Advanced Audit and Assurance (ACCT 641)

OVERVIEW

1. COURSE DESCRIPTION

This course aims to develop students with knowledge and skills in analyzing, evaluating and concluding on
the audit and assurance engagement and other audit and assurance issues in the context of best practice
and current developments.

2. REASON FOR THE COURSE

Advanced Audit and Assurance (AAA) starts with a legal and regulatory environment including money
laundering, professional and ethical considerations including Code of Ethics and professional liability. Then,
it moves to the procedures in practice management including quality control, and the acceptance and
retention of professional engagements. Next, it covers the audit of financial statements including planning
and evidence gathering. It then covers the completion, evidence evaluation, review and reporting on an audit
of historical financial information. The next section moves onto other assignments including prospective
financial information, due diligence, forensic audit as well as the reporting of these assignments. The final
section covers current issues and developments relating to the provision of the audit related and assurance
services.

3. STUDY HOURS

4. ROLE IN CURRICULUM


Prerequisites:
Students must have finished Audit and Assurance (ACCT 541) or equivalent professional certification before
attempting this course.

SKILLS

  • LEARNING OUTCOMES
  • ASSESSMENT AND GRADING
  • TEACHING METHODS
  • STUDY PLAN
  • TEXTBOOKS AND REFERENCES

5. COURSE LEARNING OUTCOMES (CLO)

The learning outcomes for this course cover the areas of Knowledge, Cognitive Skills, Communication, Information Technology, and Numerical Skills. It also includes an important aspect of a professional accountant which is Interpersonal Skills and Responsibilities. The details are listed in the table below. Therefore, on successful completion of this course, students will be able to:

Knowledge Level of Learning Related PLO
Describe the legal and regulatory environment (CK1)
Describe the legal and regulatory environment, the current issues and developments, and its impact on audit and assurance practice.		 Understand PK1
Cognitive Skills Level of Learning Related PLO
Recommend the quality control policies and procedures (CC1)
Recommend the quality control policies and procedures in relation to the acceptance and retention of the professional appointments.		 Evaluate PC2
Develop audit programmes to achieve the objectives of audit engagements (CC2)
Develop audit programmes to achieve the objectives of audit engagements in accordance with the International Standards on Auditing (ISAs)		 Create PC2
Communication, Information Technology, and Numerical Skills Level of Learning Related PLO
Evaluate the audit evidence (CCIT1)
Evaluate the audit evidence and findings to draw conclusions on the audit assignments.		 Evaluate PCIT1
Interpersonal Skills and Responsibilities Level of Learning Related PLO
Work effectively on an audit and assurance (CIP1)
Work effectively on an audit and assurance engagement within a professional and ethical framework.		 Respond PIP1

6. ASSESSMENT AND GRADING

Grades will be determined based on a grading score, calculated using the following assessments and score allocations:

Topic Assessment Skill
Weighting
for Grade
Participation Controlled Case
Studies (4)		 Final Exam
Describe the legal and regulatory environment (CK1) 50% 30% 20% 10%
Recommend the quality control policies and procedures (CC1) 50% 30% 20% 20%
Develop audit programmes to achieve the objectives of audit engagements (CC2)   40% 60% 30%
Evaluate the audit evidence (CCIT1)   50% 50% 30%
Work effectively on an audit and assurance engagement (CIP1) 50% 40% 10% 10%

 

During the course, there are 4 Controlled Case Studies and one term assignment:

1 – Learning Paper on Controlled Case Studies that will be completed individually:

Case Study no. 1 on Regulatory Environment

Case Study no. 2 on Quality Control and Practice Management

Case Study no. 3 on Planning and Conducting the audit of financial statements

Case Study no. 4 on Current Issues and Development

7. TEACHING METHODS

This course is primarily lecture based; assigned readings will support learning and serve as a reference
to material covered in class. During class, approximately half of the class will be devoted to lectures with
another half of the class for working on and reviewing the solutions to case studies and problem sets.

8. STUDY PLAN

The course comprised 75 class hours, divided into 60 hours (20 lessons) of teaching and learning, and the last 15 hours (5 lessons) of revising key concepts and practicing exam-style questions. Each lesson is 3 hours each. The study plan below describes the learning outcome for each lesson, described in terms of what the student should be able to do at the end of each topic. Reading of the recommended textbook should be done by students as preparation before the start of each class. There could be additional readings for students which may be given during the lesson. Implementation of this study plan may vary somewhat depending on the progress and needs of students.

