CPA Exam Study Guide – Summary
Prepared by: Eve Gitari
1. Overview of the CPA Exam
The CPA exam has four sections: AUD, FAR, REG, and ISC.
Each section is four hours long and contains both multiple-choice questions and task-based
simulations.
2. AUD – Auditing and Attestation
AUD focuses on how audits are planned, how evidence is gathered, and how auditors stay
objective and ethical.
Main points:
Audit Risk = Inherent Risk × Control Risk × Detection Risk
Types of audit opinions:
• Unmodified – everything appears correct
• Qualified – mostly correct but with one notable issue
• Adverse – financial statements are wrong
• Disclaimer – not enough evidence to give an opinion
Strong audit evidence usually comes from external sources or the auditor's direct
testing.
3. FAR – Financial Accounting and Reporting
FAR covers accounting standards, financial statements, revenue, leases, pensions, nonprofits,
and government accounting.
Key ideas:
Revenue recognition in simple steps:
→ Identify the contract
→ Identify the obligations
→ Determine the price
→ Allocate the price
→ Recognize revenue when work is performed
Prepared by: Eve Gitari
1. Overview of the CPA Exam
The CPA exam has four sections: AUD, FAR, REG, and ISC.
Each section is four hours long and contains both multiple-choice questions and task-based
simulations.
2. AUD – Auditing and Attestation
AUD focuses on how audits are planned, how evidence is gathered, and how auditors stay
objective and ethical.
Main points:
Audit Risk = Inherent Risk × Control Risk × Detection Risk
Types of audit opinions:
• Unmodified – everything appears correct
• Qualified – mostly correct but with one notable issue
• Adverse – financial statements are wrong
• Disclaimer – not enough evidence to give an opinion
Strong audit evidence usually comes from external sources or the auditor's direct
testing.
3. FAR – Financial Accounting and Reporting
FAR covers accounting standards, financial statements, revenue, leases, pensions, nonprofits,
and government accounting.
Key ideas:
Revenue recognition in simple steps:
→ Identify the contract
→ Identify the obligations
→ Determine the price
→ Allocate the price
→ Recognize revenue when work is performed
