fbpx

Ultimate Guide to the AUD Section: CPA Exam Blueprint and Study Resources

Area I - Ethics, Professional Responsibilities and General Principles (15-25%)

Skill
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
A. Ethics, independence and professional responsibilities
1. AICPA Code of Professional Conduct Understand the principles, rules and interpretations included in the AICPA Code of Professional Conduct.
Apply the principles, rules and interpretations included in the AICPA Code of Professional Conduct to situations.
Apply the Conceptual Framework for Members in Public Practice and Members in Business included in the AICPA Code of Professional Conduct to situations that could present threats to compliance with the rules included in the Code.
Apply the Conceptual Framework for Independence included in the AICPA Code of Professional Conduct to situations that could present threats to compliance with the rules included in the Code.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Requirements of the Securities and Exchange Commission and the Public Company Accounting Oversight Board Understand the ethical and independence requirements of the Securities and Exchange Commission and the Public Company Accounting Oversight Board.
Apply the ethical requirements and independence rules of the Securities and Exchange Commission and the Public Company Accounting Oversight Board to situations that could compromise compliance or impair independence during an audit of an issuer.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
3. Requirements of the Government Accountability Office and the Department of Labor Understand the ethical and independence requirements of the Government Accountability Office Government Auditing Standards.
Understand the independence requirements of the Department of Labor.
Apply the ethical requirements and independence rules of the Government Accountability Office Government Auditing Standards to situations that could present threats to compliance during an audit of, or attestation engagement for, a government entity or an entity receiving federal awards.
Apply the independence rules of the Department of Labor to situations when an accountant would not be considered independent during an audit of employee benefit plans.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
B. Professional skepticism and professional judgment
Understand the concepts of professional skepticism and professional judgment.
Understand unconscious auditor biases and other impediments to acting with professional skepticism, including threats, incentives and judgment-making shortcuts.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
C. Nature and scope
1. Audit engagements Identify the nature, scope and objectives of the different types of audit engagements for issuers and nonissuers.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Engagements conducted under Government Accountability Office Government Auditing Standards Identify the nature, scope and objectives of engagements performed in accordance with Government Accountability Office Government Auditing Standards, including single audits.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
3. Other engagements Identify the nature, scope and objectives of attestation engagements and accounting and review service engagements.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
E. Requirements for engagement documentation
Identify the elements that comprise sufficient appropriate documentation in physical or electronic form for an engagement.
Identify the requirements for the assembly and retention of documentation in physical or electronic form for an engagement.
Prepare documentation that is sufficient to enable an experienced auditor or practitioner having no previous connection with an engagement to understand the nature, timing, extent and results of procedures performed, the significant findings and conclusions reached and the significant professional judgments made.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
F. Communication with management and those charged with governance
1. Planned scope and timing of an engagement Identify the matters related to the planned scope and timing of an engagement that should be communicated to management and those charged with governance.
Prepare presentation materials and supporting schedules for use in communicating the planned scope and timing of an engagement to management and those charged with governance.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Internal control related matters Identify the matters related to deficiencies and material weaknesses in internal control that should be communicated to those charged with governance and management for an engagement and the timing of such communications.
Prepare written communication materials for use in communicating identified internal control deficiencies and material weaknesses for an engagement to those charged with governance and management.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
G. Audit and assurance quality
Identify a CPA firm’s responsibilities for its accounting and auditing practice’s engagement quality.
Explain procedures and responsibilities for managing engagement quality.