  Lesson Learning Outcomes Teaching and Learning
Activities, Assessment
1 International regulatory frameworks for audit and assurance services

  1. Explain the need for laws, regulations, standards and other guidance relating to audit, assurance and related services (CK1)
  2. Outline and explain the need for the legal and professional framework (CK1)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 1 pp 5-20.
2 Money laundering

  1. Define ‘money laundering’ and discuss international methods for combating money laundering (CK1)
  2. Explain the scope of criminal offences of money laundering and how professional accountants may be protected from criminal and civil liability (CK1)
  3. Describe how accountants meet their obligations to help prevent and detect money laundering including record keeping and reporting of suspicion to the appropriate regulatory body (CK1)
  4. Describe, with reasons, the basic elements of an anti-money laundering program. (CK1)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 1 pp 20-27
3 Laws and regulations

  1. Compare and contrast the respective responsibilities of management and auditors concerning compliance with laws and regulations in an audit of financial statements. (CK1)
  2. Describe the auditors’ considerations of compliance with laws and regulations and plan audit procedures when possible non-compliance is discovered. (CK1)
  3. Discuss how and to whom noncompliance should be reported. (CK1)
  4. Recognise and recommend when withdrawal from an engagement is necessary. (CK1)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 1 pp 27-33
Technical article: Laws and Regulations
4 Code of Ethics for Professional Accountants

  1. Explain the fundamental principles and the conceptual framework approach. (CK1)
  2. Identify, evaluate and respond to threats to compliance with the fundamental principles. (CK1)
  3. Discuss the importance of professional scepticism in planning and performing an audit. (CK1)
  4. Consider the ethical implications of the external auditor providing non-audit services to a client including an internal audit service. (CIP1)
  5. Assess whether an engagement has been planned and performed with an attitude of professional scepticism, and evaluate the implications. (CIP1)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 2 pp 39-71
5 Fraud and error

  1. Identify and develop an appropriate response to circumstances which indicate a high risk of error, irregularity, fraud or misstatement in the financial statements or a given situation. (CC2)
  2. Compare and contrast the respective responsibilities of management and auditors for fraud and error. (CC1)
  3. Describe the matters to be considered and recommend procedures to be carried out to investigate actual and/or potential misstatements in a given situation. (CC2)
  4. Consider the current and possible future role of auditors in preventing, detecting and reporting error and fraud. (CK1)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 3 pp 88-99
Technical article: IAS 240
6 Professional liability

  1. Recognise circumstances in which professional accountants may have legal liability and the criteria that need to be satisfied for legal liability to be recognised. (CK1)
  2. Compare and contrast liability owed to clients with liability owed to third parties (ie contract vs establishing duty of care). (CK1)
  3. Evaluate the practicability and effectiveness of ways in which liability may be restricted including the use of liability limitation agreements. (CK1)
  4. Discuss and appraise the principal causes of audit failure and other factors that contribute to the ‘expectation gap’ and recommend ways in which that gap may be bridged. (CK1)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 3 pp 76-88
7 Quality control (firm-wide)

  1. Explain the principles and purpose of quality control of audit and other assurance engagements. (CC1)
  2. Describe the elements of a system of quality control relevant to a given firm. (CC1)
  3. Evaluate the quality control procedures which are in place for a given firm and assess if they have been appropriately applied in a given engagement. (CC1)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 4 pp 105-115
8 Advertising, tendering and obtaining professional work and fees

  1. Evaluate the appropriateness of publicity material including the use of the ACCA logo and reference to fees. (CC1)
  2. Outline the determinants of fee-setting and justify the bases on which fees and commissions may and may not be charged for services. (CC1)
  3. Discuss the ethical and other professional problems, for example, lowballing, involved in establishing and negotiating fees for a specified assignment. (CC1)
  4. Recognise and explain the matters to be considered prior to tendering for an audit or other professional engagement and explain the information to be included in the proposal. (CC1)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 5 pp 120-130
9 Professional appointments

  1. Explain the matters to be considered and the procedures that an audit firm/professional accountant should carry out before accepting a specified new client/engagement or continuing with an existing engagement (CC1)
  2. Recognise the key issues that underlie the agreement of the scope and terms of an engagement with a client. (CC1)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 5 pp 130-137
10 Planning, materiality and assessing the risk of material misstatement

