Auditing and Attestation (AUD) is one of the four parts of the Uniform CPA exam. All states and jurisdictions require students to pass each of the four sections with at least 75% within an 18-month time period, regardless of the other state-specific licensing requirements. Failing to do so will result in the exam parts passed outside of the 18-month window to expire, and the examinee will need to retake that section or sections. Therefore, it is best to go in as prepared as possible, and to give yourself enough time in which to complete them while factoring in the possibility of failing one or more sections.

The AUD exam

The AUD section of the exam covers the processes of auditing and attestation. It also includes questions regarding compilations, reviews, attestation engagements, and the AICPA Code of Professional Conduct.

Structure of the AUD exam

The AUD exam is broken into two parts, each worth 50% of the exam. The first part consists of 72 multiple choice questions, while the second consists of 8 task-based simulations (TBS). These are further broken into a total of 5 segments, as shown below:

  • Testlet 1 – 36 MCQs
  • Testlet 2 – 36 MCQs
  • Testlet 3 – 2 TBSs
  • Testlet 4 – 3 TBSs
  • Testlet 5 – 3 TBSs

AUD exam length

AUD is a four-hour long examination.

AUD exam study tips

Choosing the right approach for studying any subject is subjective, because everyone has their own approach that work best for them. Generally, there are two main aspects to studying for the CPA exam, though. These are covering the course material through study guides and pounding Multiple Choice Questions (MCQs.) Most CPAs who have passed the AUD section recommend running through as many MCQ sets as you can before the exam, preferably running through a set multiple times until you feel that you understand the content through reviewing the information on the sections you struggled with, and secondly until you get 90-100% for that set. Of course, it is usually better to take the MCQ set, review and then wait a day or two before trying again, so that you don’t just answer by rote. This technique is helpful in identifying the topics that you are weak in, as well as familiarizing you with the type of questions that should come up in the exam. Fortunately, there are many free MCQ sets available online, and they also usually come part of online study packages.

As for revision, it is best to use texts that have a strong reputation, such as those by Wiley and Becker. If you can’t afford them, you can try the secondhand market or try to borrow them from a public library. There are many other study resources   besides these, such as the study plans, premade revision cards and videos, like those of Farhat’s Accounting Lectures and Edspira. Some of them are even free. Although just going through the material is helpful, a good way to really internalize it is to summarize the notes as you go along and make to also make index cards of the important definition or topics with which to revise later. Reading through the notes and cards as soon as you are done compiling them, will help you to absorb the information even more, if you have time. Another benefit to summarizing your work, is that it forces you to engage with the text and to actually consider what it is saying and that you truly understand the concepts. Additionally, it is a good idea to set a manageable study schedule for yourself with breaks and rewards to recharge yourself with. Breaks are especially important if you are faced with a section that you cannot understand, as sometimes stepping back can calm you and give your subconscious a moment to process it.

Topics covered in the AUD exam

The AUD exam section is structured so as to determine whether they have acquired the necessary skills and knowledge to accurately perform auditing or attestation tasks or providing a review service. Part of this entails demonstrating critical thinking, attention to detail, understanding how to assess risks and to sift through financial data and records.

Structure of the AUD exam

According to the AICPA’s CPA exam Blueprint effective from July 2021, the subjects are covered as follows:

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: other engagements
  • 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 management and those charged with governance
    • 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
  • 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
  • Assessing risks due to fraud, including discussions 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 risks
    • Impact of risks at the financial statement level
    • Impact of risks for each relevant assertion at the classes of transaction, account balance and disclosure levels
    • Further procedures responsive to identified risks
  • Materiality
    • For the financial statements as a whole
    • Tolerable misstatement and performance materiality
  • Planning for and using the work of others
  • Specific areas of engagement risk
    • Ant entity’s compliance with laws and regulations, including possible illegal acts
    • Accounting estimates
    • Related parties and related party transactions

Area III – Performing Further Procedures and Obtaining Evidence

  • Sufficient appropriate evidence
  • General procedures to obtain sufficient appropriate evidence
  • Specific procedures to obtain sufficient appropriate evidence
    • Analytical procedures
    • External confirmations
    • Audit data analytics
  • Specific matters that require special consideration
    • Accounting estimates
    • Investments in securities
    • Inventory and inventory held by others
    • Litigation, claims and assessments
    • An entity’s ability to continue as a going concern
  • Misstatements and internal control deficiencies
  • Written representations
  • Subsequent events and subsequently discovered facts

Area IV – Forming Conclusions and Reporting

  • 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 and other-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 and 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
    • Additional reporting requirements under Government Accountability Office Government Auditing Standards
    • Special-purpose and other country frameworks

Recommended study time for the AUD exam

The amount of time that you should dedicate to AUD section of the CPA exam is really dependent on your familiarity with auditing and attestation regulations and practices. However, the AIS-CPA recommends setting aside between 70-90 hours of study time towards the exam. Therefore, studying for around 2 hours a day for between 6-7 weeks, should be enough preparation time. You could also reduce that to 3-4 weeks by studying 3-4 hours a day.

How difficult is the AUD exam?

With a pass rate that is only slightly better than the FAR exam section, AUD is considered one of the hardest sections of the CPA exam. It should be easier for those applicants who chose to fulfill their experience requirements in an auditing firm or department of a company. It is due to this that CPA examinees usually take these two sections first, so as to lessen there chances of missing the 18-month window in which they need to pass all for sections of the exam.

AUD study guides

There are a variety of online and hardcopy guides and resources that you can use to study for the AUD exam. Some of these are free while others are premium. Some examples of free guides include:

  • NASBA and AICPA’s free 6-month subscription to study material for the Uniform CPA exam.
  • You may be able to buy second-hand copies of Becker or Wiley’s study guides or possibly to even borrow them from your local library, if they have copies available
  • Reddit user u/SwissArmy’s list of free AUC Study guide links