Area II - Assessing Risk and Developing a Planned Response (25-35%)

Skill
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
A. Planning an engagement
1. Overall engagement strategy Explain the purpose and significance of the overall engagement strategy for an engagement.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Engagement plan Prepare a draft engagement plan for specific processes, accounts or classes of transactions considering the prior period and changes in the current period.
Prepare supporting planning-related materials (e.g., client assistance request listings, time budgets) for a detailed engagement plan starting with the prior-year engagement plan or with a template.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
B. Understanding an entity and its environment
1. External factors Understand supply and demand, elasticity measures and profit maximization (e.g. marginal cost, marginal revenue).
Understand the business cycles (trough, expansion, peak, recession) and leading, coincident and lagging indicators of economic activity (e.g., consumer price index, producer price index, federal funds rate, bond yields, unemployment).
Identify relevant factors (e.g., economic, environmental, financial reporting framework, government policy, industry, regulatory, supply chain, technology) that could impact an entity, its operations, and/or the inherent risk of material misstatement.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Internal factors Understand the entity’s responsibilities with respect to the corporate governance provisions of the Sarbanes-Oxley Act of 2002.
Identify the relevant factors that define the nature of an entity, including the impact on the risk of material misstatement (e.g., its operations, ownership and governance structure, investment and financing plans, selection of accounting policies and objectives and strategies).
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
C. Understanding an entity’s control environment and business processes, including information technology (IT) systems
1. COSO Internal Control – Integrated Framework Define internal control within the context of the COSO internal control framework, including the purpose, objectives and limitations of the framework.
Identify and define the components, principles and underlying structure of the COSO internal control framework.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Control environment, IT general controls, and entity-level controls Understand the elements of an entity’s control environment, including the design and implementation of IT general controls and entity-level controls.
Perform procedures to obtain an understanding of how an entity has responded to risks arising from the use of IT, including identifying and testing the design and implementation of relevant IT general controls.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
3. Business processes and the design of internal controls, including the IT environment Identify and document the significant business processes and data flows that directly or indirectly impact an entity’s financial statements.
Perform a walkthrough of a significant business process and document (e.g., flow charts, process diagrams, narratives) the flow of relevant transactions and data from initiation through financial statement reporting and disclosure.
Obtain an understanding of an entity’s IT infrastructure (e.g., ERP, cloud computing or hosting arrangements, custom or packaged applications) and document the procedures performed to obtain that understanding.
Obtain an understanding of IT applications that are, directly or indirectly, the source of financial transactions or the data used to record financial transactions (e.g., how the entity uses IT applications to capture, store, and process information).
Perform tests of the design and implementation of relevant automated and manual transaction-level internal controls (e.g. authorizations and approvals, reconciliations, verifications, physical or logical controls, segregation of duties).
Identify and document the relevant automated and manual controls within the flow of an entity’s transactions for a significant business process and consider the effect of these controls on the completeness, accuracy and reliability of an entity’s data.
Conclude whether relevant automated and manual transaction-level internal controls are effectively designed and placed in operation.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
4. Implications of an entity using a service organization Understand the differences between SOC 1® and SOC 2® engagements.
Identify and document the purpose and significance of an entity’s use of a service organization, including the impact of using a SOC 1® Type 2 report in an audit of an entity’s financial statements.
Use a SOC 1® Type 2 report to determine the nature and extent of testing procedures to be performed in an audit of an entity’s financial statements.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
