This module 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.
Corporate Governance & Statutory Audit
Understand the historic development of audit, 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 and 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 and 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.
Obtain an understanding of the system of internal control.
Assessing the risks of material misstatement.
Developing overall responses to risks.
Developing responses to risks at the assertion 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 assertion 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 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.
Instruction will involve formal lectures and class discussion of situations commonly encountered in business which present problems for proper control and audit verification.
| Module Content & Assessment | |
|---|---|
| Assessment Breakdown | % |
| Formal Examination | 70 |
| Other Assessment(s) | 30 |