Summarised ACCA Auditing and Assurance notes

Summarised ACCA Auditing and Assurance notes

CHAPTER 1: AUDIT FRAMEWORK AND REGULATION

Concept of Audit & Assurance Engagements

  • General Principles
  • Development of assurance engagements
  • Accountability, Stewardship and Agency
  • Assurance Engagements
  • 5 Elements of Assurance engagements
  • Types of assurance engagement
  • Levels of Assurance
  • True and Fair & Reasonable Assurance

External Audit

  • Regulatory Environment for External Audits
  • Mechanisms for Regulating Auditors
  • Appointment of the Auditor
  • Auditor Removal
  • Duties / Rights of the Auditor
  • Limitations of external audits
  • The development and status of ISAs
  • The relationship between ISAs and national standards

Corporate Governance

  • Corporate Governance & Auditing
  • International Codes of CG (OECD)
  • Good Corporate Governance
  • Audit Committees
  • Internal Controls & Risk Management
  • Responsibilities for systems and controls
  • Communicating with those charged with governance

Professional Ethics

  • Fundamental Principles
  • What is meant a conceptual framework of accounting
  • Threats
  • Typical threats
  • More threats
  • Safeguards
  • Independence & Confidentiality

 

CHAPTER 2: PLANNING AND RISK ASSESSMENT

Obtaining and accepting audit engagements

  • Professional ethics and the new audit engagements
  • Preconditions for an audit
  • New engagement process
  • Engagement letter
  • Principles & Purpose
  • Definitions for Quality Control
  • Elements of a QC system
  • Engagement Performance
  • Assigning the Audit Team
  • Individual level of Quality Control

Objective and General Principles

  • Auditor Objectives
  • Professional Scepticism and Judgement

Assessing Audit Risks

  • Components of Audit Risk
  • Affecting Audit Risk
  • Materiality

Understanding the Entity And Its Environment

  • How to get Initial Understanding
  • Risk Assessment Procedures
  • Risk assessment Procedures – sexy diagram
  • Analytical Procedures in Planning
  • Key ratios used in analytical procedures

Fraud, Laws and Regulations

  • Definitions
  • Fraud & Misstatement Effects
  • Management and Auditor Responsibilities
  • Investigating Misstatements
  • Reporting Fraud and Error
  • Responsibilities of management and auditors

 Audit Planning and Documentation

  • Why Plan an Audit?
  • Contents of the Plan
  • Audit Strategy vs Audit Plan
  • Difference between Interim and Final audit
  • Importance of Documentation
  • Contents of Documentation
  • Keeping Working Papers

CHAPTER : INTERNAL CONTROL

  • Internal control systems
  • Understanding the Controls
  • The 5 components of Internal Control

The Use and Evaluation Of Internal Control Systems By Audito

  • How Auditors Record Systems
  • How Auditors Identify Deficiencies
  • Evaluation of Internal Controls

Tests of Control

  • Application & General IT controls
  • Revenue (Sales Cycle)
  • Purchases
  • Payroll
  • Inventory System continued
  • Bank & Cash
  • Capital expenditure

Communication on Internal Control

  • Reporting on Internal Controls
  • Management Letters
  • The need for auditors to communicate with TCWG

Internal Audit and Corporate Governance

  • Is there a need for Internal audit?
  • Best practice for Internal Audit
  • Internal v External Audit

Scope of Internal Audit

  • Scope and limitations of Internal Audit
  • Outsourcing
  • Outsourcing internal audit
  • Value for Money
  • Best value assignments
  • IT & Financial assignments
  • Operational assignments
  • Internal Audit Reports

CHAPTER: AUDIT EVIDENCE

Financial Statement Assertions And Audit Evidence

  • The Assertions Explained
  • Using Assertions
  • Quality and Quantity of Evidence
  • The relevance and reliability of audit evidence

Audit Procedures

  • Procedures for obtaining evidence
  • Analytical procedures
  • Auditing Accounting Estimates
  • Smaller Entity Evidence
  • Control v Substantive Tests

Audit Sampling and Other Means Of Testing

  • Definition & need
  • Statistical or non-statistical?
  • Methods of Sampling
  • Misstatement or deviation

 The Audit of Specific Items

  • Receivables – The Assertions
  • Receivables – Direct Confirmation
  • Receivables – Other Evidence
  • Receivables – Prepayments
  • Revenues – Substantive procedures
  • Inventory – and the Assertions
  • Inventory – The Physical Count
  • Inventory – Possible Count Weaknesses
  • Inventory – Valuation
  • Inventory – Cut-off
  • Payables – Trade
  • Payables – Accruals
  • Payables – Provisions
  • Payables – Non-current Liabilities
  • Bank & Cash
  • Non-current Assets – Tangible
  • Non-current Assets – Intangible
  • Share capital, reserves and directors’ emoluments

Computer-Assisted Audit Techniques

  • Using CAATs
  • The work of others
  • Why Rely on Experts?
  • Why Rely on Internal Audit?
  • Using service organisations
  • Not-for-profit organisations
  • How is the Audit Different?

CHAPTER: REVIEW AND REPORTING

Subsequent events

  • Purpose of a Subsequent Events Review
  • Auditor responsibility for Subsequent Events
  • Adjusting Events
  • Adjusting Events – Diagram

Going Concern

  • Going Concern Responsibilities
  • The need for going concern reviews
  • Going Concern Review & Indicators
  • Going Concern Disclosures and Reporting

 Written Representations

  • Management Representations

Audit Finalisation and the Final Review

  • Final Review
  • Evaluation of Misstatements

Independent Auditor’s Report

  • Structure of an Unmodified Audit Report
  • Audit Opinion
  • EOM and Other Matter Compared
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