This course is concerned with the external and internal audit of companies, and the ethics of business managers and auditors. The aim of the course is to develop a knowledge and understanding of auditing, including the legal framework, the standard setting process and business environment in which auditing is conducted. The students will gain knowledge and understanding of the process of carrying out assurance engagements and the value of auditing for validating financial accounts and improving control over businesses. Also, an appreciation of the relationship of ethical standards in business with establishing and verifying control is developed.
Corporate Governance & Statutory Audit
Understand the historic development of auditing, corporate governance and regulation
Describe the statutory framework in which audit is conducted with reference to the relevant legislation
Identify and explain the various statutory & regulatory agencies governing the responsibilities of directors & auditors
Ethical Framework
Display an awareness of the ethical framework in which auditors perform their duties
Audit Standard Setting Process
Understand the audit standard setting process, including the scope and authority of FRC / IAASA publications and announcements
Audit Process
The need to plan and perform audits with an attitude of professional scepticism
Understanding the business & internal control
Concept of materiality
Assessment of the risks of material misstatement
Developing responses to risks at financial statement and assertion levels
Audit testing
Audit completion
Communication with those charged with governance
Risk Assessment Process
Understanding the business and related business risk
Obtaining an understanding of the system of internal control (to include evaluating the design of the controls and determining whether they have been implemented)
Assessing the risks of material misstatement
Developing overall responses to risks
Developing responses to risks at the assertions level
Evidence
Apply evidence gathering principles and procedures
Explain the distinction between the testing of controls and substantive testing, including analytical procedures
Identify circumstances where control tests, tests of details and analytical procedures are appropriate
Describe the factors which influence judgements about the extent of substantive testing (i.e. sampling)
Audit Procedures
Obtain an understanding of typical systems of internal control
Identify the critical risks and related controls within those systems
Select and apply appropriate tests to identified controls
Select and apply appropriate substantive audit tests to typical financial accounts captions, which address identified risks at the assertions level
Describe the use of big data in IT auditing to include the impact of artificial intelligence on auditing and to understand the audit implications for emerging technologies such as blockchain
Describe the types of audit evidence available to support accounting estimates
Select and apply audit procedures to typical/simple accounting estimates
Audit Work Conclusions
Demonstrate a clear understanding of the appropriate framework for concluding an area of audit work
Distinguish between specific issues which can arise when concluding on an area of audit work:
• Disagreement over amount of an account caption or relating to the adequacy of a disclosure
• Limitation of scope where evidence ought reasonably to be available to the auditor but is unavailable
• Significant uncertainty, where the auditor is required to make a professional judgement based on the evidence available.
• Describe the potential financial statement implications of the issues above, where appropriate
• Formulate the appropriate double entry for proposed adjustments
Audit Reports
Have an appreciation of the principles underpinning audit reports, with reference to the relevant standards and legislation
Display an appreciation of the differences between unqualified, modified & qualified audit reports
Identify typical scenarios in which audit reports may need to be modified/qualified
The learning and teaching methods employed will include, lectures, tutorials, discussion, problemsolving exercises, readings, self-directed learning.
| Module Content & Assessment | |
|---|---|
| Assessment Breakdown | % |
| Formal Examination | 70 |
| Other Assessment(s) | 30 |