Becker CPA Review
Audit B Textbook and Lecture Errata/Clarifications
2013 Exam Edition
NOTE TO STUDENTS: On March 9, 2013, the AICPA notified the review course providers that it will test
both the old SAS and the Clarified SAS on the Auditing exam starting on July 1, 2013. The AICPA has
not given a definitive time period for this dual-testing, but has stated that it will continue until the Clarified
SAS fully replace the old SAS (most likely at the end of 2014). The good news is the Becker is wellpositioned to prepare you for the Auditing exam during this period of transition from the old SAS to the
Clarified SAS. Our Audit B textbook (Clarified SAS), is essentially the Audit A textbook (old SAS) with
enhancements to cover the new/clarified provisions of the Clarified SAS. Only a few key items from the
old SAS are not included in the Audit B textbook. We have noted those items in the detail provided
below.
Date
Lecture and
Topic
Errata/Clarifications
The Clarified SAS outline the overall objectives of the auditor and the general
requirements related to the conduct of the audit, but do not include the ten
Generally Accepted Auditing Standards. The AICPA has stated that it will continue
to test the 10 GAAS standards through 2014.
7/1/13
Audit 1
Topic 7
Pages A1-70 to
A1-77
The Clarified SAS outline a new, more detailed form of auditor’s report that should
be used for audits of NONISSUER financial statements for periods ending on or
after December 15, 2012. This new auditor’s reporting model is outlined on pages
A1-12 to A1-44 of the Audit B textbook. The AICPA has stated that it will continue
to test the old auditor’s reporting model through 2014.
The old auditor’s report should be used for audits of:
•
NONISSUER financial statements for periods ending before December
15, 2012
•
ISSUER financial statements for all periods, until the PCAOB issues its
new auditor’s reporting model (most likely in late 2013 or early 2014)
The AICPA has stated that exam questions related to the auditor’s report will make
it very clear which audit report should be used.
Click here for a link to text covering the 10 GAAS standards and old auditor’s
report.
7/1/13
7/1/13
Audit 3
Topic 9
Pages A3-76 to
A3-78
Audit 5
Topic 5
Pages A5-61 to
A5-64
In the Clarified SAS, the AICPA replaced the concept of illegal acts outlined in the
old SAS with the broader concept of compliance with laws and regulations.
Because the AICPA has stated that it will continue to test the old SAS through
2014, it is possible that questions that make specific reference to illegal acts will
appear on the CPA exam.
Click here for a link to text covering illegal acts.
The Clarified SAS include a sample management representation letter with new
wording. Because the AICPA has stated that it will continue to test the old SAS
through 2014, it is possible that questions that make specific reference to the
content of the old SAS representation letter will continue to appear on the CPA
exam.
Click here for a link to text covering the contents of the old SAS representation
letter.
Becker CPA Review
Audit B Textbook and Lecture Errata/Clarifications
2013 Exam Edition
Date
Lecture and
Topic
Errata/Clarifications
SAS 127, issued January 2013, includes amendments to AU-600 (Group Audits).
SAS 127 will be testable starting July 1, 2013. The following edits (changes
highlighted) must be made to make your Audit textbook consistent with SAS 127:
1. Making Reference to the Component Auditor
a. Requirements
Reference to the component auditor should not be made unless the
following requirements are met:
(1) the component’s financial statements are prepared using the same
financial reporting framework as the group financial statements;
(12) the group engagement partner has determined that the component
auditor has performed an audit in accordance with the relevant
requirements of GAAS, or when required, the PCAOB; and
(23) the component auditor’s report is not restricted use.
b. Use of a Different Financial Reporting Framework
4/25/13
Audit 1
Topic 3
Page A1-18
If the component’s financial statements are prepared using a different
financial reporting framework than the group financial statements,
reference to the component auditor should not be made in the auditor’s
report on the group financial statements unless:
(1) the measurement, recognition, presentation, and disclosure criteria
used by the component under the component’s financial reporting
framework are similar to the criteria under the financial reporting
framework used by the group.
