The Auditing and Attestation section of the CPA Exam covers audits, attestation engagements, and preparation, compilation and review engagements. Unlike the other three CPA Exam sections, AUD tests a candidate’s ability to assess problems and use judgment to draw conclusions. These skills are paramount in the auditing profession, and the exam seeks to ensure candidates can accurately and ethically judge situations in order to perform the auditing and attestation requirements of a certified public accountant.
To help you get more comfortable with the AUD CPA Exam, we’ve put together everything you need to know about the exam, including the structure, content, scoring, and best practices.
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Structure of AUD
AUD CPA Exam Format
The AUD section format is broken down into the following:
- Section 1: Welcome and Launch Code
- Section 2: Confidentiality and Section Information
- Testlet 1: 36 Multiple Choice Questions
- Testlet 2: 36 Multiple-Choice Questions
- Testlet 3: 2 Task-Based Simulations
- Testlet 4: 3 Task-Based Simulations
- Testlet 5: 3 Task-Based Simulations
AUD CPA Exam Questions
AUD has two types of questions within the 5 testlets:
Multiple Choice Questions – These are one sentence to paragraph length questions with four potential answers. Of the total 72 MCQs on the AUD Exam, 12 are pretest questions and do not count toward a candidate’s score.
Task-Based Simulations – These are practical questions requiring candidates to type in answers, and may include a research question, journal entries, filling out a form with multiple questions, reconciling accounts, or filling out sections of reports. Of the 8 task-based simulations (TBSs), one is a pretest question and does not count toward a candidate’s score.
Each section of the pre-exam takes 5 minutes for a total of 10 minutes before the actual exam starts.
The actual AUD Exam is four hours long with one 15-minute break built in between the first and second task-based simulation testlets. There are also two optional breaks, one after the first multiple choice testlet and one after the second multiple choice testlet, although the timer does run during these breaks.
When taking the exam, candidates should keep track of the time in relation to how many questions they have completed and how many they must finish. A good way to discover how to best allocate your time is to take a few practice exams and make mental notes on when you need to move on from certain sections of the exam in order to finish each part in time.
Candidates do not need to take the entire four hours on the exam and are not penalized for finishing early.
Like all four parts of the CPA Exam, the content of the AUD Exam is unique and covers the auditing and attestation portion of the profession. Auditing is heavily dependent on evaluation, so unlike the other three exams, AUD includes an evaluation skill level.
A High-Level Overview
CPA Exam AUD questions are based on four content areas, listed below with related exam content percentages:
- Area I: Ethics, Professional Responsibilities, and General Principles 15-25%
- Area II: Assessing Risk and Developing a Planned Response 20-30%
- Area III: Performing Further Procedures and Obtaining Evidence 30-40%
- Area IV: Forming Conclusions and Reporting 15-25%
Within these content areas, different skill levels are tested, which are listed below with their exam content allocation percentage:
- Level I: Remembering and Understanding 30-40%
- Level II: Application 30-40%
- Level III: Analysis 15-25%
- Level IV: Evaluation 5-15%
More than with any other exam, AUD candidates looking to take the AUD Exam should be able to apply concepts to specific situations and evaluate the necessary steps in a process.
Candidates will likely face more application, analysis, and evaluation within the task-based simulation portions of the AUD Exam.
To help you better understand what specific topics will be covered within each area of AUD, we’ll go over the specific content groups within each area.
Area I: Ethics, Professional Responsibilities, and General Principles
- Nature and scope
- Nature and scope: audit engagements
- Nature and scope: engagements conducted under Government Accountability Office Government Auditing Standards
- Nature and scope: non-audit engagements
- Ethics, independence, and professional conduct
- AICPA Code of Professional Conduct
- Requirements of the Securities and Exchange Commission and the Public Company Oversight Board
- Requirements of the Government Accountability Office and the Department of Labor
- Terms of engagement
- Preconditions for an engagement
- Terms of engagement and engagement letter
- Requirements for engagement documentation
- Communication with management and those charged with governance
- Planned scope and timing of an engagement
- Internal control related matters
- All other matters
- Communication with component auditors and parties other than management and those charged with governance
- A firm’s system of quality control, including quality control at the engagement level
Area II: Assessing Risk and Developing a Planned Response
- Planning an engagement
- Developing an overall engagement strategy
- Developing a detailed engagement plan
- Understanding an entity’s internal control
- Control environment and entity-level controls
- Flow of transactions and design of internal controls
- Implications of an entity using a service organization
- Information technology general and application controls
- Limitations of controls and risk of management override
- Debtor-creditor relationships
- Rights, duties, and liabilities of debtors, creditors and guarantors
- Bankruptcy and insolvency
- Secured transactions
- Assessing risk due to fraud, including a discussion among the engagement team about the risk of material misstatement due to fraud or error
- Identifying and assessing the risk of material misstatement, whether due to error or fraud and planning further procedures responsive to identified risk
- Impact of risks at the financial statement level
- Impact of risks for each relevant assertion at the class of transaction, account balance and disclosure levels
- For the financial statement as a whole
- Performance materiality and tolerable misstatement
- Planning for and using the work of others, including group audits, the internal audit function and the work of a specialist
- Specific areas of engagement risk
- An entity’s compliance with laws and regulations, including possible illegal acts
- Accounting estimates, including fair value estimates
- Related parties and related party transactions
Area III – Performing Further Procedures and Obtaining Evidence
- Acquisition and disposition of assets
- Sampling techniques
- Performing specific procedures to obtain evidence
- Analytical procedures
- External confirmations
- Inquiry of management and others
- Observation and inspection
- Recalculation and reperformance
- All other procedures
- Specific matters that require special consideration
- Opening balances
- Investments in securities and derivative instruments
- Inventory and inventory held by others
- Litigation, claims, and assessments
- An entity’s ability to continue as a going concern
- Accounting estimates, including fair value estimates
- Misstatements and internal control deficiencies
- Written representation
- Subsequent events and subsequently discovered facts
Area IV – Forming Conclusions and Reporting
- Reports on auditing engagements
- Forming an audit opinion, including modification of an auditor’s opinion
- Form and content of an audit report, including the use of emphasis-of-matter (explanatory) paragraphs
- Audit of internal control integrated with an audit of financial statements
- Reports on attestation engagements
- General standards for attestation reports
- Agreed-upon procedures reports
- Reporting on controls at a service organization
- Accounting and review service engagements
- Preparation engagements
- Compilation reports
- Review reports
- Reporting on compliance
- Other reporting considerations
- Comparative statements and consistency between periods
- Other information in documents with audited statements
- Review of interim financial information
- Supplementary information
- Single statements
- Special-purpose and other country frameworks
- Letters for underwriting and filings with the SEC
- Alerts that restrict the use of written communication
- Additional reporting requirements under Government Accountability Office Government Auditing Standards
CPA Exam Scoring
In the AUD CPA Exam, 50% of a candidate’s score is derived from multiple choice questions while 50% is derived from task-based simulations. An exam score of 75 or more is required to pass.
