Syllabus
Unit 1
Audit framework & regulation
Concept of audit & assurance – objective and general principles of external audit engagements – nature and development of audit and other assurance engagements – objectives of an assurance engagement – Elements of an assurance engagement – Types of assurance engagement
External Audits – regulatory environment within which external audits take place – reasons and mechanisms for the regulation of auditors – statutory regulations governing the appointment, rights, removal and resignation of auditors – limitations of external audits
Corporate Governance – objectives, relevance and importance of corporate governance – good corporate governance requirements relating to directors’ responsibilities (e.g. for risk management and internal control) and the reporting responsibilities of auditors – corporate governance deficiencies and recommendations to allow compliance with codes of corporate governance – the structure and roles of audit committees.
Professional ethics – fundamental principles of professional ethics – the conceptual framework, including the threats to the fundamental principles – the safeguards to offset the threats to the of fundamental principles – the auditor’s responsibility with regard to auditor independence, conflicts of interest and confidentiality.
Unit 2
Audit planning & risk assessment
Obtaining, accepting and continuing audit engagements – preconditions for an audit – importance and purpose of engagement letters and their contents – the overall objectives and importance of quality management procedures in conducting an Audit
Assessing audit risk –the components of audit risk. – the audit risks in the financial statements and auditor’s response to each risk – concepts of materiality and performance materiality – calculating materiality levels from financial information
Understanding the entity & its environment – obtaining an initial understanding of the entity, its environment and the applicable financial reporting framework – the nature and purpose of analytical procedures in planning – Compute and interpret key ratios used in analytical procedures.
Audit planning & documentation – the need for, benefits of and importance of planning an audit – the contents of the overall audit strategy and audit plan – the difference between interim and final audit – the impact of the work performed during the interim audit on the final audit – the need for, and the importance of, audit documentation – the form and contents of working papers and supporting documentation
Unit 3
Internal control & Internal Audit
Systems of Internal control – the components of internal control – recording internal control systems including the use of narrative notes, flowcharts, organigrams and internal control questionnaires – Evaluate internal control components, including deficiencies and significant deficiencies in internal control – limitations of internal control
Test of control –computer systems controls including general IT controls and information processing controls – control objectives, control procedures, control activities, direct controls and tests of control in relation to various systems in an organization
Communication on internal controls
Internal audit and governance – differences between external audit and internal audit – the scope of the internal audit function, outsourcing and internal audit assignments
Unit 4
Audit evidence and Audit Procedures
Assertions and audit evidence – the assertions contained in the financial statements for transactions and account balances – various audit procedures to obtain audit evidence – differences between tests of control and substantive procedures
Audit sampling – the need for sampling – the differences between statistical and non- statistical sampling – the application of the basic principles of statistical sampling and other selective testing procedures
Audit of specific items – Audit of receivables, inventory, payables & accruals, bank & cash, tangible & intangible assets, share capital & reserves, directors’ remuneration – details of audit checks for these items and reporting thereof – use of management representation Automated tools and techniques
The work of others – experts – service organizations – Internal Auditors Not-for-profit organization – audit techniques
Unit 5
Review & reporting
Subsequent events – the purpose of a subsequent events review – responsibilities of auditors of
regarding subsequent events – the procedures to be undertaken in performing a subsequent events review
Going Concern – importance of and the need for going concern reviews – respective responsibilities of auditors and management regarding going concern – potential indicators that an entity is not a going concern – procedures to be applied in performing going concern reviews Written representations – circumstances where written representations are necessary and the matters on which representations are commonly obtained
Final review – the importance of the overall review – the significance of uncorrected misstatements.
Independent auditors report – basic elements contained in the independent auditor’s report – circumstances in which a modified audit opinion may be issued in the auditor’s report – impact on the auditor’s report when a modified opinion is issued – format and content of key audit matters, emphasis of matter and other matter paragraphs
Objective and Outcomes
Course Objective:
The aim of paper is to develop knowledge and understanding of the process of carrying out assurance engagements such as external audits and internal audits & their application in the context of the professional regulatory framework.
Course Outcomes:
Students will be able to:
CO1: Understand the concept of audit and assurance, its framework and regulations.
CO2: Understand how the auditor obtains and accepts audit engagements, assesses audit risk and plans an audit
CO3: Describe and evaluate internal controls & understand internal audit
CO4: Identify and describe the audit evidence obtained by the auditor through audit Procedures
CO5: Understand the importance of subsequent events review, going concern principle, written representations, and the final review.
