Attestation Engagements and the term “reasonable assurance” is used in the context of an audit of historical financial statements.