 Hello and welcome to this session in which I will go over the current CPA exam auditing and attestation section and compare it to the CPA evolution 2024, which is the CPA exam changes. Now can you guess which one is the current exam and which one is the new exam? And I guess you can't, why? Because they both have the same four section, one, two, three, four, which is ethics and professional responsibilities and general principle, assessing risk and developing a planned response, performing further procedures and obtaining evidence and forming conclusion and reporting. It's not only the sections are the same, the weight for each section, section 115 to 25, section 225 to 35, section 3, 30 to 40, and section 4, 10 to 20. So the first thing is the topics are basically the same and the weight is basically the same. Now what I'm going to do in this session, I'm going to go through each section separately, starting with one, two, three, four, and break it down by the subsection and see what happened, what are the changes that's occurring between the current audit and the new core that's going to be tested starting January 1st, 2024. Let's go ahead and get started. Before we proceed any further, I have a public announcement about my company, farhatlectures.com. Farhat Accounting Lectures is a supplemental educational tool that's going to help you with your CPA exam preparation as well as your accounting courses. My CPA material is aligned with your CPA review course such as Becker, Roger, Wiley, Gleam, Miles. My accounting courses are aligned with your accounting courses broken down by chapter and topics. My resources consist of lectures, multiple choice questions, true-false questions, as well as exercises. Go ahead, start your free trial today, no obligation, no credit card required. So the format will be the following. I will have the area on the top, for example this is area one and the weight which is going to be the area one and within each area you're going to have this section, for example, old A, new A, then if there's any major changes or something I need to discuss, I will discuss further. So starting with area one, section A, nature and scope. This nature and scope, old A, move to the new C, so it's no longer A. So what happens to A? A became ethics, independent and professional responsibilities. This area used to be B. So all what we are seeing here is some shifting. So notice the old B used to be ethics, independence and professional contact. Now the old B moved to A, nothing unusual. Now what is the new B? The new B, we have a new section called professional skepticism and professional judgment. Hold on a second. Is this really a new section? This used to be part of old B. So this top topic, professional skepticism and professional judgment used to be part of ethics, independence and professional conduct. Now the first thing you would say is well obviously if they are having a section called professional skepticism and professional judgment, they must be covering this topic more in depth. Well let's see. Let's take a look at the details, not really. Let's take a look at the old tasks. Understand the concept of professional skepticism and professional judgment. Understand personal bias and other impediment to acting with professional skepticism such as threats, incentives and judgment, judgment making shortcuts. Let's take a look at the new one. Understand the concept of professional skepticism and professional judgment. Exactly the same. Understand unconscious auditor biases and other impediment to acting with professional skepticism including threat, incentive and judgment shortcut. I would say the same. So notice although they have a professional skepticism as a new area, I don't see any changes. And even on the testing level, they have the same testing level which is understanding and remembering. It's the lowest level. Why did they have it as a separate area? Other than shifting things around, I don't see any value because even from A, from the tasks and from the level, it's exactly the same. Let's move on. Moving to area C. Old C, it used to be terms of engagement. Now they moved it to B. So this one becomes a new B. The new C is nature and scope which used to be old A which is once we shifted all A, we're going to have all the shifting. The old B used to be a requirement for engagement documentation, which is documentation. Now this moved to the new E. Well, again, this became the new E. The new E is the documentation. It used to be old A. Old E used to be communication with management and those charged with governance. This becomes the new F. This becomes the new F. I'm sorry, this becomes the old E became the new F. Communication with management and those charged with governance used to be old E. Now it's the new F. The old F, a firm system of quality control including quality control at the engagement level. This is move to G. This move to G. And again, if we look at the quality control, just give you an example. This is the old requirement. Recognize the CPA responsibilities for its accounting and auditing practices, system of quality control, apply quality control procedures on an engagement. The new is called audit and quality control. The reason I want to show you because the titles look different, but let's take a look at it. Identify a CPA firm responsibilities for its accounting and auditing practice engagement quality. Explain procedure and responsibilities for managing engagement quality. I'm telling you it's a different language. It's the same thing for me. It's the same thing. Although they call it here a firm system of quality control here, they call it audit and insurance quality. I believe it's the same. Conclusion for Area 1. I see no serious changes in Area 1. Some shifting around no serious changes. Again, some topics might be, I did not check each topic, whether it's going to be tested on a different level, but it doesn't matter. In my opinion, once you know a topic, you need to be answered the questions about that topic from easy, medium to medium slash difficult, but no serious changes. Area 2. Again, Area 2, the weight is the same, starting with old A, planning and engagement, new A, planning and engagement, old B, understanding an entity and its environment, new B, understanding an entity and its environment. Area C. Area C, there's a topic called old C, understanding an entity's control environment and business processes, including IT system. Well, the same title except all what I see is they remove the section, which is controlled environment, IT general control and entity level control. I am assuming they're moving to the information system and control to the specialty. That's the only thing I saw different. Area 2, old A, assessing risk due to fraud, including discussions among engagement team about the risk of material in the statement due to fraud and error, this moved to E. And the new D is a section called materiality. And this is not really a new section. This used to be the old F. So they moved the old F, they made it the new D. The old E used to be identifying and assessing risk of material in the statement, whether due to error and fraud. Remember, now