5. Limitations of controls and risk of management override Understand the limitations of internal controls and the potential impact on the risk of material misstatement of an entity’s financial statements.
Identify and document the risks associated with management override of internal controls and the potential impact on the risk of material misstatement of an entity’s financial statements.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
D. Materiality
1. For the financial statements as a whole Understand materiality, including qualitative considerations, as it relates to the financial statements and related disclosures as a whole.
Calculate materiality for an entity’s financial statements as a whole.
Calculate the materiality level (or levels) to be applied to classes of transactions, account balances and disclosures in an audit of an issuer or nonissuer.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Tolerable misstatement and performance materiality Understand the use of tolerable misstatement or performance materiality in an audit.
Determine tolerable misstatement or performance materiality for the purposes of assessing the risk of material misstatement and determining the nature, timing and extent of further audit procedures in an audit of an issuer or nonissuer.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
E. Assessing and responding to risks of material misstatement, whether due to fraud or error
Determine the pressures, incentives and opportunities for fraud (e.g., fraudulent financial reporting, misappropriation of assets) that could lead to the risk of material misstatement.
Determine risk of material misstatement, whether due to fraud or error, at the financial statement level and relevant assertion level for each significant class of transactions, significant account and disclosure.
Determine a response to risks of material misstatement at the financial statement level (e.g. maintaining professional skepticism, engagement team supervision, incorporating elements of unpredictability), considering the auditor’s understanding of the control environment.
Determine appropriate procedures to assess the operating effectiveness of relevant controls.
Determine appropriate substantive procedures to test relevant assertions for each significant class of transactions, significant account and disclosure.
Determine procedures to satisfy the requirements and objectives of an attestation engagement.
Determine procedures to satisfy the requirements and objectives of an accounting and review services engagement.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
F. Planning for and using the work of others
Identify the factors to consider in determining the extent to which an engagement team can use the work of the internal audit function, IT auditor, auditor’s specialist, management’s specialist or a component auditor.
Determine the nature and scope of the work of the internal audit function, IT auditor, auditor’s specialist, management’s specialist or component auditor.
Perform and document procedures to determine the extent to which an engagement team can use the work of the internal audit function, IT auditor, auditor’s specialist, management’s specialist or a component auditor.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
G. Specific areas of engagement risk
1. An entity’s compliance with laws and regulations Understand the accountant’s responsibilities with respect to laws and regulations that have a direct effect on the determination of material amounts or disclosures in an entity’s financial statements for an engagement.
Understand the accountant’s responsibilities with respect to laws and regulations that are fundamental to an entity’s business but do not have a direct effect on the entity’s financial statements in an engagement.
Perform tests of compliance with laws and regulations that have a direct effect on material amounts or disclosures in an entity’s financial statements in an engagement.
Perform tests of compliance with laws and regulations that are fundamental to an entity’s business, but do not have a direct effect on the entity’s financial statements for an engagement.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Accounting estimates Recognize the potential impact of lower complexity and higher complexity significant accounting estimates on the risk of material misstatement, including the indicators of management bias.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
3. Related parties and related party transactions Perform procedures to identify related party relationships and transactions, including consideration of significant unusual transactions and transactions with executive officers.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
4. Uniform Guidance for single audits Understand when an entity is required to have a single audit in accordance with the audit requirements of the Uniform Guidance, including the identification of federal awards and major programs.