(2) the group engagement team has obtained sufficient appropriate audit
evidence to evaluate the appropriateness of the adjustments needed
to convert the component’s financial statements to the financial
reporting framework used by the group (without needing to assume
responsibility for the work of the component auditor).
c. Making Reference in the Auditor’s Report
The auditor’s report on the group financial statements should clearly
indicate:
(1) that the component was not auditor by the auditor of the group
statements but was audited by the component auditor,
(2) and should include the magnitude of the portion of the financial
statements audited by the component auditor,
(3) when the component’s financial statements are prepared using a
different financial reporting framework than the group financial
statements:
(a) the financial reporting framework used by the component, and
(b) that the auditor of the group financial statement is taking
responsibility for evaluating the appropriateness of the
adjustments to convert the component’s financial statements
to the group financial reporting framework.
(4) when the component auditor’s report on the component’s financial
statements does not state that the audit was performed in
accordance with GAAS or PCAOB standards and the group
engagement partner has determined that the component auditor
performed additional procedures to meet the relevant requirements
of GAAS:
(a) the set of auditing standards used by the component auditor
and
(b) that additional audit procedures were performed by the
component auditor to meet the relevant requirements of GAAS.
Becker CPA Review
Audit B Textbook and Lecture Errata/Clarifications
2013 Exam Edition
Date
Lecture and
Topic
Errata/Clarifications
SAS 127, issued January 2013, includes amendments that add any other basis of
accounting that uses a definite set of logical, reasonable criteria that is applied to
all material items appearing in financial statements to the list of acceptable special
purpose frameworks. SAS 127 will be testable starting July 1, 2013. The following
edits (changes highlighted) must be made to make your Audit textbook consistent
with SAS 127:
Pg. A2-12, Item A.1.
1. Special Purpose Frameworks
A special purpose framework is a financial reporting framework other than
GAAP that is one of the following bases of accounting:
a. Cash Basis
4/25/13
Audit 2
Topic 2
Pages A2-12 to
A2-14
b.
A basis of accounting that the entity uses to record cash receipts and
disbursements and modifications of the cash basis having substantial
support, such as recording depreciation on fixed assets.
Tax Basis
c.
A basis of accounting that the entity uses to file its income tax return for
the period covered by the financial statements.
Regulatory Basis
d.
A basis of accounting used to comply with the requirements or financial
reporting provisions of a regulatory agency having jurisdiction over the
reporting entity.
Contractual Basis
e.
A basis of accounting that the entity uses to comply with an agreement
between the entity and one or more third parties other than the auditor.
Other Basis of Accounting
Any other basis of accounting that uses a definite set of logical,
reasonable criteria that is applied to all material items appearing in the
financial statements.
Pg. A2-14, Item a.
a. Describe the Purpose of the Financial Statements
When the financial statements are prepared in accordance with a regulatory,
or contractual, or other basis of accounting, the auditor’s report should
describe the purpose for which the financial statements were prepared or refer
to a note that contains that information.
Pg. A2-14, Item e.
e. Other-Matter Paragraph
Except when the special purpose financial statements are prepared in
accordance with a regulatory basis and are intended for general use,
the auditor’s report should include an other-matter paragraph that
restricts the use of the auditor’s report to those within the entity, the
parties to the contract or agreement, or the regulatory agencies to
which the entity is subject, when the special purpose financial
statements are prepared in accordance with either:
(1) a contractual basis of accounting; or
(2) a regulatory basis of accounting; or
(3) an other basis of accounting.
Becker CPA Review
Audit B Textbook and Lecture Errata/Clarifications
2013 Exam Edition
Date
12/3/13
Lecture and
Topic
Audit 5
Topic 2
Pages A5-41 to
A5-42
Errata/Clarifications
"Item b. Sample Combined Report" shows an example of the Independent
Auditor's Report when a combined report is issued on both the company's
financial statements and on its internal control over financial reporting for a
nonissuer. This report should be replaced with a new version, which can
be found by clicking on the following link.
New Combined Report
The new report format conforms to the AICPA's Clarified Auditing
Standards.