Hello readers! Welcome to another knowledgeable article that will help you prepare for another challenging section of the CPA exam, the AUD exam.
With four different test sections, the Uniform CPA (Certified Public Accountant) Exam is hard to get through, with only a 50% pass rate.
So, let us help you get into that 50%.
By the end of this informative article, you will know everything from the exam format and content to study tips to enable you to ace your exam.
Here is what we cover to help you out with AUD Exam:
So, without wasting any time, let us get you closer to attaining your CPA license by getting the auditing and attestation stuff right!
About AUD CPA Exam
Getting established as a career Certified Public Accountant requires effort and in-depth preparation to pass all the four sections – BEC, REG, AUD, and FAR, of the CPA exam.
AICPA, the American Institute of Certified Public Accountants, has set high standards for the exam with expansive content areas for each test section.
The candidate who clears every section alongside other CPA-related requirements can acquire the CPA license and carry on with the professional responsibilities.
Else, you may find it better to switch your career field now.
Amongst all the sections, AUD is considered the second hardest after FAR. The third hardest is the REG exam, while BEC is considered the easiest of all with the highest pass rate (62.4%).
AUD, or the Auditing and Attestation section of the CPA exam, assesses the candidate’s knowledge related to the complete auditing process alongside the engagement, compilation, preparation, and review of attestation engagements and non-attestation services.
The main purpose of this exam is to test the candidate’s paramount capabilities of problem-solving and judgemental analysis in forming conclusions.
If the candidate manages to pass the exam, it ensures that their judgment is bias-free and conforms to the ethical standards.
As a CPA professional, you will be providing auditing and attestation services. Therefore, it is essential that you can curate informed decisions and planned responses on a fair basis.
This is why the examination ensures that not only do you pass the exam, but your responses align with the AICPA code of professional conduct.
The key to passing the AUD exam is to study for the course and work on your decision-making skills.
The AUD exam is highly conceptual; it is essential to practice as many past papers and quizzes as you can find.
To put your best foot forward in this exam, you have to learn the art of learning, practice, and apply.
While this CPA exam section is considered the “middle road” when it comes to difficulty, the pass rate is low, at only 53%.
The pass rate for FAR hovers at 50%, while for REG, it is at 59%, and 62.4% for BEC.
Therefore, when preparing and reading for the exam sections, you need to be smart about your decision.
If the pass rate has elevated your anxiety, do not lose your cool yet. You have this article to guide you and ample time to prepare for the exam.
AUD Exam Format
Now that you have decided that you will pursue your career as a CPA, you have to be prepared on all fronts.
The test questions can be unexpected, unpredictable, and challenging, so you must play to your strength.
With each passing minute, you get closer to your exam day with your fears soaring high.
But as they say, nothing in life (or “in CPA”) should be feared, and it must be understood.
Therefore, it is essential that you understand the exam format.
The AUD exam format is broken down into different types of questions contained in different sections, each with varying levels of difficulty.
Each part or division of the AUD exam is known as a testlet, and the test contains five of them. Furthermore, the testlets contain two types of exam questions:
- Multiple Choice Questions- MCQs
- Task-Based Simulations- TBS or TBSS
These questions can be operational, the ones that you will have to attempt in the actual exam or pretest, the ones that you will have to attempt just before the actual exam begins.
The pretest questions, however, do not contribute to the exam score. They provide statistical and analytical data on the candidate’s ability and determine the difficulty level for the actual exam.
No, do not think of getting the pretest questions wrong to get easy questions in the actual exam – it would be a mistake.
Because difficult questions help you score more.
Multiple Choice Questions – MCQs, as the name suggests, have multiple options listed for a question, out of which only one is correct.
There are two MCQ testlets in the exam, each containing 36 questions, a total of 72. Out of these, 12 are the pretest MCQs, and 60 of them are the operational MCQs.
Task-Based Simulations – TBSS are practical questions, and unlike the MCQs, the candidate has to write or “type-in” the answers. The simulations are designed to test the conceptual knowledge of the candidate.
They can contain research questions, filing forms, generating reports, financial statements, journal entries, or applying auditing procedures. Three out of the five testlets cover a total of 8 TBS, 1 of which is a pretest question.
Here is what the format looks like:
- Testlet 1: 36 MCQs
- Testlet 2: 36 MCQs
- Testlet 3: 2 TBSs
- Testlet 4: 3 TBSs
- Testlet 5: 3 TBSs
So, you will have to prepare thoroughly for a total of 80 questions covering all the content areas of the entire AUD course if you want to pass the exam.
Once you understand the exam format, the next thing to keep in mind is the time allocation for each question or testlet, so you study and prepare accordingly.
Every minute in the exam matters and can decide your CPA exam result. Therefore, you must practice the past papers in relevance to the actual time allotted for the testlets.
- Pre-test Exam: This is a short test conducted right before the exam. Even though it has nothing to do with your pass or fail, AICPA uses it to analyze your knowledge, and it contains two sections, one with 12 MCQs and the other with 1 TBS. The candidate is allotted 5 minutes for each section, hence a total of 10 minutes to charge your mind before the actual test begins
- Actual Exam: The AUD exam, consisting of operational MCQs and TBS in five testlets is four hours long, with a 15-minute break between the testlet 3 and testlet 4. The candidate also has two optional breaks, one allowed after testlet 1 and after testlet 2. However, there is no extra time for the optional break, and the exam clock keeps ticking. If you want an optional break, you must compromise your exam time
Tips to finish the AUD exam in time as a pro
- Each testlet and each question is different; therefore, they do not allocate the same amount of time. Instantly answer the questions you are sure about to get some extra time for the difficult questions
- If you are confused about an answer, do not hover it. It would just waste your time. Flag the question, and once you are done with the entire test, go back and then study that answer again with all the time you have left
- Practice, practice, practice! Nothing, but practicing past papers by monitoring the time on a stop clock will help you with your time management on exam day
You know the format and are probably trying to break the “time management code” for AUD now. But, how would any of this help if you have no idea about what to study for the exam?
