Module Information

This elective module contributes to the contextual, conceptual and applied knowledge base specified in the QAA 2007 Benchmark Statement for degree schemes in Accountancy. It introduces undergraduates to one of the main pillars of the accounting profession, and is designed to achieve further accreditation from professional accountancy bodies, specifically the Institute of Chartered Accountants in England and Wales; the Institute of Chartered Accountants of Scotland.

Insofar as a rationale is required for continuing to teach auditing at all, it is as follows:
As economic and social life has become more complex, there has been a growth in the demand for transparency and accountability in a number of areas. Auditing in its most general sense is an important mechanism for addressing these demands. Historically, financial auditing of some kind has existed wherever economic resources have been entrusted to third parties. Today it has evolved into a significant tool for regulating economic activity in both the private and the public sector, and at entity and broader levels.
Financial auditing in the private sector takes place at the level of the client entities (PLCs etc) but at another level underpins the credibility of the financial infrastructure itself, the financial markets. High-profile failings in private sector accounting and auditing in North America and Europe have highlighted both the importance of audit within the context of corporate governance and also its strengths and weaknesses. As a result, an interest in the practices and context of auditing is far from being confined to the auditing firms and profession: regulators, legislators, company directors, analysts, lenders and shareholders all have direct interests in effective audit.
Audit, including forms of audit beyond financial audit, has also become increasingly important in the public sector. Here financial audit often meets value-for-money or performance audits, raising issues about the extension of the role of audit and potential tensions between the accountability and managerial functions of these more broadly defined audit functions.

The following broad areas will be covered:

1. The context of audit:
a. Principles and theory of financial audit;
b. Regulation and ethics;
c. Governance and accountability;
d. Public sector audit and the expansion of the audit role.
2. The practice of audit:
a. methodology, materiality & risk;
b. internal controls and systems;
c. obtaining and interpreting evidence - audit testing, sampling, review;
d. Completion and reporting.
3. Contemporary issues e.g.
a. Auditor’s Legal Liability;
b. Auditor Independence;
c. Competition in the Audit Market.