AUD CPA

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21 Aug, 2024

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The Auditing and Attestation (AUD) CPA exam section tests your expertise in performing auditing, attestation, and other service engagements. The content and format of the AUD section make it one of the most challenging sections of the Uniform Certified Public Accountant (CPA) Exam.

The AUD exam section analyzes the candidates’ know-how of auditing procedures, fundamental principles, generally accepted accounting standards, professional code of conduct, and attestation standards. In addition, it assesses your skills in applying auditing and attestation concepts in real-world work situations.

The primary purpose of this section is to determine whether the new CPAs possess the essential skills to perform the following tasks:

Audit Engagements: These involve financial statement audits, compliance audits, audits of federal grants, and all other kinds of audits in compliance with different governing bodies' requirements.
Attestation Engagements: It includes obligations for examinations, reviews, and set procedures per the AICPA’s Auditing Standards Board requirements.
Accounting and Review Service Engagements: These comprise preparation, compilation, and review obligations in adherence to the AICPA’s Accounting and Review Services Committee requirements.

The American Institute of Certified Public Accountants (AICPA), the State Boards of Accountancy, and the National Association of State Boards of Accountancy (NASBA) collaborate to administer the CPA Exam.

Let’s discuss the AUD section in detail.

AUD CPA Exam

How do I Pass the AUD CPA Section?

The key to passing the AUD section is to be able to apply the concepts learned. Merely repeating the knowledge will not be of use in this section. This is because AUD tests candidates on their ability to accurately and ethically evaluate situations.

It is especially easy for candidates who have work experience in auditing. So, try to gain some experience in auditing before taking the exam. This will help you put to practice the auditing concepts learned. It will also cement your concepts well enough to understand the variations in questions and exact reasons for following specific audit procedures.

For candidates with no work experience, practice as many sample questions as possible. It will provide you with hands-on experience in handling tricky questions.

AUD CPA Exam Pass Rates

Here are the AUD exam pass rates for the last five years, from 2017 to 2021. As seen below, the highest passing rate was in the exam held in the second quarter of 2020, 65.29%.

Years	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Cumulative
2021	48.56%	50.49%	-	-	49.70%
2020	47.97%	65.29%	56.89%	47.50%	52.84%
2019	48.56%	55.11%	51.94%	47.88%	51.01%
2018	49.27%	54.70%	51.07%	48.54%	50.90%
2017	43.47%	52.00%	52.15%	47.69%	48.59%

On analyzing the last four years' trend, the results have slightly improved. Although, things may change after the new CPA exam blueprint becomes effective from July 1, 2021.

CPA AUD Exam Format

The maximum time allotted for completing the AUD section is four hours. The question paper is sub-divided into five testlets, two with 72 multiple-choice questions (MCQ) and three with eight task-based simulations (TBS). The composition of each question type is stated below.

AUD Exam Section	Number
Multiple-Choice Questions (MCQs)	72
Task-Based Simulations (TBSs)	8
Written Communication	0

There is no separate time allocation for each testlet. You may proceed according to your preference. Please note that after attempting the first three testlets, you may take the standardized 15 minutes break. This break will not be included in your exam duration of four hours. After this, you can attempt the fourth and the fifth TBS testlets.

CPA AUD Testing Process

You must take all five testlets, one after the other—first, the two MCQ testlets and then the three TBS testlets.

The MCQ testlets use the multi-stage adaptive exam delivery model. As per the model, the exam progresses according to your performance. The first MCQ testlet is of the same difficulty for all. However, the difficulty of the second testlet varies with your performance.

You get a difficult testlet when you do well, whereas a medium testlet when you don’t. You need to understand that the more complex a question is, the higher marks it will fetch for you. Yes, the worth of each question depends upon its difficulty level.

Easier questions will not ensure better scores. Moreover, there is no way of knowing whether you have got an easy or difficult testlet.

Furthermore, the TBS testlets are of the same difficulty for all. Note that you receive them only after submitting the MCQ testlets.

CPA AUD Question Types

As we are already aware, the AUD exam is based on two types of questions, namely, the MCQs and the TBSs.

