BUU44670 Audit and Assurance
5 ECT credits - (Semester One Module)
Lecturer
TBC
Module Outline
Audit framework
The origins of auditing, its current and continuing development, its social dimension
Statutory audits, accountability, stewardship and agency theory
The regulatory environment and corporate governance
Directors’ responsibilities and auditors’ responsibilities
The audit market
Standards and Regulation
Statutory Audits
Statutory regulations
The standard setting process.
International Standards on Auditing (UK and Ireland) and International Standards on Auditing their development, role and relationship with each other.
Regulation and supervision by professional and other bodies.
The role of the Auditing Practices Board, IAASA other standard-setting bodies impacting on Ireland and the UK.
Corporate governance codes and regulation.
Quality control.
Ethics
Professional ethics and codes of conduct
Ethics in organisations
Policing ethics
Internal audit and internal review
The scope and limitations of internal audit
The role of internal audit and internal review in corporate governance, organisational control, risk management and adherence to corporate objectives.
Control by the directors over the scope and functions of internal audit
The variable nature and extent of internal audit and internal review assignments.
The outsourcing of internal audit functions.
The relationship with the external auditor
The conduct of external and internal auditors: Responsibility for fraud and error.
Client Acceptance, Planning and Risk Assessment
Objectives and general principles
Client Acceptance for first time and continuing audit engagements
Understanding the entity and related business risks
Planning the audit
The concept of materiality
Assessing the risk of material misstatement
Fraud and error
Law and regulation
Financial statement assertions
Audit risk; inherent, control and detection risk; risk assessment.
Developing responses to risk
Analytical procedures
Audit documentation
Using the work of others
The use of technology
Internal control
The objectives of internal control systems, and their inherent weaknesses
Determining the existence and reliability of internal control systems
Evaluating of internal controls
Assessing the risk of material misstatement
Developing overall responses to risk
Internal controls over transaction cycles
The reliance by the auditor on internal controls
Informing management of weaknesses in internal control
Substantive Audit
Objective and general principles
The testing of balances and transactions
The use of analytical procedures and other types of testing
Financial Statement assertions
The audit of specific items: assets, liabilities, income and expenditure, including accounting estimates, included in or asserted in the financial statements.
The evaluation of evidence from substantive testing
Audit evidence.
Evidence gathering techniques
The use of assertions
Tests of control, substantive testing, analytical procedures; the distinction between them and the appropriate use of them
The extent of testing
Statistical and non-statistical sampling
The evaluation of evidence
Audit Review and Finalisation
Audit documentation
Audit finalisation and review
Written representations
Subsequent events
Going concern
Analytical procedures
The overall review of evidence obtained.
Modifications to the overall audit planning and detailed work program due to audit assessment of evidence received to date.
Reporting
External audit reports on financial statements: unqualified, modified and qualified, key audit matters reporting
Reports to management
Reports on investigations and assignments.
Other
The uses and limitations of CAATs (Computer-assisted audit techniques).
The audit of small business
Review engagements
Learning Outcomes
On successful completion of this course, students will be able to:
- Understand and appreciate the nature, purpose and scope of assurance engagements including the role of the external auditor and explain and appreciate the legal and business environment (including corporate governance issues) in which audit and assurance engagements are conducted.
- Demonstrate a critical awareness of the regulatory context within which audit operates including current changes in the Irish regulatory framework for auditing
- Understand the nature purpose and scope of internal audit; understand the role of internal audit in corporate governance, risk management and the control framework of an organisation; the relationship between the internal and external auditor and the level of reliance the external auditor can place on the internal audit function as part of carrying out the external audit process.
- Understand and demonstrate how the external auditor obtains an understanding of the entity and its environment and prepare an audit planning document which outlines key audit risks and auditor responses
- Understand the techniques available to the external auditor to collect audit evidence.
- Identify and assess the internal controls of an entity, communicate control weaknesses, potential consequences and suggested improvements
- Understand the concept of financial statement assertions in relation to the financial statements being audited and the prepare substantive audit procedures
- Understand the need for and explain the detail of overall audit review procedures.
- Understand and appreciate the impact of the audit and assurance work in the content of the audit report; understand audit reports and suggest the applicable audit reports for a given scenario, prepare reports for management, including recommendations to improve the control weaknesses and performance of the business.
- Discuss International Standards of Auditing and apply their principles to specific situations
Textbook and Readings
You will find it beneficial to obtain the following textbooks:
Nolan, M., Nangle, C. External Auditing and Assurance: An Irish Textbook, (Latest edition), Chartered Accountants Ireland
ACCA Paper F8 INT, Audit and Assurance, Study Text, (Latest edition), BPP / Kaplan
It is also recommended that students maintain an awareness of financial matters through regular use of appropriate professional and academic journals as well as web references
Module Prerequisite
BUU22530 Introduction to Accounting and BUU33530 Financial Accounting
Assessment
To be Confirmed: