Ultimate Guide to the AUD CPA Exam [2023]

As its primary focus on financial statement auditing, several aspects of the AUD CPA exam are similar to the FAR CPA exam. Many candidates choose to take AUD after sitting for FAR, which is the approach I recommend as well.

For this post, I’ve compiled everything you need to know about the AUD CPA exam, including the content covered, the format and structure of the exam, the types of questions you’ll see, time management and other helpful tips you’ll need to pass the AUD exam with flying colors. Let’s dive in!

AUD CPA Exam Topics and Skills Tested

Which Topics are Tested on the AUD CPA Exam?

The AUD CPA exam covers four key auditing and attestation concepts, referred to as “content areas”, as follows:

1. Ethics, Professional Responsibilities and General Principles (15-25%)
2. Assessing Risk and Developing a Planned Response (20-30%)
3. Performing Further Procedures and Obtaining Evidence (30-40%)
4. Forming Conclusions and Reporting (15-25%)

Note that 50-70% of the exam tests Areas 2 and 3, the risk assessment process and performing procedures / obtaining evidence! These areas pretty much sum up the day-to-day responsibilities of an auditor, so this is great news if you have deep experience woking in audit. If not then don’t worry, but the faster you learn how to “think like an auditor” then the easier this exam will be be to prepare for.

To learn more about these content areas check out the CPA exam blueprints for yourself.

What CPA Exam Skills are Tested on AUD?

The CPA exam also tests range of higher order skills as opposed to simple memorization of facts and rules. There are four skill levels tested on the AUD CPA exam, as follows:

As of July 1, 2021 the skill-level weightings for the AUD CPA exam are:

• Evaluation – 5-15%
• Analysis – 15-25%
• Application – 30-40%
• Remembering and Understanding – 30-40%

AUD CPA Exam Question Types

You’ll see two types of questions on the AUD CPA exam:

1. Multiple-choice questions, and
2. Task-based simulations

While each question type is graded slightly differently (more on this below), MCQs and TBSs each make up 50% of your overall AUD exam score, so you’ll want to prepare thoroughly for each type of exam question.

AUD CPA Exam Format and Structure

The AUD CPA exam consists of 5 testlets. The first 2 testlets include a total of 72 total multiple-choice questions while the remaining 3 testlets include a total of 8 task-based simulations. See below for how the AUD CPA exam is structured:

[table id=54 /]

AUD CPA Exam Testing Process

AUD Testlet Selection

The CPA exam uses a multi-stage adaptive testing approach for all of their multiple-choice testlets, which means your performance on the first MCQ testlet impacts the difficulty level of questions you’ll see on the second testlet.

Here’s an illustration of how this model works in practice:

Source: AICPA

As noted above, the first MCQ testlet will always be rated as “medium” difficulty, whereas the second MCQ testlet will be rated “difficult” or “medium” based on your testlet 1 performance. Also, the multi-stage adaptive testing approach only applies to the MCQ testlets and not the TBS simulations. The AICPA establishes the difficulty of task-based simulation testlets ahead of time so all of the TBS testlets will be the same difficulty level.

Operational vs. Pretest Questions

Another interesting aspect of the CPA exam is their use of “pretest” questions during the CPA exam. While most of the questions and simulations on the CPA exam are “operational” and count towards your exam grade, the AICPA also includes a handful of “pretest” questions on each exam that DO NOT count towards your exam score.

Why does the AICPA do this?

The AICPA is constantly developing new questions to keep up with new laws and accounting rules and needs a reliable way to determine whether new questions are fairly written or need improvement. Including these “pretest” questions within the live CPA exam and seeing how candidates perform allows them to gauge whether these new questions are too easy or too difficult. Questions and simulations that pass a successful “pretest” trial period will eventually become “operational” questions on future exams.

How Long is the AUD CPA Exam?

The AUD CPA exam is 4 hours long, with an optional 15-minute break between the third and fourth testlets that doesn’t count towards your exam time. You can take a break at any other point during the exam, but the clock will be running!

AUD CPA Exam Grading

How is the AUD CPA Exam Graded?

There’s a lot of confusion around how the CPA exam is graded so hopefully I can clear things up.

While MCQs and TBSs each make up 50% of your overall AUD CPA exam grade, your final score isn’t simply the percentage of each question type you answered correctly. Here’s how each type of question is scored:

AUD Multiple-Choice Questions

MCQs are graded as pass-fail, meaning there’s only 1 correct or “best” answer for each question and 3 incorrect ones. There’s no opportunity for partial credit on MCQs and no penalty for incorrect answers.

Due to the multi-stage adaptive approach on the MCQ testlets, your MCQ score depends on whether your second testlet was “difficult” or “medium” difficulty. In other words, MCQs from the “difficult” testlets are worth more than MCQs from “medium” difficulty” testlets when it comes to calculating your exam score.

That doesn’t mean one type of MCQ testlet is better than the other though. Mathematically speaking, you’re likely to get fewer “difficult” MCQs correct than “moderate” ones, so don’t worry if you think your second MCQ testlet is only a “medium” difficulty.