Area III - Performing Further Procedures and Obtaining Evidence (30-40%)

Skill
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
A. Use of data and information
1. Requesting, preparing and transforming data Explain the components of a relational database (e.g., tables, records, fields/ attributes, primary and foreign keys, normalization).
Explain the characteristics and uses of different measurement scales (e.g., nominal, ordinal, interval, ratio, continuous, discrete).
Determine attribute structures, format, and sources of data needed when making a data extraction request to complete planned procedures.
Determine methods to transform (e.g., preparing, cleaning, scrubbing) data to complete planned procedures.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Reliability of data and information Perform procedures (e.g., agreeing information to original sources such as general ledger, subledger or external information sources, validating search or query criteria used to obtain data) to validate the reliability (completeness, accuracy, authenticity and susceptibility to management bias) of data and information obtained.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
3. Data analytics Describe how to apply automated tools and techniques to process, organize, structure or present data in a given context to generate useful information that can be used as evidence.
Perform procedures using outputs (e.g. reports, visualizations) from audit data analytic techniques to determine relationships, trends or notable items in the data and identify the appropriate audit response.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
B. Sufficient appropriate evidence
Determine the sources of sufficient appropriate evidence (e.g., obtained from management specialists, obtained from external sources, developed by the audit team from internal or external sources).
Exercise professional skepticism and professional judgment while analyzing information to be used as audit evidence taking into account its relevance and reliability, authenticity and whether such information corroborates or contradicts the assertions in the financial statements.
Conclude whether sufficient appropriate evidence has been obtained to achieve the objectives of the planned procedures.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
C. Sampling techniques
Understand the purpose and application of sampling techniques including the use of automated tools and audit data analytic techniques to identify significant events or transactions that may impact the financial statements.
Identify the appropriate population of items to sample to meet the objectives of the planned procedures.
Determine the appropriate sampling method to be used in order to accomplish the objective (control, attribute, test of detail) of the planned procedures.
Use sampling techniques to extrapolate the characteristics of a population from a sample of items.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
D. Procedures to obtain sufficient appropriate evidence
1. Test of controls and test of details Use observation and inspection to obtain evidence.
Use recalculation (manually or using automated tools and techniques) to test the mathematical accuracy of information to obtain evidence.
Use reperformance to independently execute procedures or controls to obtain evidence.
Inquire of management and others to gather evidence and document the results.
Analyze responses obtained during structured interviews or informal conversations with management and others, including those in non-financial roles, and ask relevant and effective follow-up questions to understand their perspectives and motivations.
Perform tests of operating effectiveness of internal controls, including the analysis of exceptions to identify deficiencies in an audit of financial statements or an audit of internal control.
Perform tests of details, including the analysis of exceptions, to identify potential misstatements in an audit of financial statements.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Analytical procedures Determine the suitability of substantive analytical procedures to provide evidence to support an identified assertion.
Perform substantive analytical procedures, including developing an expectation, on an account balance to provide evidence to support an identified assertion.
Perform analytical procedures near the end of an audit engagement that assist the auditor when forming an overall conclusion about whether the financial statements are consistent with the auditor’s understanding of the entity.
Evaluate and investigate differences resulting from analytical procedures (e.g., fluctuations or relationships that are inconsistent with other information or expected values).
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
3. External confirmations Confirm significant account balances and transactions using appropriate tools and techniques (e.g., confirmation services, electronic confirmations, manual confirmations) to obtain relevant and reliable evidence.
Analyze external confirmation responses to determine the need for follow-up or further investigation.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
E. Specific matters that require special consideration
1. Accounting estimates Recalculate and reperform procedures to validate the inputs and assumptions of an entity’s significant accounting estimates with a higher risk of material misstatement or complexity, such as fair value estimates.
Perform procedures (e.g. reviewing the work of a specialist and procedures performed by the engagement team) to validate an entity’s calculations and detailed support for significant accounting estimates, including consideration of information that contradicts assumptions made by management.
Conclude on the reasonableness of significant accounting estimates with a lower risk of material misstatement or complexity in an audit.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Investments in securities Identify the considerations relating to the measurement and disclosure of the fair value of investments in securities in an audit.
Test management’s assumptions, conclusions and adjustments related to the valuation of investments in securities in an audit.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
3. Inventory and inventory held by others Test the ending inventory quantities in an audit by obtaining evidence regarding the existence and condition of inventory and inventory held by others (e.g., inventory counting procedures, confirmation) and conclude whether inventory records accurately reflect count results.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
4. Litigation, claims and assessments Perform appropriate audit procedures, including inquiring of management and others, reviewing minutes and sending external confirmations, to detect the existence of litigation, claims and assessments.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
5. An entity’s ability to continue as a going concern Identify factors that should be considered while performing planned procedures that may indicate substantial doubt about an entity’s ability to continue as a going concern for a reasonable period of time.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
6. Uniform Guidance for single audits Test transactions related to federal awards for compliance with statutes, regulations, and the terms and conditions of the federal awards.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
F. Misstatements and internal control deficiencies
Prepare a summary of corrected and uncorrected misstatements.
Determine the effect of uncorrected misstatements on an entity’s financial statements in an engagement.
Determine the effect of identified misstatements on the assessment of internal control over financial reporting, individually and in the aggregate.
Evaluate internal control deficiencies to determine potential impact on the nature, timing, and extent of audit procedures.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
G. Written representations
Identify the written representations that should be obtained from management or those charged with governance in an engagement.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
H. Subsequent events and subsequently discovered facts
Recall the impact of subsequently discovered facts on the auditor’s report.
Perform procedures to identify subsequent events that should be reflected in an entity’s current period financial statements and disclosures.
Determine whether identified subsequent events are appropriately reflected in an entity’s financial statements and disclosures.

