Hamdard University Bangladesh
Auditing
Course Code: ACT 321
Credit Hour: 3
Course Group: Specialization Course: Accounting
Introduction: Nature of auditing -Distinction between Auditing and Accounting -Types of Auditing-Operational Audit-Financial Statements Audit-Compliance Audit-Interim Audit-Final Audit-Complete Audit-Internal AuditExternal Audit-Government Audit-Types of Auditors: Internal and External: Chartered Accountants -Government Auditor. Economics of Auditing -Reduction of Information Risk.
Objectives of an Audit: Primary Objectives-Secondary objectives: Errors and Defalcations-Reporting on Internal control - Constructive Advice-How to achieve objectives?
The Accounting Framework: Fundamental Accounting concepts: Going concern, Accruals, Consistency, and Prudence- Accounting Bases-Accounting Policies -Accounting Conventions -Accounting Rules.
Auditing Theory: Auditing Theory-Conceptual Framework -Axioms of a theory of Auditing -Auditing Concepts: Evidence, Due care, Fair presentation, Independence- Ethical conduct Auditing Standards: General StandardsField work standards- Reporting Standards- Judgment in Auditing -Quality Control-Auditing procedures: Substantive and Compliance procedure.
Accounting Profession in Bangladesh: Bangladesh Chartered Accountants by Laws 1973-Ccrtificate of Practice-Certificate of Admissions and Practice-faces- Standing Committees-Executive Committee-Examination Committee-Investigation & Disciplinary Committee-Articled Students Committee-Technical & Research Committee-Admission to Article ship -Service Under Article Ship-Examination & Training.
Professional Ethics: Definition -Need for Ethics-Independence-Integrity and Objectivity-Competence-Responsibility to Clients: Confidentiality-Contingent Fee-Responsibility to colleagues-Other responsibilities and practices- Acts Discreditable-Advertising and solicitation -Commissions-Incompatible occupations.
Internal Control Concepts: Introduction: Definition of Internal control- Classification of internal controls-Extent and Limitations of An Internal Control-Essential features of Internal Control-Organizational arrangements-Principles of Internal Control System Design-Internal Accounting Controls-Objectives and types: Basic Controls and Disciplines over basic controls-Internal check -Internal audit as a Control Factor-Internal control and the Auditor.
Internal Control: Study & Evaluation: Introduction -Internal Control Questionnaires -Ascertaining and Evaluating the system-Flow Charting or Flow Diagram-Flow Charting Techniques -Principles of Flow Charting -One Dimensional Flow Charting - Two-Dimensional Flow Charting- Rules for Flow Charting -Benefits of Flow Charting - Overview Flowcharts - Specimen documents- Notes on accounting procedures-Transaction reviews. Principles of evaluation of internal control -Internal Control Questionnaire-Form of ICQ- Completion of Internal Control Questionnaire-Methods of answering question in ICQ-Assessment of Answers-Relationship of ICQ to compliance tests-Record of Control weakness- Modification Procedure-Reporting to clients on internal control weaknesses.
Audit Approach: Introduction - Overall concept of the audit approach-Determination of the audit strategy-Auditor's responsibility in accordance with the terms of the engagement-Familiarization with the client's business-Documentation of Audit Strategy-Detailed under- standing of the recording system-Audit evidenceAudit evidence decisions-Persuasiveness of evidence -Types of evidence-Audit tests-Reliance on internal control.
Administration and Conduct of an Audit: Introduction-Planning for new audits-Acceptance of nomination as an auditor-Reliance on the Accounts for preceding period -Letter of Engagement - Documentation of Audit strategyComputer matters-Audit budget-Staff selection- Briefing Audit staff-Timing of Audit work -arrangements for Final audit-Planning for Continuing audits-Controlling audits-Audit files-Audit Programs -Design of the audit programAudit Planning and Analytical procedures- Vouching & Verification.
Materiality and Risk: Materiality- Set Preliminary Judgment about Materiality- Estimate Error-Risk-Desired audit risk- Inherent Risk-Control Risk-Detection Risk.
Testing Internal Control Procedures: Principles of compliance tests-Testing Internal Control Procedures of Purchases, wages and salaries, Cheque payments, Petty cash, Postage and similar funds-Fixed Assets - Stocks & Work- in-progress, Sales, Receipts-Bank Reconciliation’s-Nominal Ledgers.
Auditing Transactions and Accounting Balances:
- Introduction: Compliance Testing- Substantive testingRelationship between Compliance & Substantive testing- Analytical review procedures-Tests of Balance Sheet account balances-Tests of Profit and Loss Account balances.
- Auditing the Revenue and Receipts Cycle: Review Internal Control-Compliance Tests-Final evaluation of internal control-Substantive audit procedure.
- Auditing the Purchases and Payment cycle: Review of Internal Control-Compliance tests-Substantive audit procedures.
- Auditing Inventory: Review of Internal Control-Compliance Tests-Substantive tests of inventory account balances.
- Auditing the Payroll system: Review of Internal control-Compliance tests of Control in the Payroll SystemSubstantive tests of payroll balances.
- Auditing other Assets, Equities and Liabilities: Fixed assets-Other asset balances-Tests of owners’ equity and liabilities-Accounting estimates.
- Profit and loss Account balances and completing the audit-Substantive tests of Profit and Loss account balances-Completing audit
The Audit Report: Introduction - General considerations: Terminology-Basic Legal requirements-Reference to Accounting Conventions - Signing & Dating Audit report Distinction between Reports and Certificate-Profit, losses and results - Information discovered after the Audit Report is issued-Report Review. Short form report- Long form report- Report drafting-Report comments- Audit report on Group Accounts- Report on special types of accountsReliance on other Auditor. Types of Audit Reports - standard Unqualified Audit report-Unqualified audit report with explanatory paragraph or modifying paragraph.
Qualifications in Audit Report: Introduction - Definition of a Qualified Audit report-Structure of a qualified Audit Report-Conditions requiring a Departure-Type of Opinion-Qualifications on Uncertainty -Qualifications on disagreement - Guidance on Qualified Report - Reference on Notes to the Accounts'-Representation by Management.
Recommended Books:
Arens & Loebbecke, Auditing - An integrated Approach, Prentice-Hall.
Emile Woolf, Auditing Today, Prentice-Hall.
Cooopers and Lybrand, Student’s Manual of Auditing.
Holmes & Burns, Auditing Standards and Procedures, Irwin