The CIA Part 3 Textbook has been updated, and the new files are available for current students to download in My Studies. This update made some changes to Section IV to synchronize the textbook with the new 2019 CIA Part 3 Videos. It is not necessary to re-study any topics already studied, but if possible we do recommend switching to the new textbook to continue studying.

If you have any questions about these changes, please contact us and we will be glad to assist you.

You can also learn more about the HOCK CIA Textbooks and other exam prep materials if you are not already a HOCK student.

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While Critical Audit Matters (CAMs) were added to the PCAOB Standards in 2017, reporting of CAMs is only effective for fiscal years ending on or after June 30, 2019. Additionally, CAMs will be tested on the CPA Audit exam beginning July 1, 2019. Therefore, both practitioners and CPA exam candidates need to be familiar with CAMs.

CAMs are an additional section in the auditor’s report in which the auditor provides disclosure about any areas of the audit that were particularly difficult or had significant estimates or judgement in them. While I am not going to cover the requirements of CAMs here, I want to outline why this reporting is important and can help users of financial statements better understand a company. I will do this by giving brief examples of two companies that each have goodwill of $10,000,000 on their balance sheet.

First, let us imagine that Company A made a significant investment in Company Z three years ago and recognized $10,000,000 of goodwill related to 7 patents owned by Company Z. All of the patents are still valuable and there are no potential competing products in development. So, Company A has $10,000,000 of goodwill that is not impaired and not likely to become impaired in the near future. Assuming that Company A will receive an unqualified opinion from its auditor, there will be no specific mention about the goodwill in the auditor’s report and the only mention of the goodwill in the financial statements will be its inclusion on the balance sheet. (There may be some disclosure about the goodwill in a note if the amount is material to the financial statements.)

Next, let us assume that Company B made a significant investment in Company Y three years ago and recognized $10,000,000 of goodwill related to the brand name and reputation of Company Y. Now, the $10,000,000 of goodwill is being tested for impairment. Though the auditor feels that they did enough testing, and they are comfortable that the goodwill is not impaired, they know that there were a lot of estimates and believe that the goodwill could become impaired in the near future, or, if the industry changes rapidly enough, the goodwill may lose all of its value. In coming to this conclusion, the auditor knows that their decision involved especially challenging, subjective, and complex judgment. At this point, Company B will receive an unqualified opinion from their auditor, but unlike Company A there will be specific mention of the goodwill in the audit report as a Critical Audit Matter.

Prior to the PCAOB addition of Critical Audit Matters, the language of the reports for both companies could have been copied and pasted out of the Standards and would behave been the same for both companies. However, based on the situations, the $10,000,000 of goodwill that is on each balance sheet is different and was looked at very differently during the audit. With the addition of Critical Audit Matters in the audit report, the users of the financial statements will get more information about the goodwill of Company B in the report. Even more importantly, that information is coming from the perspective of the auditor and not management.

My unofficial definition of a CAM is that it is any material account or disclosure that could have been reported another way than it was reported in the financial statements. If there were extensive estimates, subjective decisions, or substantial use of auditor judgment, then I think that the users of those financial statements would want to know what the other considerations were for reporting it.

If you are taking the CPA Exam, you need to know Critical Audit Matters starting in July of 2019. If you are not a CPA Candidate, but prepare or audit financial statements for a publicly-traded company in the US, then this is something that you may have already started preparing for and doing during engagements.

To help all CPA candidates prepare for this new topic, we are offering our two videos covering Critical Auditor Matters free of charge. Use the buttons below to play each of the videos.

Critical Audit Matters (16 Minutes)
Reporting Critical Audit Matters (16 Minutes)

If you have written or read any CAMs as an auditor or user of financial statements, I would be interested to hear your experience so far with CAMs in the comments.

Brian Hock, CMA, CIA

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HOCK is pleased to announce that the Part 1 Volume 2 Textbook (Sections D-F) for the 2020 CMA exams is now available. The questions and videos for Sections D and E are also ready for 2020. Questions and videos for Section F are still in development and will be available in the coming weeks. All HOCK students who have the materials for the current exam syllabus have access to the 2020 materials at no additional charge.

An important reminder: students studying for exams through October 31, 2019 should continue to use the old/existing materials to prepare for their exams. Only students studying to take the exams in 2020 should use the new materials. More information about the 2020 CMA exam changes is available here.

Topics added/changed in CMA Part 1 Sections D-F (Textbook Volume 2) for 2020:

  • Section D: Expanded discussion of Lean Resource Management (pages 112-116).
  • Section E: More details added to the steps of software development (pages 227-231).
  • Section F: New Section for 2020 covering Technology and Analytics (pages 244-370).

Topics deleted in CMA Part 1 Sections D-F (Textbook Volume 2) for 2020:

  • Section E: Internal Auditing.

Please watch our web site or social media pages for further announcements regarding the rest of the materials updates for the 2020 CMA exams.

As always, if you have any questions about the materials or the exams, please do not hesitate to contact us.

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HOCK is pleased to announce that the first Sections (Textbook Volume 1) for both Parts of the 2020 CMA exams are available. All HOCK students who have the materials for the current exam syllabus have access to the 2020 materials at no additional charge.

An important reminder: students studying for exams through October 31, 2019 should continue to use the old/existing materials to prepare for their exams. Only students studying to take the exams in 2020 should use the new materials. More information about the 2020 CMA exam changes is available here.

Topics added/changed in CMA Part 1 Sections A-C (Textbook Volume 1) for 2020:

  • Section A: Added Integrated Reporting (pages 41-53).
  • Section A: Terminology change of uncollectible accounts to credit losses (pages 59-70).
  • Section A: Added depreciation for tax purposes (pages 110-111).
  • Section A: Updated leases for new accounting standards (pages 131-135).