Area IV - Forming Conclusions and Reporting (10-20%)

Skill
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
A. Reporting on audit engagements
Identify the factors that an auditor should consider when forming an opinion on an entity’s financial statements.
Identify the factors that an auditor should consider when forming an opinion on the effectiveness of internal control in an audit of internal control over financial reporting that is integrated with an audit of financial statements.
Identify the type of opinion (unqualified or unmodified, qualified, adverse, or disclaimer of opinion) that an auditor should render on the audit of an issuer or nonissuer’s financial statements.
Identify the appropriate use of emphasis-of-matter and other-matter (explanatory) paragraphs.
Determine the appropriate form and content of an auditor’s report for an engagement, including the appropriate use of emphasis-of-matter and other-matter (explanatory) paragraphs.
Determine the appropriate form and content of a report on the audit of internal control over financial reporting, including report modifications and the use of separate or combined reports for the audit of an entity’s financial statements and the audit of internal control.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
B. Reporting on attestation engagements
1. Examination or review engagements Identify the factors that a practitioner should consider when issuing an assertion-based examination, direct examination or review report.
Determine the appropriate form and content of an accountant’s report for an assertion-based examination, direct examination, or review for an attestation engagement.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Agreed-upon procedures engagements Identify the factors that a practitioner should consider when issuing an agreed-upon procedures report for an attestation engagement.
Determine the appropriate form and content of an agreed-upon procedures report for an attestation engagement.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
C. Accounting and review service engagements
1. Preparation engagements Identify the factors that an accountant should consider when performing a preparation engagement.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Compilation engagements Identify the factors that an accountant should consider when reporting on an engagement to compile an entity’s financial statements.
Determine the appropriate form and content of an accountant’s report for a compilation engagement.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
3. Review engagements Identify the factors that an accountant should consider when reporting on an engagement to review an entity’s financial statements.
Determine the appropriate form and content of an accountant’s report for a review engagement.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
D. Reporting on compliance
Identify the factors that an auditor should consider when reporting on compliance with aspects of contractual agreements or regulatory requirements in connection with an audit of an entity’s financial statements.
Identify the factors that a practitioner should consider when reporting on an attestation engagement related to an entity’s compliance with the requirements of specified laws, regulations, rules, contracts or grants, and reports on the effectiveness of internal controls over compliance with the requirements.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
E. Other reporting considerations
1. Comparative statements and consistency between periods Identify the factors (change in accounting principle, the correction of a material misstatement, or a material change in classification) that would affect the comparability or consistency of financial statements.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Other information in documents with audited statements Understand the auditor’s responsibilities related to other information included in documents with audited financial statements.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
3. Review of interim financial information Identify the factors an auditor should consider when reporting on an engagement to review interim financial information.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
4. Supplementary information Identify the factors an auditor should consider when reporting on supplementary information included in or accompanying an entity’s financial statements.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
5. Additional reporting requirements under Government Accountability Office Government Auditing Standards Identify requirements under Government Accountability Office Government Auditing Standards related to reporting on internal control over financial reporting and compliance with provisions of the law, regulations, contracts, grant agreements and federal awards that have a material effect on the financial statements.
Understand the requirements when preparing the auditor’s report on compliance and internal control over compliance – major programs and the auditor’s schedule of findings and questioned costs for a single audit.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
6. Special-purpose frameworks Identify the factors an auditor should consider when reporting on the audit of financial statements prepared in accordance with the cash basis, tax basis, regulatory basis, contractual basis or other basis of accounting.