Multiple-Choice Questions (MCQs)

MCQs provide multiple answer choices. You have to select the correct one. There are 72 MCQs to be answered by the candidates while attempting the AUD section. These questions are equally bifurcated into two testlets, each containing 36 MCQs.

Even out of the 72 MCQ, 12 are the pretest questions that aren’t considered during evaluation. Instead, they are the experimental questions put up by AICPA to decide whether these can be used as operational MCQs in the future. The other 60 operational MCQs are evaluated in the exam.

Task-Based Simulations (TBSs)

In this exam, there are eight TBSs distributed among the three testlets. Out of these eight TBSs, seven are considered for evaluation as they are operational. However, one task-based simulation is added as a pretest to check whether it is suitable for operational TBSs in the future.

Each of the TBS may contain two tabs:

Information tab: It includes details of resources, directions and authoritative literature used for working out the simulation.
Work tab: The work tab shows the gradable response.

The following AUD exam format lists the question set of each testlet.

AUD testlets	Question types
MCQ	TBS
Testlet 1	36	-
Testlet 2	36	-
Testlet 3	-	2
Testlet 4	-	3
Testlet 5	-	3
Total questions	72	8
Operational questions	60	7
Pretest questions	12	1

How is CPA AUD Graded?

You must score at least 75 points out of 99 in the AUD exam section to pass. Scaled scores of MCQs and TBSs are combined and weighted to arrive at the final AUD score. Both MCQs and TBSs add equally to the total score.

AUD Exam Section	Score Weightage
Multiple-Choice Questions (MCQs)	50%
Task-Based Simulations (TBSs)	50%

As previously discussed, the MCQs with greater difficulty have higher weightage. Therefore, with better performance in the first testlet, you get a more challenging set of questions in your next testlet. This will let you improve your overall score.

TBSs are scaled and weighted but not according to your performance. With no negative marking, remember to attempt all questions without fail.

CPA AUD Exam Content

The exam content is broken down into the following four areas:

Areas	Content Group	Topics	Allocation
Area I	Ethics, Professional Responsibilities and General Principles	Nature and scope Nature and scope of engagements performed under Government Accountability Office Government Auditing Standards Nature and scope of audit engagements Nature and scope of other engagements	15 – 25%
Ethics, independence and professional conduct AICPA Code of Professional Conduct Requirements of the Securities and the Exchange Commission and the Public Company Accounting Oversight Board Requirements of the Government Accountability Office and the Department of Labor Professional skepticism and professional judgment
Terms of engagement Preconditions for an engagement Terms of engagement and engagement letter
Requirements for engagement documentation
Communication with those charged with governance and management Planned scope and timing of an engagement Internal control related matters
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	25 – 35%
Understanding an entity and its environment External factors Internal factors
Understanding an entity’s control environment and business processes, including information technology (IT) systems Control environment, IT general controls and entity-level controls Business processes and the design of internal controls, including IT systems Implications of an entity using a service organization Limitations of controls and risk of management override
Identifying and assessing material misstatement risk due to error or fraud and planning further procedures Impact of risks assertions at the account balance, class of transaction, and disclosure levels Further procedures responsive to identified risks Impact of risks at the financial statement level
Planning for and using the work of others
Materiality For the financial statements as a whole Tolerable misstatement and performance materiality
Assessing risks due to fraud, including discussions among the engagement team about the risk of material misstatement due to fraud or error
Engagement risk areas Accounting estimates Compliance of an entity with laws and regulations, including possible illegal acts Transactions of related parties
Area III	Performing Further Procedures and Obtaining Evidence	Sufficient appropriate evidence	30 – 40%
General procedures to obtain sufficient appropriate evidence
Specific procedures to obtain sufficient appropriate evidence Analytical procedures External confirmations Audit data analytics
Written representations
Specific matters requiring special consideration Investments in securities Litigation, claims and assessments Accounting estimates An entity’s ability to continue as a going concern Inventory and inventory held by others
Subsequent events and subsequently discovered facts
Misstatements and internal control deficiencies
Area IV	Forming Conclusions and Reporting	Reports on auditing engagements Form and content of an audit report, including the use of emphasis-of-matter and other-matter (explanatory) paragraphs Audit of internal control integrated with an audit of financial statements Forming an audit opinion, including modification of an auditor’s opinion	10 – 20%
Reports on attestation engagement 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

The weightage range of each area in terms of question allocation is listed in the above table. Try to prepare a study plan keeping in mind these weights. Allot more time to the content group with higher weightage. The AICPA's Uniform CPA Examination Blueprints provide more information on the content areas.