  1. Define materiality and performance materiality and demonstrate how it should be applied in financial reporting and auditing. (CC2)
  2. Evaluate business risks, audit risks and risks of material misstatement for a given assignment. (CC2)
  3. Explain how the result of planning procedures determines the relevant audit strategy. (CC2)
  4. Recommend additional information which may be required to assist the auditor in obtaining an understanding of the entity. (CC2)
  5. Discuss how transnational audits may differ from other audits of historical financial information (e.g. in terms of applicable financial reporting and auditing standards, listing requirements and corporate governance requirements). (CK1)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 6 pp 144-187
11 Evidence and testing considerations

  1. Identify and describe audit procedures (including substantive and test of controls) to obtain sufficient appropriate audit evidence from identified sources to support the financial statement assertions and disclosures. (CC2)
  2. Assess and describe how IT can be used to assist the auditor, and recommend the use of automated tools and techniques, such as audit software, test data and other data analytics tools where appropriate. (CCIT1)
  3. Apply analytical procedures to financial and non-financial data. (CC2)
  4. Explain the specific audit problems and procedures concerning related parties and related party transactions. (CC2)
  5. Recognise circumstances that may indicate the existence of unidentified related parties and recommend appropriate audit procedures. (CC2)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 7 pp 193-225
12 Audit procedures and obtaining evidence

  1. Design appropriate audit procedures. (CC2)
  2. Explain how the auditor’s responsibilities for corresponding figures, comparative financial statements, and ‘other information’, are discharged. (CC2)
  3. Explain the auditor’s main considerations in respect of social and environmental matters and how they impact on entities and their financial statements (e.g. impairment of assets, provisions and contingencies). (CC2)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 8 pp 229-247, Chapter 9 pp 267-289, Chapter 10 pp 293-329
13 Using the work of others

  1. Recognise when it is justifiable to place reliance on the work of an expert (e.g. a surveyor employed by the audit client). (CC2)
  2. Evaluate the potential impact of an internal audit department on the planning and performance of the external audit. (CC2)
  3. Assess the appropriateness and sufficiency of the work of internal auditors and the extent to which reliance can be placed on it. (CC2)
  4. Recognise and evaluate the impact of outsourced functions, such as payroll, on the conduct of an audit. (CC2)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 16 pp 453
14 Group audits

  1. Recognise the specific matters to be considered before accepting appointment as group auditor to a group in a given situation. (CC2)
  2. Identify and describe the matters to be considered and the procedures to be performed at the planning stage, when a group auditor considers the use of the work of component auditors. (CC2)
  3. Consider how the group auditor should evaluate the audit work performed by a component auditor. (CC2)
  4. Explain the responsibilities of the component auditor before accepting appointment, and the procedures to be performed in a group situation (CC2)
  5. Justify the situations where a joint audit would be appropriate. (CC2)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 11 pp 333
15 Subsequent events and going concern

  1. Design audit procedures to identify subsequent events which may require adjustment to, or disclosure in, the financial statements of a given entity. (CC2)
  2. Evaluate indicators that the going concern basis may be in doubt and recognise mitigating factors. (CC2)
  3. Recommend audit procedures, or evaluate the evidence that might be expected to be available and assess the appropriateness of the going concern basis in given situations. (CC2)
  4. Assess the adequacy of disclosures in financial statements relating to going concern and explain the implications for the auditor’s report with regard to the going concern basis. (CC2)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 8 pp 247-262
Technical article: Subsequent events and going concern
16 Completion and final review

  1. Explain the use of analytical procedures in evaluation and review. (CCIT1)
  2. Assess whether an engagement has been planned and performed in accordance with professional standards. (CIP1)
  3. Evaluate whether reports issued are appropriate in the relevant circumstances. (CCIT1)
  4. Evaluate as part of the final review the matters (e.g. materiality, risk, relevant accounting standards) and audit evidence to confirm if sufficient and appropriate evidence has been obtained. (CCIT1)
  5. Justify the review procedures which should be performed in a given assignment, including the need for an engagement quality control review and recommend additional procedures or actions needed in the circumstances. (CCIT1)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 17 pp 471
17 Auditor’s reports

  1. Determine the form and content of an unmodified auditor’s report and assess the appropriateness of the contents of an unmodified auditor’s report. (CCIT1)
  2. Recognise and evaluate the factors to be taken into account when forming an audit opinion in a given situation and justify audit opinions that are consistent with the results of audit procedures. (CCIT1)
  3. Advise on the actions which may be taken by the auditor in the event that a modified auditor’s opinion is issued. (CCIT1)
  4. Recognise when the use of an emphasis of matter paragraph, other matter paragraph and KAM disclosure would be appropriate. (CCIT1)
  5. Discuss the courses of action available to an auditor if a material inconsistency or material misstatement exists in relation to other information such as contained in the integrated report. (CCIT1)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 17 pp 471-495
18 Reports to those charged with governance and management