Worry not; we have got you covered.
AUD Exam Content and Grading Structure
There is no shortcut to pass your AUD CPA exam. You have to study your way through it.
Like the other four sections of CPA, AUD has expansive, unique topics. These topics are divided into four content areas and each content area contributes to a percentage of the questions in the exam.
Here are the content areas and how many you will be getting of each in the exam:
|Content Area||Percentage of Questions|
|Ethics, Professional Responsibilities, and General Principles||15-25%|
|Assessing Risk and Developing a Planned Response||20-30%|
|Performing Further Procedures and Obtaining Evidence||30-40%|
|Forming Conclusions and Reporting||15-25%|
As you can see, the major chunk of the test paper is based on the practical application of your auditing process and attestation knowledge.
Here is how your skill levels are assessed in the exam:
|Skill Level||Exam Content (%)|
|Level 1: Remembering and Understanding||30-40%|
|Level 2: Application||30-40%|
|Level 3: Analysis||15-25%|
|Level 4: Evaluation||5-15%|
Therefore, keep in mind, for AUD you do not need to only memorize but learn how to apply the concepts in practical, real-life scenarios.
To prepare for each content area, we have listed down the topics you need to study for each.
Details of each Content Area
Content Area I: Ethics, Professional Responsibilities, and General Principles
- Nature and scope
- Audit engagements
- Engagements conducted under Government Accountability Office Government Auditing Standards
- 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
- Engagement Terms
- Engagement preconditions
- Terms of engagement letter
- Engagement documentation requirements
- Communication with management and those charged with governance
- Planned scope and timing of an engagement
- Internal control related matters
- 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
Content 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
- Information technology general and application controls
- Limitations of controls and risk of management override
- Flow of transactions and design of internal controls
- Implications of an entity using a service organization
- Debtor-creditor relationships
- Rights, duties, and liabilities of debtors, creditors and guarantors
- Bankruptcy and insolvency
- Secured transactions
- Assessing risk due to fraud
- 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
Content Area III – Performing Further Procedures and Obtaining Evidence
- Assets acquisition and disposition
- 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
Content Area IV – Forming Conclusions and Reporting
- Reports on auditing engagements
- Forming an audit 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
- Alerts that restrict the use of written communication
- Additional reporting requirements under Government Accountability Office Government Auditing Standards
- 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
AUD Exam Grading/ Scoring
Similar to other CPA exam sections, 50% of a candidate’s score is acquired from MCQ questions and 50% from the TBSS in AUD.
An important thing to remember is that “attempt all questions even if you do not know the right answers because there is no penalty or negative marking for the wrong ones.
Therefore, something is better than nothing.
Do not leave the answer space empty, think and write what comes up in your mind. Even if you get it wrong you would get the same marks as if you would by not answering.
But, if you get lucky and the answer turns out to be right, you just got closer to your passing score.
The questions are graded according to their difficulty level, such as:
- Scoring for Multiple Choice Questions
The first MCQ question is always set at the “medium” level of difficulty. The rest of them can be easy or hard, but most of them are of medium difficulty.
Moreover, for MCQs, your performance on the first testlet determines the difficulty level for the next one. If you do well, the next testlet will have difficult questions, and vice versa.
Remember, difficult questions help you score higher. are worth more than medium questions.
- Scoring for Task-Based Simulation Question
Unlike the MCQs, the TBS questions are pre-set. The level of difficulty does not change and has nothing to do with the candidate’s performance. However, if the candidate answers a part of TBS correctly, they might score partial credits on non-research AUD questions.
So, now you know almost everything about the AUD CPA Exam, it is study time!
Study Guide on AUD Exam Preparation
Exams have a stressful aura preceding them and if it is the Uniform CPA Exam you are preparing for, the stress just increased many folds.
Alongside the in-depth AUD content knowledge that you already have up your sleeve by now, you can leverage certain CPA review courses to prepare for the exam.
Some of the reliable names are:
- Becker CPA review course
- Roger CPA course
- Surgent CPA course
- Gleim CPA course
Even though you are taking a review course to practice for CPA exam questions, we have some great study tips to help you in your exam.
Decide when to take the test – After your first CPA exam, you have an 18 months testing window in which you have to give and clear all the sections. Therefore, it is recommended to take AUD after FAR, as the majority of their content areas overlap. And attempting FAR first can significantly reduce your study time for AUD and also increase the chances of passing it.
Practice makes perfect – Whichever section of CPA you are preparing for, practice is the key to passing them. AUD is a conceptual test, and practicing past papers can help you learn and evaluate the actual exam questions alongside time management.
Use updated and efficient study materials – The auditing and attestation regulations for business constantly change, updating the AUD exam content constantly. Therefore, keep a track of such updates to study the right topics. Study at your pace to study efficiently. Focus on your weak areas.
Get some hands-on experiences – Actual experience with the auditing and attestation process, your chances of passing AUD get higher. Working as an auditor or even an internship can help you grasp the concepts and the ways to apply them in the AUD exam.
Never underestimate yourself- Keep reassuring yourself to stay motivated. Do not overburden yourself and start preparing at the earliest.
Even though CPA is one of the hardest exams to pass, consistency and learning are key to CPA success.
Keep assessing and testing your AUD knowledge so that you do not find yourself in a nook on exam day. Take review courses, seek help, allocate study time, and get hands-on experience to prepare fully for AUD or any other section of the CPA exam.