Many candidates get flustered on exam day because they think they did poorly on the first MCQ testlet, which ends up affecting their performance on later testlets. Don’t let this happen to you! Instead, keep a level head throughout the exam and just take whatever questions the exam throws your way.

Also, remember that the AUD exam includes several pretest questions that don’t count towards your exam grade. If you’re caught off guard by several questions and feel like you’re bombing the exam, chances are they’re just pretest questions and they won’t impact your score.

AUD Task-Based Simulations

TBSs don’t vary in difficulty like the MCQs, so each one is scored equally. Also, one TBS is a pretest simulation and doesn’t count towards your exam grade.

Given how the TBSs are structured you have the opportunity to earn partial credit on non-research TBSs, so try to follow the same advice here and answer each one completely and as best as you can, even if you’re unsure of the answer.

What is a Passing Score on the AUD CPA Exam?

As with all CPA exam sections, a passing score for AUD is 75.

Is the CPA Exam Graded on a Curve?

No. All grading for the AUD CPA exam is performed electronically and automatically based on the weightings of the operational exam questions. There’s no bell curve or any other type of curve applied to the exam results.

AUD CPA Exam Tips

What are the AUD CPA Exam Pass Rates?

AUD has fairly consistent pass rate of just under 50%, making it historically the second lowest pass rate among the four CPA exam sections.

How Much Do I Need to Study for AUD?

I’ve written a whole separate article on this topic, but the TL:DR is this:

Most candidates should plan to spend at least 70-90 hours studying for AUD. Assuming you study ~15 hours each week, this translates to roughly 4-6 weeks of studying.

If you have work experience as an auditor or take FAR immediately before AUD (which I recommend) then you may be on the lower end of this spectrum. Either way, AUD takes most candidates less time than FAR and REG but more time than BEC.

AUD CPA Exam Study Tips

1. Think Like an Auditor – Most of the concepts covered on the AUD exam become fairly logical and intuitive once you understand an auditor’s role. Auditor’s provide assurance to the investing community that a company’s financial statements are accurate, conform with GAAP (or IFRS, if applicable), and are free from material misstatements. Each and every test and procedure performed is thus designed to help external accountant achieve the appropriate amount of assurance required for compilation, review and audit engagements.
2. Know the Audit and Assurance Reports Inside and Out – These days of needing to memorize most things in life are over, unless of course you’re taking the AUD CPA exam! There’s really no better way to ace these exam questions than to know the reports so well you can spot even the smallest errors and omissions. Most of the report language is standard, so start by reading through the standard unqualified reports 10-20 times each and then pay careful attention to when, why and how modified language is used.
3. Understand How Assurance is Gained with Different Types of Evidence – Recalculating the client’s allowance for bad debts lets you determine if it’s accurate or not, but won’t detect if they forgot to scope-in $5 million of sales shipped but not invoiced just before year-end! For that you’ll need to perform another procedure to test whether they achieved appropriate cut-off with their sales / receivables. Knowing the right mix of procedures needed to achieve assurance over every financial statement assertion is often what separates those who pass AUD vs. those who fail, so be sure to study this material thoroughly!
4. Internal controls – Internal controls are critical at preventing errors and fraud, so it’s critical to understand how they should be designed and how a failure in a control could impact the financial statements. Pay careful attention to this material!

How to Avoid Failing the AUD CPA Exam

Sometimes it’s easier to remember what NOT to do.

There are lots of reasons why people fail AUD, but here are a few in particular that you should be aware of:

1. Rely Solely on Your Work Experience – If you’re an auditor then AUD should be a piece of cake, right? Surprisingly, many candidates end up failing AUD because they fell into this trap and didn’t give AUD the respect and time that it deserves. Yes, AUD can be a fairly easy section if you study properly, but don’t cut corners just because you work as an auditor.
2. Study Inconsistently or Only When It’s Convenient –  This is my favorite advice for anyone looking to fail a CPA exam section. Don’t feel like studying? That’s cool, just put it off until tomorrow, or the next day, or the weekend! Consistency is critical to effectively studying for the CPA exam, and going even 2 or 3 days between study sessions can cause you to lost momentum and forget key concepts and rules.
3. Decide That Audit Reports Are Just Too Boring –  “We have audited the accompanying consolidated financial statements of blah, blah blah”. Yes, the audit reports are really boring. Yes, they may seem pointless, especially if you don’t plan on doing any audit work during your career. But they always have and always will be on the test, so just suck it up and memorize them.
4. Assume That AUD Is All About Memorization – Speaking of which, you’ll be doing LOTS of memorizing to pass AUD. Make things easier for yourself by understanding the logic behind audit methodology and the hierarchies of audit evidence. Once you learn to “think like an auditor” many of the concepts in AUD become much more intuitive.

When Should I Take AUD?

