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Midlands State University Faculty of Commerce Department of Accounting

This document outlines an introduction to audit theory and practice module. The module aims to introduce students to basic auditing concepts and the International Standards of Auditing. Students are expected to have prerequisite accounting knowledge. By the end of the module, students should understand auditor and management responsibilities, the audit process, obtaining evidence, and reporting. The module content will cover the nature of auditing, the audit profession standards, concepts, internal controls, and the audit process. Students will be assessed through in-class tests worth 30% and a final exam worth 70% of their grade. Recommended reading materials include international auditing standards and textbooks.

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Phebieon Mukwenha
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51 views3 pages

Midlands State University Faculty of Commerce Department of Accounting

This document outlines an introduction to audit theory and practice module. The module aims to introduce students to basic auditing concepts and the International Standards of Auditing. Students are expected to have prerequisite accounting knowledge. By the end of the module, students should understand auditor and management responsibilities, the audit process, obtaining evidence, and reporting. The module content will cover the nature of auditing, the audit profession standards, concepts, internal controls, and the audit process. Students will be assessed through in-class tests worth 30% and a final exam worth 70% of their grade. Recommended reading materials include international auditing standards and textbooks.

Uploaded by

Phebieon Mukwenha
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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MIDLANDS STATE UNIVERSITY

FACULTY OF COMMERCE
DEPARTMENT OF ACCOUNTING

MODULE OUTLINE: INTRODUCTION TO AUDIT THEORY AND AUDIT


PRACTICE

MODULE AIM
This module aims at introducing the student to the theory of auditing. This includes basic
concepts of auditing, approaches and International Standards of Auditing. The module is a
foundation for more advanced studies in level 2.2 and at level 4.
PRE-REQUISITES
Candidates must have acquired basic accounting skills equivalent to those at Acc 107 and Acc
108 levels. Knowledge of Business Law is expected to complement the basic financial
accounting knowledge.

MODULE OBJECTIVES
By the end of the study, candidates should have mastery of the following areas and must be able
to:
a) Explain the nature, purpose and scope of assurance engagements including the role of
the external audit and its regulatory and ethical framework
b) differentiate auditor and management responsibilities, understand management assertions
and develop audit objectives
c) Explain the nature of internal audit and describe its role as part of overall performance
management and its relationship with the external audit
d) To develop knowledge and understanding of the process of carrying out the assurance
engagement and its application in the context of the professional regulatory framework.
e) Demonstrate how the auditor obtains an understanding of the entity and its environment,
assesses the risk of material misstatement (whether arising from fraud or other
irregularities) and plans an audit of financial statements
f) Identify and describe the work and evidence required to meet the objectives of audit
engagements and the application of the International Standards in Auditing
g) Evaluate findings and modify the audit plan as necessary and ultimately reporting
MODULE CONTENT
1. THE NATURE AND SCOPE OF THE AUDIT FUNCTION
(a) Definition of Auditing
(b) The need for auditing services
(c) Types of audit engagements
(d) The audit practice
(e) Audit postulates

2. THE AUDIT PROFESSION


(a) Historical development of the audit profession
(b) The governance of the public auditor
(c) Procedures for regulating the profession
(d) The role of the professional auditor
(e) Professional ethical requirements
(f) Overview of International Standards on Auditing (ISA 200, ISA 210, ISA 240, ISA
260, ISA 315, ISA 500, ISA 501, ISA 505, ISA 520, ISA 700, ISA 300, ISA 320,
ISA 330, ISA 450, ISA 530, ISA 600)
(g) The internal auditor and the external auditor
(h) Risk-based internal audit

3. FUNDAMENTAL AUDITING CONCEPTS AND PRINCIPLES


(a) Audit assurance
(b) Audit evidence ( The use of financial assertions by auditors, Audit procedures, Audit
of specific items)
(c) Planning materiality
(d) Working papers
(e) Types of Risk (Audit risk, Inherent risk, Sampling risk, Detection risk)
(f) The relationship amongst the various sub-risks

4. INTERNAL CONTROL SYSTEM


(a) Internal control concept
(b) Organisational control
(c) Accounting systems and their inter-relationship
(d) The design of the internal control system and compliance requirements
(e) Quality control in auditing
(f) Documentation in auditing of working papers
(g) Auditor’s reliance on the internal controls

5. AN OVERVIEW OF THE AUDIT PROCESS


(a) Pre-engagement activities and their importance
(b) Planning an audit
(c) Management’s assertions and how they interfere with the audit objectives
(d) Obtaining audit evidence and ultimate reporting

ASSESSMENT
Assessment will be done through In-class test and the Final examination. Candidate’s
coursework has a weighting of 30% and this is obtained through in-class tests. The tests require a
display of a combination of skills-comprehension of concepts, analysis and synthesis of matter
on hand and application of concepts or principles. The examination is structured along similar
lines carrying a weighting of 70% of the overall assessment. Candidates are required to think in
an original and creative manner.
GRADING:
Final Examination 70%
In-class Tests 30%
TOTAL 100%
RECOMMENDED READING LIST
i. International Standards in Auditing (selected and relevant standards to the
introduction)
ii. Puttick, Van Esch- The principles and practices of Auditing, Juta, Latest edition
iii. Pany and Whittington, (McGrawhill-Irwin Principles of Auditing and Assurance
services, Latest edition
iv. Loebbeck-Auditing, an intergrated approach, Latest edition
v. Millichamp, A.H. (2002). Auditing. 8th ed. London: Continuum International
Publishing Group.
vi. Woolf, E., & Riches, J. (1997). Auditing today. Heme1 Hempstead: Prentice Hall.

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