CPA Exam Mnemonics & Memory Aids
The AICPA tests recall of specific lists. These mnemonics cut memorization time dramatically. Review them daily during your study period.
AUD Mnemonics
COSO Framework, 5 Components
"CR. CAMI", "Can Rihanna Cook A Meal Impressively"
Control Environment (tone at the top)
Risk Assessment (management's process)
Control Activities (policies and procedures)
Monitoring Activities (ongoing evaluation)
Information & Communication (IT systems, reporting)
Used for: Control Environment is the FOUNDATION, everything else depends on it.
The Legacy 10 GAAS (now the "Principles")
Three categories: "GFR" = General, Fieldwork, Reporting
Heads up: the 10 standards were superseded by the clarified standards' principles (responsibilities · performance · reporting). The concepts all survive, learn the map, but don't cite the "10 GAAS" as current AICPA law.
General (3): "TID"
Training and proficiency
Independence
Due professional care
Fieldwork (3): "PIE"
Planning and supervision
Internal control understanding
Evidence (sufficient appropriate)
Reporting (4): "CODA"
Consistency
Opinion expression
Disclosure adequacy
Accordance with GAAP
Used for: a concept map of auditor responsibilities, general → responsibilities principle, fieldwork → performance, reporting → reporting
Audit Opinion Types, Severity Ladder
"U Q A D" = "You Quit, And Disclaim"
Unmodified (clean, everything's fine)
Qualified ("except for", one issue)
Adverse (statements are wrong, pervasive misstatement)
Disclaimer (can't opine, pervasive scope limitation)
Used for: Severity INCREASES left to right. When multiple issues exist, the MOST SEVERE wins.
Engagement Assurance Levels
"Audits are Reasonable, Reviews are Limited, Compilations are Nothing"
Audit = Reasonable assurance (highest)
Review = Limited assurance (moderate)
Compilation = No assurance
Preparation = No assurance, no report
Shortcut: R-L-N-N (from most to least)
Used for: Understanding assurance hierarchy across engagement types
Evidence Reliability, EIIO
"External Independent Is Outstanding"
1. External from Independent sources (bank confirmations)
2. Internal with strong controls
3. Internal with weak controls
4. Oral evidence (inquiry)
Used for: Ranking audit evidence from most to least reliable
Vouching vs. Tracing, Direction of Testing
"Vouch BACK (Existence), Trace FORWARD (Completeness)"
Vouch: Records → Source docs = Verify Existence (catches Overstated items)
Trace: Source docs → Records = Test Completeness (catches Understated items)
Used for: Substantive testing direction and related assertions
Sampling, Sample Size Factors
"CTE"
Sample size INCREASES when:
Confidence level increases (want more assurance)
Tolerable rate/misstatement decreases (less room for error)
Expected rate/misstatement increases (expect more problems)
Used for: Determining appropriate sample sizes in audit sampling
Subsequent Events
"Type 1 = Existed, Type 2 = New"
Type 1 (recognized): condition Existed at B/S date → Adjust the statements
Type 2 (nonrecognized): New event after B/S date → Disclose only
Used for: Determining the proper accounting treatment for post-balance-sheet events
FAR Mnemonics
Government Fund Types, GRaSPP
"GRaSPP"
Governmental funds (in GRaSPP order):
G = General
R = special Revenue (the "a" is silent filler)
S = debt Service
P = capital Projects
P = Permanent
Used for: Memorizing the five governmental fund types in GASB reporting
Proprietary Fund Types, SE
"SE"
Enterprise (external customers, like a water utility)
Internal Service (internal customers, like a motor pool)
Used for: Distinguishing proprietary fund types in government accounting
Revenue Recognition 5-Step Model, "I IDAR"
"I IDAR" (sounds like "I Die R")
1. Identify the contract
2. Identify performance obligations
3. Determine transaction price
4. Allocate to performance obligations
5. Recognize when/as satisfied
Used for: ASC 606 revenue recognition steps
Pension Expense Components, "SIR APE"
"SIR APE"
Service cost (+)
Interest cost (+)
Return on plan assets (−) (expected return REDUCES expense)
Amortization of prior service cost (+)
Prior gains/losses amortization (corridor)
Expected vs actual adjustments
Used for: Only Service cost goes to operating income (ASC 2017-07). Everything else goes below the line.
EPS, "Don't Forget Treasury Stock Method"
"Options use Treasury, Converts use If-Converted"
Stock options → Treasury Stock Method: assume exercised, use proceeds to buy back shares at market price. Net new shares = dilutive shares.
Convertible bonds → If-Converted Method: assume converted at beginning of period. Add shares, add back interest expense × (1 − tax rate) to numerator.
Convertible preferred → If-Converted Method: assume converted. Add shares, add back preferred dividends to numerator.
Anti-dilution rule: If including a security INCREASES EPS, it's anti-dilutive, EXCLUDE it.
Used for: Calculating diluted earnings per share
Lease Classification, "OWNES" (Finance lease if any ONE is met)
"OWNES"
Ownership transfers
Written purchase option (reasonably certain)
Ninety percent (PV ≥ 90% of FV)
Economic life (term ≥ 75% of useful life)
Specialized asset (no alternative use)
Used for: If NONE of these are met, it is an operating lease.
NFP Net Asset Classes, Simple!
"With or Without, like the U2 song"
With Donor Restrictions (purpose or time restricted)
Without Donor Restrictions (unrestricted)
Used for: Not-for-profit financial statement presentation
Modified Accrual, "MEASURABLE and AVAILABLE"
"MEASURABLE and AVAILABLE"
The two-part test for governmental fund revenue recognition:
Measurable: Can you reasonably estimate the amount?
Available: Will it be collected within 60 days of year-end?
Both must be met. Property taxes collected in July (within 60 days of June 30 year-end) = recognized. Property taxes collected in October = deferred.
Used for: Governmental fund revenue recognition under modified accrual basis