  1. Critically assess the quality of a report to those charged with governance and management. (CCIT1)
  2. Advise on the content of reports to those charged with governance and management in a given situation. (CCIT1)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 17 pp 495-501
19 Audit-related and assurance services

  1. Describe the nature of audit-related services, the circumstances in which they might be required and the comparative levels of assurance provided by professional accountants. (CC1)
  2. Describe the main categories of assurance services that audit firms can provide and assess the benefits of providing these services to management and external users. (CC1)
  3. Describe the level of assurance (reasonable, high, moderate, limited, negative) for an engagement depending on the subject matter evaluated, the criteria used, the procedures applied and the quality and quantity of evidence obtained. (CC1)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 12 pp 365-393
20 Due Diligence, review of interim financial information, prospective financial information, forensic audits

  1. Define and describe the purpose of each type of assignment and analyse the appropriate level of assurance which may be offered by a professional firm in relation to these assignments. (CC1)
  2. Evaluate the matters to be considered before accepting the engagement, including any ethical and professional considerations. (CC1)
  3. Plan the assignment to gather suitable evidence and provide an appropriate level of assurance in line with the objectives of the assignment. (CC2)
  4. Discuss the level of assurance that the auditor may provide and explain the other factors to be considered in determining the nature, timing and extent of examination procedures. (CC2)
  5. Describe and recommend appropriate substantive examination or investigative procedures which can be used to gather sufficient and appropriate evidence in the circumstances. (CC2)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 14 pp 397-407, Chapter 14 pp 411-421
Technical article: forensic audits
21 The audit of social, environmental and integrated reporting

  1. Plan an engagement to provide assurance on integrated reporting performance measures and sustainability indicators. (CC2)
  2. Describe the difficulties in measuring and reporting on economic, environmental and social performance and give examples of performance measures and sustainability indicators. (CC2)
  3. Describe substantive procedures to detect potential misstatements in respect of socio-environmental matters. (CC2)
  4. Discuss the form and content of an independent verification statement of an integrated report. (CCIT1)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 15 pp 423-439
22 The audit of performance information (predetermined objectives) in the public sector

  1. Describe the audit of performance information (predetermined objectives) and differentiate from performance auditing. (CK1)
  2. Plan the audit of performance information (predetermined objectives), and describe examination procedures to be used in the audit of this type of information. (CC2)
  3. Discuss the audit criteria of reported performance information, namely compliance with reporting requirements, usefulness, measurability and reliability. (CC2)
  4. Discuss the form and content of a report on the audit of performance information. (CCIT1)
  5. Discuss the content of an audit conclusion on an integrated report of performance against predetermined objectives. (CCIT1)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 15 pp 439-449
23 Reporting on other assignments

  1. Analyse the form and content of the professional accountant’s report for an assurance engagement as compared with an auditor’s report. (CCIT1)
  2. Discuss the content of a report for an examination of prospective financial information. (CCIT1)
  3. Discuss the effectiveness of the ‘negative assurance’ form of reporting and evaluate situations in which it may be appropriate to modify a conclusion. (CCIT1)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 17 pp 471-495
24 Professional and ethical developments

  1. Discuss emerging ethical issues and evaluate the potential impact on the profession, firms and auditors. (CK1)
  2. Discuss the content and impact of exposure drafts, consultations and other pronouncements issued by IFAC and its supporting bodies including IAASB, IESBA and TAC. (CK1)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 18 pp 507-513
25 Other current issues

  1. Discuss current developments in auditing standards including the need for new and revised standards and evaluate their impact on the conduct of audits. (CK1)
  2. Discuss current developments in business practices, practice management and audit methodology and evaluate the potential impact on the conduct of an audit and audit quality. (CK1)
  3. Discuss current developments in emerging technologies, including big data and the use of automated tools and techniques such as data analytics and the potential impact on the conduct of an audit and audit quality. (CK1)
  • Lecture
  • Discussion
  • Kahoot!

Reading:
References: BPP Text Chapter 18 pp 507-515

Time for the intensive exam reviews, midterm and final examinations is not included in the lecture hours above.

9. TEXTBOOKS AND REFERENCES

Textbook

1. BPP Learning Media, Workbook/Textbook, Advanced Audit & Assurance (latest edition)
2. BPP Learning Media, Practice & Revision Kit, Advanced Audit & Assurance (latest edition)

Education Resources