B03 - Auditing Principles

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1.

0 SUBJECT CODE AND NAME: B03: AUDITING PRINCIPLES

AND PRACTICE

2.0 LEVEL: INTERMEDIATE LEVEL

3.0 PRE-REQUISITE SUBJECT: A01

4.0 CONTACT HOURS: 120

5.0 SUBJECT DESCRIPTION

The subject intends to introduce the nature and purpose ofboth internal and external auditing. It
further continues by equipping candidates with hands-on skills of undertaking audit assignments as
per the International Standards on Auditing (ISA) and provides a link between audit
procedures/evidence and audit objectives/ conclusion/report.

6.0 PRINCIPAL LEARNING OUTCOME

Apply auditing principles and standards in executing external audit assignments (carrying out audit
procedures) and coming up with appropriate reports, as well as implementingentity’s internal control
policies in carrying out internal audits.

7.0 INDICATIVE CONTENT AND SUPPORTING LEARNING OUTCOMES

7.1. Objectives, Process and Need for External Audit and Assurance Services

Learners will be able to:

(a) Demonstrate understanding of the concepts of audit andassurance

(b) Describe the reasons for and the benefitsgained from the different types of audit and
assurance assignments including those relatingto financial statements, internal controls, corporate
social responsibility and sustainabilityreports

(c) Use expectation gap in the context of audit and assurance assignments and assess their
implications for the profession, including fraud, going concern, internal control and risk issues

(d) Describe and interpret public interest in auditing and the need for professional skepticism in
carrying out assurance engagements

(e) Describe materiality

- Meaning of materiality

- Determinants of materiality

- Quantification of materiality

(f) Describe audit risk and audit risk model

(g) Apply the principles and requirements of audit documentation


7.2. The Nature and Use of Internal Controls Learners will be able to:

(a) Describe the nature of internal controls

• internal controls

• financial controls

(b) Describe how internal controls supportbusiness, reportingand compliance.

(c) Describe types of internal controls

(d) Describe IT controls and manual controls

(e) Use the main components of internalcontrol including, the control environment, risk
assessment, control activities, information andcommunication and monitoring activities

(f) Evaluate internal controls in a scenario stating how the controls support particular aspects of
reliable financial reporting and support the prevention and detection of fraud and error

(g) Design audit procedures in response to assessed risks.

(h) Describe and interpret the limitations of internal controls

7.3. The Nature of Audit Evidence and the Selection of Sufficient Appropriate

Evidence

Learners will be able to:

(a) Describe the importance of audit working papers.

(b) Describe the concept of audit evidence including:

• Source of audit evidence

• Appropriateness of audit evidence

(c) Describe the methods of obtaining audit evidence

(d) Analyse efficiency and costs of obtaining audit evidence

(e) Use appropriate audit procedures performed to obtain audit evidence

(f) Describe and apply the reliability of audit evidence

(g) Describe and apply the sampling of documents and transactions in gathering audit evidence

(h) Describe and use the relevance audit procedures suitable to address assertions for elements
of financial statements

(i) Describe and apply Computer Assisted Audit Techniques (CAATs)

(j) Evaluate the appropriateness of information regarding evidence obtained based on given
scenario as basis for given opinion or report
(k) Evaluate the circumstances under which matters raised by senior assurance team member
can be documented and communicated to management and those charge with governance.

7.4. Professional ethics, public interest, fundamentalobjectives, threats and

safeguards to independence

Learners will be able to:

(a) Describe the importance of and apply professional ethics

(b) Describe in context the fundamental ethical principles.

(c) Analyse rules- based and principles-based approaches to professional ethics

(d) Evaluate ethical issues based on the IFAC code of ethics

(e) Propose suitable actions to deal with ethical threats

(f) Describe and interpret ethical conflicts for employed accountant.

7.5. Audit reports, Types and the content Learners will be able to:

(a) Formulate audit conclusions from evidence collected in an audit

(b) Analyse the form and content of the auditor’s report for

an audit engagement

(c) Evaluate the implications of going concern, subsequent events and written representation

(d) Propose an appropriate audit opinion given the circumstances of an audit

(e) Draft audit reports based on opinions reached.

7.6. Public Sector Auditing Learners will be able to:

(a) Describe the regulatory framework of public sector audit in Tanzania

(b) Describe the role of Controller and Auditor General (CAG)

(c) Describe the legal environment in which the CAG and auditees function: Appointment,
functions and legal mandate, resignation

(d) Describe and apply specific considerations for public sector auditing

(e) Describe and use Value for Money, management and technical audit

(f) Describe the role of INTOSAI

(g) Describe the role of Internal Auditor General (IAG)


(h) Describe the legal environment in which IAG operates: Appointment, function, legal
mandate,resignation

7.7. Specialized audits Learners will be able to:

(a) Explain the features, objectives, conduct and reporting in social and environmental audits

(b) Explain the features, objectives, conduct and reporting in audit of not for profit organizations

7.8. Internal Audit of Entities Leaners will be able to:

(a) Describe the key functions of Internal audit units

(b) Describe International Professional Practice Framework (IPPF) and its application in internal
audit.

(c) Describe and use the internal audit reporting structure.

(d) Describe the rationale for or against outsourcing of internal audit function.

(e) Describe the assurance and consulting role of internal audit unit.

(f) Describe the role of internal audit functions in risk management and internal control

(g) Apply risk-based approach to internal auditing

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