Chopi CPA Auditing and Assurance Notes

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CPA INTERMEDIATE LEVEL NOTES

COURSE OUTLINE

GENERAL OBJECTIVE

This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to conduct the audit of an entity.

LEARNING OUTCOMES

A candidate who passes this paper should be able to:

• Describe the nature and purpose of auditing
• Describe the regulatory framework governing the external audit of financial statements, including an understanding of International Standards of Auditing where appropriate and Professional Ethics and codes of conduct
• Describe the rights, duties and professional obligations of an auditor
• Explain the process of planning an audit and the necessity for an appropriate audit programme taking into account audit evidence and audit risk (excluding group accounts)
• Explain the risk based approach to audit of limited companies; describe the audit evidence required in specified situations
• Describe the audit work required at the final review and report stage of an audit
• Explain the role of internal audit.

CONTENT

Assurance and non- assurance engagements

• Definition and objectives
• Elements of an assurance engagement
• Types of assurance engagements
• Levels of assurance and reports
• Non-assurance engagements

Nature and purpose of an audit

• Nature and objectives
• Audit as an assurance engagement
• Development of audit (early audit and modern audit)
• Types of audit and limitations

Audit legal and professional framework

• Regulatory framework within which external audits take place
• Statutory regulations; auditors’ liability, appointment, removal, remuneration, resignation, rights and duties of auditors
• International standards on auditing and other regulations
• Professional ethics/code of ethics for professional accountants
• Fundamental principles, threats and safeguards; other professional guidelines on audit fees, conflict of interest, advertising and opinion shopping

Planning and risk assessment

• Obtaining ,accepting and retention of an audit engagement
• Assessing audit risks
• Understanding the entity and its environment

• Audit planning, audit strategy, audit programmes and documentation
• Assessing audit risks
• Fraud, laws and regulation

Overview of forensic accounting

• Nature, purpose and scope of forensic accounting
• Types of forensic investigations: corruption, asset misappropriation, financial statement fraud, others
• Fraud prevention and deterrence

Internal control systems

• Internal controls theory and practice
• The use and evaluation of internal control systems by auditors
• Tests of controls on specific control environment
• Communication on internal control systems (management letter)
• Information technology threats and control

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Audit evidence

• Financial statement assertions and audit evidence
• Audit evidence procedures/techniques
• Audit sampling and other means of testing
• The audit of specific items (income/expenses/assets/liabilities)
• Using the work of others (internal audit and experts)
• Computer assisted audit techniques

Overall audit review

• Subsequent events review
• Going concern review
• Contingencies and commitments
• Management representations
• Quality control and reviews
• Audit investigations

Audit reports

• Legal provisions on audit reports
• Basic elements and key audit matters
• Types of audit reports and different aspect of reporting
• Features of audit reports

Auditing in the public sector

• Introduction to auditing in the public sector; regulatory provisions
• Framework of public sector audit
• Objective and scope of public sector audit
• Categories of public sector audit (compliance audit, performance, financial)
• Audit report of the auditor general
• Role of internal audit function in public entities
• Relationship between external and internal auditors in the public sector
• International Standards on Supreme Auditing Institutions

Emerging issues and trends

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