Topics deleted in CMA Part 1 Sections A-C (Textbook Volume 1) for 2020:

  • Section A: Deleted off-balance sheet financing.
  • Section B: Deleted best practices for budgeting.

Topics deleted in CMA Part 2 Section A-B (Textbook Volume 1) for 2020:

  • Section A: Deleted EBITDA ratios.
  • Section A: Deleted off-balance sheet financing.
  • Section B: Deleted bankruptcy.
  • Section B: Deleted tax implications of transfer pricing.

Materials for the remaining Sections of the new 2020 CMA exam syllabus will be released as they are completed in the coming weeks. Please watch our web site or social media pages for further announcements.

As always, if you have any questions about the materials or the exams, please do not hesitate to contact us.

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The HOCK study plans have been a staple of the HOCK CMA exam prep since its introduction fifteen years ago, guiding you step by step through your studies. These PDF-based plans tie the books, videos, and questions together section by section and topic by topic.

Now, with our new interactive study planner called the PassMap, HOCK has combined the study plan with a personalized schedule in an online dashboard, allowing you to easily track and see your progress through the materials, including a progress bar and countdown to your exam date. If you fall behind or change your expected exam date, you can easily adjust your schedule with a few clicks.

The CMA Part 1 PassMap is available in My Studies for HOCK students who have the CMA Review or CMA Complete materials and the Section A PassMap is available in the CMA Trial. We would like to hear your feedback about the new PassMap, whether positive or negative, so that we can be sure that we are providing the most useful study tools.

A PassMap for CMA Part 2 will also be coming soon, providing HOCK students with a seamless plan through both Parts of the CMA exams.

If you don’t have your HOCK CMA materials yet, you can learn more about the HOCK CMA Exam Prep including our exclusive “You Pass Or We Pay” Guarantee, and start studying today.

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The CIA Part 2 Textbook has been updated, and the new files are available for current students to download in My Studies. The significant changes are listed below including page numbers in the new book. If you have any questions about these changes, please contact us and we will be glad to assist you.

You can also learn more about the HOCK CIA Textbooks and other exam prep materials if you are not already a HOCK student.

Section I

Page 57: Added Standard 2120: Risk Management.

Section III

Page 120: Added more discussion of liquidity ratios and working capital.

Page 132: Added topic “Review of the Working Papers.”

Section IV

Page 152: Added more points from PA 2440-2 on whistleblowing.

Page 154: Added discussion of Standard 2600 on the acceptance of risks.

Page 155: Added PA 2060-1: Reporting to Senior Management and the Board and a discussion monitoring engagement outcomes.

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The CIA Part 3 Textbook has been updated, and the new files are available for current students to download in My Studies. The significant changes are listed below including page numbers in the new book. If you have any questions about these changes, please contact us and we will be glad to assist you.

You can also learn more about the HOCK CIA Textbooks and other exam prep materials if you are not already a HOCK student.

Section I

Page 74: Added discussion of big data, types of data, and the four V’s of data.

Section II

Pages 83-84: Added examples of and audit considerations for input, processing, and output controls.

Pages 89-90: Added details about privacy risks and privacy audits.

Page 93: Added a description of brute force password attacks.

Section III

Page 104: Added information about private browsing, XML, and XBRL.

Page 106: Added discussion of Software as a Service (SaaS).

Page 118: Added a definition of business continuity and elements of a business continuity plan.

Page 119: Consolidated two different lists with elements of a disaster recovery plan into a single list.

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HOCK is pleased to announce that the HOCK CIA App by Appitur® has been updated for the 2019 CIA exams. All HOCK students who have the CIA Parts 1, 2, or 3 Review can access the updated App by logging in inside the App with their HOCK My Studies email and password.

Learn more about the HOCK CIA App and if you have any questions about the materials or the exams, please do not hesitate to contact us and we will be glad to help.

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The CIA Part 1 Textbook has been updated, and the new files are available for current students to download in My Studies. The significant changes are listed below including page numbers in the new book. If you have any questions about these changes, please contact us and we will be glad to assist you.

You can also learn more about the HOCK CIA Textbooks and other exam prep materials if you are not already a HOCK student.

Section III

Page 31: Added lists of the knowledge and skills that an internal auditor should have.

Section V

Pages 47-50: Additional discussion about governance, the Board of Directors, and managing stakeholders with regards to governance.

Page 52: Small topic added about the governance process relationship with risk and control.

Pages 57-58: The IAA’s role as an ethics advocate and what is included in a code of conduct.

Page 60: A list of the main aspects of ISO 26000.

Page 61: Added a discussion about the Pyramid of Social Responsibility.

Pages 67-70: Detailed descriptions of risk appetite, risk tolerance, risk capacity, and the influences on a company’s risk appetite.

Page 101: New lists cover the benefits and limitations of internal controls.

Pages 105-106: Added discussion about the segregation of duties along with some examples.

Appendices

Page 152-153: Appendix D added with a sample code of conduct. Previous Appendix D is now Appendix E.

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The CPA FAR Volume 2 Textbook has been revised to reflect the latest guidance for Leases in ASC 842, which is a major revision to the accounting for leases. The new Volume 2 textbook files are available for current students to download in My Studies.

Candidates should review the new lease material in Group F on pages 54-104. If you have any questions about these changes, please contact us and we will be glad to assist you.

You can also learn more about the HOCK CPA and other exam prep materials if you are not already a HOCK student.

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