ACCA: AA | A Complete Audit & Assurance Course

PART A: Audit Framework & Regulation

Having studied this chapter you will be able to:

a) Identify and describe the objective and general principles of external audit engagements.[L2]

b) Explain the nature and development of audit and other assurance engagements.[L1]

c) Discuss the concepts of accountability, stewardship and agency.[L2]

d) Define and provide the objectives of an assurance engagement [L1]

e) Explain the five elements of an assurance engagement [L2]*

f) Describe the types of assurance engagement [L2]

g) Explain the level of assurance provided by audit and other review assignments.[L1]

Upon completion of this chapter, you are able to:

a) Describe the regulatory environment within which statutory audits take place [1]

b) Discuss the reasons and mechanisms for the regulation of auditors [1]

c) Explain the statutory regulations governing the appointment, removal and resignation of auditors.

d) Explain the regulations governing the rights and duties of auditors [1]

e) Describe the limitations of external audits.[1]

f) Explain the development and status of International Standards on Auditing (ISAs).[1]

g) Explain the relationship between International Standards on Auditing and national standards.[1]

In this lesson, you will learn how to:

A. Discuss the objective, relevance and importance of corporate governance.

B. Discuss the need for auditors to communicate with those charged with governance.

C. Discuss the requirements and methods of how reporting significant deficiencies in internal control are provided to management and those charged with governance.[2]

D. Explain, in a format suitable for inclusion in a report to management, significant deficiencies within a system of internal control and provide control recommendations for overcoming these deficiencies to management.[2]

E. Discuss the provisions of international codes of corporate governance (such as Organization for Economic Cooperation and Development (OECD)) are most relevant to auditors.

F. Describe good corporate governance requirements relating to directors’

responsibilities (e.g. for risk management and internal control) and the reporting

responsibilities of auditors.

G. Evaluate corporate governance deficiencies and provide recommendations to allow compliance with international codes of corporate governance.[2]

H. Analyze the structure and roles of audit committees and discuss their drawbacks and limitations.

I. Explain the importance of internal control and risk management

In this chapter, you will learn the professional code of ethics and letter of engagement. ISA210 Terms of Engagement and ISA315 Identifying and Assessing Risk of Material Misstatements are discussed.

ISA 210 Agreeing the Terms of Audit Engagements

ISA 315 Identifying and Assessing the Risks of Material Misstatement

In this chapter, you will learn the quality control standard and requirements. Before obtaining and accepting the audit engagement, auditors will need to review the ethical and professional requirements.

In this chapter, ISAs covered are:

ISA 220 Quality Control for Audit of Financial Statement

ISA240 The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements

ISQC1

In this chapter, you will learn the ways how auditors assess the risks of material misstatement. What are the components of audit risk and how do auditors respond to the assessed risks?. ISA covered in this chapter are:

• ISA 200 Overall objectives of the independent auditor and the conduct of an audit in accordance with ISA

•ISA 315 Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and its Environment

•ISA320 Materiality in Planning and Performing an Audit

•ISA 330 The Auditor’s Responses to Assessed Risks

In this chapter, you will learn how to plan the audit engagement. Those topics covered in this chapter are audit planning, analytical procedures, and interim & final audit. ISAs covered are:

ISA240 The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements

ISA300 Planning an Audit of Financial Statements

ISA520 Analytical Procedure

In this chapter, you will learn how to keep audit documents and how to rely on the work of others.  ISAs covered are:

ISA230 Audit Documentation

ISA 402 Audit Considerations Relating to an Entity Using a Service Organization

ISA 450 Evaluation of Misstatements Identified during the Audit

ISA610 Using the Work of Internal Auditors

ISA620 Using the Work of an Auditor’s Expert

In this chapter, you will learn the nature of internal control system, what are the components of internal control system, how internal control system is designed and implemented. You will also learn the test of control and its objectives.

The ISAs covered in this chapter include:

ISA315 Identifying and Assessing the Risk of Material Misstatement

ISA330 The Auditor's Responses to The Assessed Risks.

In this chapter,  you will learn the internal audit functions, advantages and disadvantages of outsourcing the internal audit.

In this chapter, you will learn how to audit sales, purchases, payroll, and inventory.

In this chapter, you will learn how to design audit procedures and collect audit evidence. The ISAs covered in this chapter include:

ISA500 Audit Evidence

ISA 501, Audit Evidence—Specific Considerations for Selected Items

ISA 505, External Confirmations

ISA520 Analytical Procedures

ISA540 Auditing Accounting Estimates, Including Fair Value

Accounting Estimates, and Related Disclosures

In this chapter, you will learn how auditor uses sampling techniques to collect audit evidence, use computer-automated audit technique, and small entities audit. The ISA covered is :

ISA530 Audit Sampling

In this chapter, you will learn how to perform audit on noncurrent assets, intangible assets (goodwills, research, and development), cash and bank balance and non-profit organization audit.

In this chapter, you will learn the audit of liabilities and equity.

In this chapter, you will learn the requirements of subsequent events review, reviewing the going concern assessment, obtaining the written representations, and conducting the final review of financial statements before expressing the audit opinion. The ISAs covered in this chapter include:

ISA560 Subsequent Events

ISA570 Going Concern

ISA580 Written Representations.