Armenia Auditor Qualification Exam cheat sheet

IFRS 15 five-step model: identify contract, identify performance obligations, determine transaction price, allocate price to obligations, recognize revenue when control transfers.

IFRS 16 lessee: recognize right-of-use asset and lease liability at present value of lease payments; exemptions for short-term (≤12 months) and low-value assets.

IAS 36 impairment: carrying amount > recoverable amount (higher of fair value less costs of disposal and value in use); recognize loss immediately.

IAS 37 provisions: recognize when present obligation from past event, probable outflow, and reliable estimate; measure best estimate.

IAS 2 inventories: lower of cost and net realizable value; cost includes purchase, conversion, and other costs to bring inventory to present location and condition.

IAS 16 PPE: initial measurement at cost; subsequent either cost model or revaluation model; depreciation over useful life.

IFRS 9 financial assets classification: amortized cost if business model hold-to-collect and SPPI; FVOCI if hold-to-collect-and-sell and SPPI; otherwise FVTPL.

IAS 12 deferred tax: temporary differences between tax base and carrying amount; recognize deferred tax liability/asset at expected tax rates.

Armenian accounting standards (AAS) are based on IFRS; entities must apply IFRS as adopted by the Armenian regulator for statutory reporting.

ISA 200: auditor's objective is to obtain reasonable assurance about whether financial statements are free from material misstatement, whether due to fraud or error.

ISA 315 (Revised 2019): risk assessment procedures include inquiries, analytical procedures, and observation/inspection; identify risks of material misstatement at financial statement and assertion levels.

ISA 330: responses to assessed risks: tests of controls when reliance on controls, and substantive procedures for all material classes of transactions, account balances, and disclosures.

ISA 500: audit evidence must be sufficient (quantity) and appropriate (relevance and reliability); external evidence generally more reliable than internal.

ISA 700: form an opinion on whether financial statements are prepared, in all material respects, in accordance with applicable financial reporting framework.

ISA 701: communicate key audit matters (KAMs) in the auditor's report for listed entities; KAMs are selected from matters communicated with those charged with governance.

ISA 570: going concern: evaluate management's assessment for at least 12 months from financial statement date; include material uncertainty paragraph if needed.

ISA 220: quality management at engagement level: engagement partner responsible for overall quality; engagement quality review for listed entities.

Armenian auditing standards: the Law on Auditing Activity and related regulations adopt ISAs; audits must be conducted in accordance with ISAs as adopted in Armenia.

Assertions: existence, rights and obligations, occurrence, completeness, accuracy, cut-off, classification, presentation, valuation and allocation.

Audit procedures: inspection, observation, external confirmation, recalculation, re-performance, analytical procedures, inquiry.

Reliability hierarchy: external direct evidence > internal evidence with effective controls > internal evidence without controls > oral representations.

ISA 505 external confirmations: auditor should maintain control over confirmation requests and responses; positive vs negative confirmations.

ISA 530 audit sampling: sampling risk and non-sampling risk; determine sample size based on tolerable misstatement, expected misstatement, and confidence level.

ISA 540 accounting estimates: evaluate reasonableness of estimates, including methods, assumptions, and data; obtain written representations.

ISA 580 written representations: obtain from management and, where appropriate, those charged with governance; dated as near as practicable to auditor's report date.

ISA 230 audit documentation: sufficient to enable an experienced auditor to understand work performed, evidence obtained, and conclusions reached; retain at least 5 years (or as required by law).

Audit risk model: AR = IR × CR × DR; detection risk is inversely related to inherent and control risk.

COSO internal control framework: five components: control environment, risk assessment, control activities, information and communication, monitoring activities.

Control activities include authorization, segregation of duties, reconciliation, physical controls, and IT general controls.

ISA 265: communicate significant deficiencies in internal control to those charged with governance and management in writing.

ISA 240: fraud risk factors: incentives/pressures, opportunities, attitudes/rationalizations; required procedures include testing journal entries and reviewing accounting estimates for bias.

Significant risk: an identified risk of material misstatement that requires special audit consideration; assess at assertion level.

Understanding the entity's IT environment: identify risks from IT, including unauthorized access, program changes, and data integrity.

Walkthrough: trace a transaction through the system to confirm understanding of controls and identify control points.

Armenian VAT standard rate is 20%; registration threshold generally AMD 115 million annual turnover (subject to changes; verify current law).

Corporate profit tax rate in Armenia is 18% (standard rate; special regimes may apply).

Personal income tax flat rate is 20% (since 2023; verify current legislation).

Tax audits in Armenia: conducted by the State Revenue Committee (SRC); types include desk, field, and thematic audits.

Statute of limitations for tax audits and assessments: generally 3 years from the end of the tax period (exceptions may apply).

Transfer pricing: Armenia applies arm's length principle; documentation required for controlled transactions above thresholds.

Tax penalties: late payment interest and fines for underreporting; voluntary disclosure may reduce penalties.

Tax agent obligations: withhold and remit personal income tax and social contributions from salaries.

Armenian Civil Code: legal entities may be commercial (LLC, JSC, etc.) or non-commercial; LLC is most common form.

LLC: charter capital minimum generally AMD 100,000 (verify current law); members' liability limited to contributions.

Joint-stock company: minimum charter capital for open JSC is AMD 10 million; for closed JSC AMD 1 million (verify current law).

Contract formation: offer and acceptance; contract is concluded when acceptance reaches the offeror.

Statute of limitations (general): 3 years; special periods may apply (e.g., 1 year for certain claims).

Bankruptcy: Law on Bankruptcy; grounds include insolvency; procedure includes observation, financial rehabilitation, and liquidation.

Labor Code: employment contract in writing; probation period up to 3 months (generally); termination requires legal grounds.

Property rights: ownership, right of economic management, operational management; registration of real estate rights required.

Net present value (NPV) = Σ [CF_t / (1+r)^t] − initial investment; accept if NPV > 0.

Internal rate of return (IRR): discount rate making NPV = 0; accept if IRR > required rate of return.

Weighted average cost of capital (WACC) = (E/V)×Re + (D/V)×Rd×(1−Tc).

Capital asset pricing model (CAPM): Re = Rf + β×(Rm − Rf).

Break-even point (units) = Fixed costs / (Price − Variable cost per unit).

Current ratio = Current assets / Current liabilities; quick ratio = (Current assets − Inventory) / Current liabilities.

DuPont analysis: ROE = Net profit margin × Asset turnover × Equity multiplier.

Bond valuation: price = present value of coupon payments + present value of face value at yield to maturity.

Cost classification: fixed vs variable, direct vs indirect, product vs period costs.

Activity-based costing (ABC): allocate overhead based on activities and cost drivers; more accurate than traditional costing for diverse products.

Standard costing: variances: price variance = (AP − SP) × AQ; quantity variance = (AQ − SQ) × SP.

Contribution margin = Sales − Variable costs; contribution margin ratio = Contribution margin / Sales.

Relevant costs for decision making: avoidable costs that differ between alternatives; sunk costs are irrelevant.

Budgeting: master budget includes operating budgets (sales, production, purchases) and financial budgets (cash, capital).

Balanced scorecard perspectives: financial, customer, internal processes, learning and growth.

Sensitivity analysis: test how changes in one variable affect outcomes; scenario analysis: multiple variables change together.

IESBA Code fundamental principles: integrity, objectivity, professional competence and due care, confidentiality, professional behavior.

Independence: independence of mind and appearance; required for audit and review engagements.

Threats to independence: self-interest, self-review, advocacy, familiarity, intimidation; apply safeguards or decline engagement.

Fee dependency: if total fees from one client exceed 15% of firm's total fees for two consecutive years, disclose and apply safeguards (for listed entities, communicate with those charged with governance).

Non-assurance services: prohibited for audit clients if they create self-review threat (e.g., preparing financial statements for listed entities).

ISQM 1 (or ISQC 1): firm-level quality control: leadership, ethical requirements, acceptance and continuance, human resources, engagement performance, monitoring.

Confidentiality: do not disclose client information without authority unless legal or professional duty; continue after engagement ends.

Rotation: engagement partner rotation for listed entities (e.g., 5-7 years depending on jurisdiction); Armenia may have specific requirements.

Audit activity in Armenia is regulated by the Law on Auditing Activity and oversight by the Ministry of Finance and the Public Oversight Board.

Auditor qualification: pass the qualification exam and obtain a license/certificate from the authorized body.

Licensing: audit firms must be licensed; individuals must hold auditor qualification certificate.

Public oversight: the Public Oversight Board oversees audit quality and disciplinary matters.

Continuing professional education (CPE): auditors must complete annual CPE requirements (e.g., 40 hours per year, verify current regulation).

Liability: auditors may be subject to civil liability for damages caused by non-compliance; criminal liability for certain offenses.

Quality control reviews: mandatory periodic inspections by the oversight body.

Professional bodies: Armenian Association of Accountants and Auditors (AAAA) may play a role in certification and CPE.