PAPER NO.12 AUDITING
GENERAL OBJECTIVE
This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to undertake non-complex audit assignments.
LEARNING OUTCOMES
A candidate who passes this paper should be able to:
- Plan an audit assignment
- Comply with the regulatory framework during an audit assignment
- Obtain audit evidence
- Prepare an audit
CONTENT
Nature, purpose and scope of auditing
- Definition of auditing, auditor and an audit
- Explain the principles and processes of an audit
- Differences between auditing and accounting
- The types and timing of audits
- Internal versus external and a focus on the complimentary role of internal to external, interim and final audit
- The users of audited financial statements and auditor reports
Legal and professional requirements
- Appointment of an auditor
- Qualifications of an auditor
- Duties and rights of an auditor
- Dismissal of a company auditor
- Professional ethics
- Auditing standards and guidelines
Panning and conducting an audit
- Objectives of planning for the audit work
- Audit plan for a new client
- Audit plan for an existing client
- Developing an overall audit plan
- Limitations of audit plans
- Methods and techniques of an audit
Internal control system
- Definition of internal controls and internal control systems
- Purpose of internal control system
- Designing an internal control system
- Benefits and limitations of internal control system
- General controls on:
- Revenue
- Expenditure
- Assets
- Liabilities
Error and fraud
- Definition of error and fraud
- Differences between error and fraud
- Types of errors and frauds
- Causes of frauds and fraud triangle
Audit evidence
- Nature and source of audit evidence
- Financial statement assertion
- Types of audit evidence
- Gathering audit evidence
- Reliance on the work of an internal auditor
- Contents of audit working papers (excluding their preparation)
- Audit tests
- Substantive tests
- Analytical tests
Audit risk
- Definition of audit risks
- Components of audit risks
- Risk-based audit
Computerised auditing
- Benefits and drawbacks of computerized accounting systems
- Computer Aided Auditing Techniques (CAATs); Auditing around and through the computer
Auditor’s report
- Purpose of the auditor’s report
- Legal provisions on auditor’s report
- Elements of the auditor’s report
- Key audit matters
- Forms of audit opinion
Emerging issues and trends