Candidates should keep in mind that there are no penalties for wrong answers. A correct answer gains points, no answer gets zero points and a wrong answer gets zero points. Therefore, it is always good to guess at an answer as opposed to leaving it blank; if you get it right, you’ll receive points toward a passing score.
Multiple Choice Question Scoring
Each candidate is presented with a multiple choice testlet of ‘medium’ difficulty first. This difficulty level refers to the difficulty, on average, of the questions in the testlet. Some may be harder, some may be easier, but on average, they are of medium difficulty.
If a candidate does well on the first testlet, the second testlet will, on average, be more difficult. If a candidate does average or not well on the first testlet, the second testlet will remain at ‘medium’ difficulty.
Difficult questions are worth more than medium questions. A candidate who does well on the first testlet but struggles with the second testlet with more difficult questions is not penalized since correct answers on this testlet are worth more. Keep in mind, it is still possible to pass the exam if a candidate gets two medium testlets. If a candidate performs well on the second medium testlet, she or he can still pass the exam provided a good score is achieved on the task-based simulations.
Task-Based Simulation Question Scoring
AUD CPA Exam are pre-set and do not change in relation to a candidate’s performance. However, candidates can receive partial credit on non-research based task-based simulations by answering part of the question correctly.
AUD CPA Exam Tips
The AUD Exam covers a lot of information regarding auditing and attestation engagements. If you’re considering sitting for AUD in the near future, use these 6 tips to make your experience smoother.
Tip 1: Consider Taking AUD – The content in AUD and FAR build off each other, and there is considerable overlap in the material. You may get questions on AUD that relate to FAR material, and there is a possibility the simulations will ask similar questions to those on FAR. By taking AUD right after FAR, you may reduce your study time since some of the material may be familiar from studying FAR.
Tip 2: Know Your Reconciliations and Journal Entries – Like we said, AUD has material overlap with FAR. Part of an auditor’s job is to reconcile accounts and make sure they add up. Another part of his or her job is to suggest adjusting journal entries to fix any misstatements. Expect to see both topics on the exam, and make sure you’re prepared to think critically to answer the questions.
Tip 3: Take Practice Exams – This is true for all CPA Exams, but the variety of information you need to learn and the fact that they test all four levels of competency means you really need to take the time to understand how questions on the AUD Exam work. You need to learn to use judgment and evaluate what questions are asking while also keeping in mind time constraints.
Tip 4: Make Sure Your Study Materials are Up to Date – Regulations for companies are constantly changing, and as such the profession changes too. With updates come AUD Exam changes, and you’ll want to ensure you have the most accurate content for the exam you’re taking. You don’t want to get stuck with outdated study materials going into an updated exam. Surgent updates content regularly and with updates to the exam, so you’ll never miss a new topic.
Tip 5: Take AUD After Some Experience (If Possible) – AUD candidates have likely taken an auditing class in college, but especially with the AUD Exam, most of the learning happens with actual experience. If you’re planning on going into the auditing profession, consider taking the AUD Exam after you’ve worked in the field for a few months. Even better, wait until you’ve had a busy season and then take the exam. This might mean saving the AUD Exam for last, but the content is much easier to grasp after some experience.
If you’re not going into an auditing position or want to pass the exam before working, no worries; Surgent’s exam materials are comprehensive and will help you learn everything you need to know to pass the exam.
Tip 6: Find Study Materials that Help You Study More Efficiently – Candidates are often told there is a certain hour threshold that must be met before an exam can be passed. However, not everyone learns the same, and candidates often waste time trying to attain a certain number of study hours even if they’re completely ready to sit for the exam. To study more efficiently, look for a CPA Review course that is adaptive and can help you efficiently learn difficult topics. Surgent’s learning materials feature A.S.A.P. Technology, which helps students pass in half the time, and ReadySCORE which helps candidates objectively know when they’re ready to sit for the CPA Exam.
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