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.
GAAS — 10 Generally Accepted Auditing Standards
Three categories: "GFR" = General, Fieldwork, Reporting
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: Audit planning and quality control standards
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:
General
Special Revenue
Capital Projects (the "a" is silent filler)
Debt Service (the "P" stands for "Pay debt")
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