Compared to the previous years, there are some changes to the content and topics covered under the AUD section of the CPA Exam. To go through the new syllabus, you may refer to the AICPA's Practice Analysis Final Report.

How Hard is it to Pass the AUD CPA Section?

AUD is considered one of the toughest exam sections. This is because it is the only section that tests you on your evaluation skills. You have to use your judgment to come up with answers to real-life auditing situations.

Moreover, it has over 70 MCQs, making it a quite lengthy exam. Since AUD MCQs are subjective, they are considered to be very challenging. There may be more than one correct answer choice. All this adds to its perceived difficulty.

Skills Tested in AUD Exam

The AUD CPA exam tests you on four skills: remembering and understanding, application, analysis, and evaluation. Besides possessing an in-depth understanding of auditing concepts, you must be able to express your skills in applying them effectively. The weightage of each skill in the AUD section is as follows:

Skill Allocation	Weight
Evaluation	5 – 15%
Analysis	20 – 30%
Application	30 – 40%
Remembering and understanding	25 – 35%

Thus, you can score within the above range based on your skillset.

When Should I take the AUD CPA Section?

It is a matter of personal choice to decide which section to take first. It depends entirely upon your strengths, weaknesses, likes, and dislikes. However, beginning the CPA exam with the AUD section can boost the confidence of those having experience or an inherent interest in auditing.

Being a relatively challenging section, taking it in the beginning will take the burden off your shoulders. Also, it will leave you with more time to prepare other sections.

Moreover, remember that this section of the CPA exam is quite lengthy and requires brainstorming. So, if you are less interested in auditing, attempt this section at the end.

AUD CPA Exam Time Management

The following AUD exam format lists out the suggested time allocation for each testlet.

Testlets	Question Sets	Suggested Time
Testlet # 1	36 Multiple-Choice Questions	60 Minutes
Testlet # 2	36 Multiple-Choice Questions	60 Minutes
Testlet # 3	2 Task-Based Simulations	30 Minutes
Testlet # 4	3 Task-Based Simulations	45 Minutes
Testlet # 5	3 Task-Based Simulations	45 Minutes

To solve the MCQ and TBS testlets, you can set a maximum time limit of two hours each. By following the above suggestion, you can complete the exam on time. If you finish early, you can use your extra time to review your answers.

How do I Prepare for AUD?

Preparing for the AUD CPA Exam is challenging. The best way to prepare for the exam is to start by identifying learning resources. There are various online and offline study materials, review courses, tutorials, books, videos, etc.

Before selecting the material, always review it to ensure it covers all tested topics. Also, make sure the learning material is up-to-date. The suitable material will effectively channel your time and effort and improve your performance.

You can use AICPA’s Exam Blueprints to get a list of all testable topics related to each section. The blueprints divide each section's content into areas, groups, topics, and sample tasks. Each area is assigned weights. You can identify topics with higher weightage and prepare a study plan allotting more time to them.

What is the Best Way to Study for the AUD Exam Section?

Here are some AUD CPA exam tips to keep in mind for improving your score.

Learn the auditing concepts thoroughly and stay updated with the new auditing procedures and guidelines.
Practice simulations, and don’t forget the research-based questions since it will save you time during the exam.
Keep a complete knowledge of the internal controls as it contributes to the significant part of this questionnaire.
Don’t miss out on the audit opinion letters, as they are equally essential to answer the MCQs and the TBSs.
Go through the question paper to get a clear understanding of the exam instructions and directions.
Simulations often require more time. Therefore, plan and allocate sufficient time to TBSs. Moreover, try to complete the questions within the decided time frame.
Solve the more accessible simulations first and then jump to the complex ones. It will save your overall time spent on brainstorming.