No matter which CPA exam you take first, I suggest taking AUD immediately after FAR. There’s a lot of overlapping material between the AUD and FAR exams, and the logic and main concepts behind auditing become much easier to understand if you already have a foundational understanding of the underlying financial accounts.

For example, the evidence required to verify a financial asset like cash is very different from what’s needed to verify deferred revenue. If you already understand how each account is quantified then figuring out how to audit them is much more intuitive.

Who is the AUD CPA Exam Easiest For?

AUD is fairly logical once you finally understand the concepts, but there’s a bit of a learning curve if you don’t have much experience. For that reason, the AUD CPA exam tends to be easier for candidates who have worked as an auditor and/or did well in their auditing courses during college.

That being said, don’t automatically assume you’ll have an advantage on AUD just because you work as an auditor. The AUD CPA exam test is very broad and covers much more material than most young audit professionals have been exposed to, so treat AUD with respect!

Who is the AUD CPA Exam Hardest For?

The AUD CPA exam tends to be more difficult and take more time for candidates who’ve never work worked as an auditor and/or struggled with auditing courses during college.

If you don’t have any AUD experience then I suggest adding an extra 1-2 weeks of study time to fully prepare for the AUD CPA exam.

Time Management for the AUD CPA Exam

Effective time management is a critical to passing the CPA exam, and AUD is no exception.

You only have four hours to complete all 5 testlets, so you’ll need to work through the exam at a brisk pace and not get stuck along the way, especially on the multiple-choice testlets. Trust me, not saving enough time for task-based simulations is a recipe for disaster!

Here’s how much time I recommend you spend on each testlet for AUD:

[table id=53 /]

These numbers are just my guidelines. You must complete an entire testlet before moving on to the next one, but you can complete individual questions or simulations within a testlet in any order.

To manage your time effective, aim to spend as little time as possible on the questions that you’re most confident about and more time on more difficult questions. To do this, try to stick with my four-step process:

Effective AUD MCQ Strategy

1) Carefully read each question to make sure you understand what’s being asked. To work as efficiently as possible, read last sentence first, then re-read the entire question from start to finish.

2) Make a first pass through each testlet with the goal of answering each question in 30 seconds or less.

The first testlet is at a moderate difficulty level, so if you really know the material then this will be more than enough time. If you’re unsure of the answer then flag it or leave it unanswered and move on to the next MCQ.

This approach lets you to make a first pass through the whole testlet in about 20 minutes, giving you plenty of time to go back to the more challenging MCQs.

3) Revisit and try to answer each flagged or unanswered question, this time within 1 minute. 

If you truly don’t know the material then there’s no sense in spinning your wheels, just make your best guess and move on. For any MCQs that you’re still a little uncertain of, make your best educated guess but flag the question to revisit again.

Plan to spend no more than 20 total minutes on this step. Assuming you have about 12 questions to work through here, this step should only take another 10-15 minutes.

4) Make a third and final pass through flagged or unanswered questions, giving yourself up to 2 minutes on each question if you need. 

This is when you need to wrap things up and make your best educated guess on any remaining questions in the testlet. Assuming you have 5-10 questions to work through this step can take another 10-20 minutes.

The above approach should allow you to complete each MCQ testlet in 35-50 minutes. You can then decide if you want to spend a few extra minutes revisiting and triple-checking a few MCQ answers or bank the time and move on to your next testlet.

Remember, if you perform well on the first MCQ testlet then the second MCQ testlet may be more difficult and you may need a little more time to complete it.

Effective AUD TBS Strategy

Dominate your AUD TBSs with these three simple steps:

1) Before starting the TBS testlets, note your total remaining exam time and divide it by 8. This is roughly how much time you have to complete each simulation. 

Ideally you should have at least 15 minutes for each TBS, but pan to spend a bit more time if it’s a Document Review Simulation (DRS).

2) Complete each TBS before moving on to the next one.

Unlike the MCQs, task-based simulations include several questions and calculations that revolve around an overarching scenario and fact pattern. Switching back and forth between simulations only increases the chances that you’ll mix up or forget key details.

3) As you approach your budgeted time on each TBS, assess how you’re doing and decide whether it’s worth completing or if you should make your best educated guesses and move on. 

Simulations ultimately come down to time management. The worst thing you could do on the CPA exam is spin your wheels and take time away from later simulations, so don’t be afraid to cut bait and move on if you’re starting to struggle.

Just remember to fill out the entire simulation, as there’s no penalty for incorrect answers and you may even get partial credit!

Other CPA Exam Sections

Learn more about the other CPA exam sections here:

• BEC CPA Exam
• FAR CPA Exam
• REG CPA Exam

Still Need a CPA Review Course?

Whether you’re just starting to prepare for AUD or you already took it and failed, having the right CPA review course by your side will work wonders for your exam prep.

All of the CPA prep courses featured on this site are top notch and you can pass the CPA exam with any of them. I suggest going with the one that best fits your learning style and how you learn best. Check out which CPA review course is best for you and get to cracking on AUD as soon as you can!