There are a variety of auditing questions on the CPA exam, ranging from questions about a full financial audit to questions about information technology, fraud, operational audits and the statistical nature of auditing samples. You also should be prepared for a complex essay question; the new computerized CPA exam has an essay component in each of the four sections, now known as the Communication part of the exam.
Financial Audit Questions
By far, the most complex and comprehensive question you'll be asked will come from the Communications part of the exam, which also requires online research during the test. There is no way to predict the questions, but good preparation is to simulate all parts of a financial audit. This includes accounts payable, accounts receivable, inventory, general ledger and information technology. Also practice applying the different variations of the opinion letter. That will prepare you for many questions which are certain to be on the exam in a variety of formats. Materials that will help you prepare include "Principles of Auditing and Other Assurance Services," by Whitington and Pany, and "Auditing and Assurance Services," by Arens, Elder and Beasley. When you take the CPA review course, you most likely will have the chance to purchase flash cards, which are additional learning aids.
Fraud and Forensic Audit Questions
Be prepared for questions on fraud audit and Sarbanes-Oxley compliance. Learn the five financial statement assertions, and try to think of related answers that are not one of the five assertions (some of the COSO components are frequently mixed in). In addition, learn the components to the fraud triangle, as well as segregation of duties issues and how to determine when this segregation is missing in the accounting department. That is, whether the accounts-payable function should be performed by a different person or department than the one performing the receivables. There is almost always a variation on this in the exam. The answers are typically real-world examples rather than merely straight dictionary definitions.
Also learn about the SEC Acts of 1933 and 1934. Those two acts tie historically into the Sarbanes-Oxley Act of 2001 and issues surrounding regulatory compliance. Materials that will help you here include "Auditors Guide to Forensic Accounting," by Golden and Skalak, and "Fraud Examination," by Albrecht.
Audit Sampling and Statistics
Understand the statistical nature of audit samples and how they are derived and utilized, especially from an external auditor's viewpoint. You can learn more from "Audit Sampling: An Introduction," by Guy, Carmichael and Whitington. In its purest form, there are calculations involved, but the CPA exam typically has questions on the different sampling methods and how many samples might be required under a given circumstance. Also become familiar with when to include third-party validation in your audit samples.
Information Technology Questions
Learn more about information technology and how the IT departments are audited by both internal and external auditors. Learn the segregation of duties issues in the IT department and how they differ from the accounting department in a financial audit. There will always be questions on this. One book that will help you here is "Information Technology Control and Audit," by Gallegos, Manson, Senft and Gonzales.
- Principles of Auditing and Other Assurance Services: Whitington and Pany; McGraw-Hill; 2008
- Book: Auditors Guide to Forensic Accounting, Golden and Skalak; Wiley, John and Sons; 2006
- Book: Information Technology Control and Audit; Gallegos, Manson, Senft, and Gonzales; Auerbach Publications; 2004
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