the new E assessing and responding the risk of material in the statement, whether due to error or fraud. So simply put, the new E covers this assessing and responding to fraud. So the new E cover basically what we called an auditing frauditing, all the fraud topics. Old area F, remember old area F used to be materiality. It became the new D. New area F planning for and using other other the work of others used to be all the G. Now it's the new F. The older G used to be planning for and using the work of others became the new F. The new G specific areas of engagement risk used to be old H. Old H used to be specific area of engagement risk. The only thing is they moved something called accounting estimate to area three and there is no area H anymore. What is the conclusion from this whole section, which is 25 to 35 percent, the removal of this topic. That's the only thing that I see was removed. Let's take a look at area three, which is represented 30 to 40 percent. Old A, sufficient and appropriate evidence. This topic is moved to B. We're going to see what happened to few things in this topic. This was not removed. This was this is wrong. So the new A, we have a new A use of data and information. This use of data of information is requesting, preparing, transforming data, reliability of data and information and data analytics. This used to be some of it was tested and audit and some of it was tested in BEC, likely in BEC, but this I would say this is a new area in the audit, in the core audit. Now, since this is a new area, I believe it's worth looking at the details of this area. So basically here, we have three tasks, which is requesting, not three tasks, three subtopics, one, two and three, requesting and preparing, requesting, preparing and transforming data. Here are the tasks, explain the component of relational database, explain the characteristic and use of different measurement scale, determine attribute structure format and sources of data needed, determine the method to transform the data, basically cleaning the data, reliability of data information, perform procedures to validate the reliability of data and data analytics. Again, some of it used to be covered in the old section, but this is basically a new section. Here is new information. They are emphasizing the use of data and this section is basically, I would say new, although some of it was tested before, but this is new because it's now its own section. Old B used to be general procedure to obtain sufficient and appropriate evidence. The new B called sufficient and appropriate evidence, which is basically the old A. The old A becomes the new B. The old A becomes the new B. The old C used to be specific procedures to obtain sufficient and appropriate evidence, also this move to D, some of the topic move to D, analytical procedures move to new D, external confirmation move to the new D, and they used to have audit data analytics, move to the data analytics in A for more coverage. So what's the new C? The new C is called sampling technique. This is by its term new, which was part of old A. Old A used to be about evidence and within evidence, they have sampling technique, but now on the new exam, they're emphasizing more on sampling. So you have to do more sampling for the new exam. Old area D, specific matters that require special consideration. This area, this is the topics that were covered in it. It's moved to, it's moved to E. Remember this accounting estimate was moved from area two to area three. This moved to E and they added a small topic, which we'll see on the next slide. The new D is procedure to obtain sufficient and appropriate evidence, which would include analytical procedure, which I told you it's moved to D and external confirmation. They were moved to D from C, from the old C, and they have here test of controls. Old E, misstatement of internal deficiencies. This is moved to the new F and it's basically the same F. So this old E became the same, exactly the new F. The new E, specific matters. This was used to be the old D. Now it's becoming the new E and they added to it one more thing, uniform guidance for single audit. They added this topic here. Old F, written representation. Now it's the new G. So old F, now it's the new G. The new F is misstatement of internal control used to be the old E. Nothing changing, shifting around. The old G used to be subsequent event and subsequently discovered fact. They moved to H and old H, we did not have an old H. Overall, the summary for section three, it's I believe has the most changes. I shouldn't have told you this before I looked at four, but that's fine. We have a new section about data analytics and more emphasis on sampling. Area four, forming conclusion and reporting, basically the same weight, report on auditing engagement, report on auditing engagement, almost the same. Old B, report on attestation engagement and we had the general standard for attestation, agreed upon procedures, reporting on control at service organization. This section is removed. And anything that has to do with SOC service organization, this is moved to the specialty ISC. Now the new B is examination or review almost the same as this one and agreed upon procedures, agreed upon procedures. Old C, accounting and review service engagement. New C, accounting and review service engagement. Old D, reporting on compliance. New D, reporting on compliance. E, other reporting consideration. E, other reporting consideration. They just, the only thing that I noticed real quick is there is no other country framework. Summary four B, they removed the service organization issues. They removed it from the section because service organization SOC one, SOC two and SOC three, they're all going to be major topic in the ISC specialty. Overall summary for area one, no serious changes. For area two, they removed the section. For area three, they added the data analytics, emphasis more on sampling. Area four, again, they moved this service organization to the ISC. Overall, no major changes. No major changes. Whether you take the audit exam now or whether you take the audit exam and the court 2024, they removed some topic and they added some topic. Overall, it's the same. So that should not, should not factor into your consideration. If you want to take the auditing exam, unless you really don't like data, data analytics, that's the only major thing that's being changed here, which is under area three. If you want to see the more details and if you don't like sampling, if you don't like those two, like, you know what, I want to get rid of the auditing now, that's fine. Otherwise, I see no major changes, no serious changes overall. That's my opinion. I will be covering the ISC later on and BEC and I did cover already FAR and and Rag, you can take a look at those recording. Again, make the make the decision and and bar as well. NTCP, I covered all of them. Make the decision that best fits your personal circumstances. Know the fact and make the decision. But audit, I would say should be no, like either or it's the same in my opinion. Good luck, everyone. Visit FARHAT lectures for additional resources and stay safe.