Module Information

Module Identifier
AC31700
Module Title
The Role and Practice of Auditing
Academic Year
2017/2018
Co-ordinator
Semester
Semester 1 (Taught over 2 semesters)
Pre-Requisite
Other Staff

Course Delivery

Delivery Type Delivery length / details
Lecture 11 x 1 Hour Lectures
Seminar 5 x 1 Hour Seminars
Seminar 6 x 1 Hour Seminars
Lecture 11 x 2 Hour Lectures
 

Assessment

Assessment Type Assessment length / details Proportion
Semester Exam 3 Hours   Unseen written examination  80%
Semester Assessment 2000 word report  20%
Supplementary Exam 3 Hours   Unseen written examination  Repeat failed element  80%
Supplementary Assessment 2000 word report  Repeat failed element  20%

Learning Outcomes

On successful completion of this module students should be able to:

* Critically analyse the evolving legal, regulatory, professional and social contexts of auditing, and the responsibilities these place on auditors;

* Examine the interaction between external audit and systems of governance and internal audit;

* Explain and evaluate the audit process and the concepts and methodologies that it embodies;

* Demonstrate knowledge and understanding of practices providing audit evidence and supporting the expression of an audit opinion;

* Examine the function of internal control systems in relation to internal and external audit;

* Explain how and why the conclusions from audit work are reflected in audit reports;

* Critically appraise contemporary developments and issues in the practice and regulation of audit.

Aims

This elective module contributes to the contextual, conceptual and applied knowledge base specified in the QAA 2007 Benchmark Statement for degree schemes in Accounting. 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 and the Association of Chartered Certified Accountants (ACCA).

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.

Brief description

This module examines the role and practice of audit in both private and public sectors, in the context of modes of regulation and the dominant corporate governance framework. It provides an overview of audit practice, relevant to those interested in a career in auditing or accounting, while the contemporary issues it addresses are of interest to a wider spectrum of professionals and others using audited information.

Content

1. Internal Control
a. Understanding the internal control system
b. The components of internal control environment
c. Transaction cycles and tests of controls, comparison with substantive testing
d. Evaluation of the internal control system
e. Auditors’ reliance on the internal control system
f. Internal control reporting

2. Internal audit
a. The internal audit function
b. Internal audit and corporate governance
c. Types of internal audit assignments
d. Outsourcing the internal audit function
e. The interface between the external auditor and the internal auditor
f. Internal audit reports


3. External audit framework ,regulation and policy
a. The nature of external audit and assurance
b. Statutory and public sector audits and audit reports
c. Types of audit report
d. The audit regulatory environment
e. Development and application of ethical standards for auditors
f. Legal liability and public policy

4. Planning an audit and risk assessment
a. Scope and general principles
b. Understanding the entity and its environment
c. Assessing the risks of material misstatement
d. Materiality, fraud, laws and regulations
e. Planning and tendering
f. Quality control

5. Obtaining audit evidence
a. Understanding the use of assertions by auditors
b. Performing audit procedures
c. Audit testing techniques: substantive and transactional testing
d. The work of experts in audit

6. Completion and communication
a. Review and opinion
b. Communication with the client, management reports

Module Skills

Skills Type Skills details
Application of Number Evaluation of numerical problems in lecture examples and appropriate examination questions.
Communication Applied in seminar class discussion.
Improving own Learning and Performance In preparation for, attending and participating and reflecting on seminar classes. Preparing and producing an assignment and preparing for assessment in examination
Information Technology Appropriate accessing of electronic and internet materials and use of word-processing skills in assignment.
Personal Development and Career planning Preparation for seminar tasks will encourage initiative, independence and self-awareness.
Problem solving Scenario-based problems treated in lectures and applied in seminars, assignment and examination.
Research skills Obtaining, selecting, assimilating information from research literature, professional and regulatory sources for use in seminars, assignment preparation and examination.
Subject Specific Skills Skills relevant to the practice of a regulated profession specifically interpretation of international auditing standards and practice notes (as applicable to the UK and Ireland), and UK Ethical Standards. Studying auditing engenders a focus on evidence and the meaning of professionalism, ethics and independence that is relevant to other professional settings.
Team work Group work in preparation for and during seminars.

Notes

This module is at CQFW Level 6