Electives related to Accounts Major
Module : ACT
309: Auditing
Programme : B.Com
Credit Value : 12
Prerequisite :
ACT
101: Accounting Principles & FIN 201: Introduction to Corporate Finance
& Financial Management
General
Objectives:
·
To
acquaint student with basic auditing concepts and processes
·
To
appreciate the economic benefits of financial statement auditing
·
To
plan and execute basic financial statements audit functions and procedures
Learning
Outcomes:
Upon
the successful completion of this module, student should be able to:
·
interpret
basic auditing concepts such as financial statements assertions, materiality,
audit risk, fraud and misstatements, audit engagement, audit reports etc.
·
prepare
basic audit plans and determine audit procedures for audit test of various
assertions
·
draft
simple audit report and interpret its implications to the information users
CONTENT
Unit –I: Introduction
to Auditing functions (8
Hours)
Historical
development of Auditing; Auditing defined; Need for Financial Statements Audit;
Economic benefits of an Audit; Types of Auditors; Public Accounting Profession
(Big-Four Accounting Firms); Relationship between Accounting & Auditing;
Fundamentals underlying Financial Statements Audit; Limitations of Audit
Unit –II: Auditing
Standards (5
Hours)
Generally
Accepted Auditing Standards (GAAS); Auditing Standards in Bhutan and
International Auditing Standards (ISA): formulation and application of GAAS;
Auditor Independence; Reasonable Assurance and detecting Fraud (these
concepts & promulgations are to be discussed within the given auditing
standards); fraud vs misstatements in the financial statements.
Unit–III: Accepting the
Engagement & Planning the Audit (14 Hours)
Client
acceptance and retention; engagement letter; Audit planning and risk assessment
procedures: understanding the entity and its environment; Identify relevant
financial statement assertions; decisions about materiality; assessment of
risks that may lead to material misstatements including the risk of fraud;
develop preliminary audit strategies; understand internal control; substantive
test and test of internal control; audit evidence- sufficiency and competency of
audit evidence; audit procedures (inspection, observation, inquiry,
confirmation, recalculation, reperformance and analytical procedures);
Audit sampling; Audit documentation
Unit–IV: Auditing the
transaction cycle (10
Hours)
Auditing
Revenue cycle: control activities for credit and cash sales, sales adjustment
transactions, substantive test of accounts receivables; Auditing Expenditure
cycle: control activities for purchases and purchase adjustments, substantive
tests of accounts payables balances; Auditing Cash Balances: internal control
activities for cash transactions, substantive test for cash balances
Unit–V: Completing the audit
and audit reporting (8
Hours)
Completing
the field work, obtaining client’s representation letter, evaluating going
concern, formulating opinion and drafting audit report on the financial
statements and internal controls ; types of audit reports: unqualified,
modified , qualified and adverse reports; communicating audit findings to
financial statement users and audit committee or management.
Unit-VI: Auditing in
Computerised Environment (5
Hours)
Computer
based accounting Vs manual accounting system; internal controls in computerized
environment; auditing around the computer and through the computer; Audit trail
in CISE
Note: The module
tutor(s) is expected to deliver this module in close reference to the
International Standard on Auditing (ISA) approach.
Teaching
strategies
·
Lecture
method
·
Short
Case study
·
Role
plays
·
Group/Cooperative
methods
Assessment
·
Assignments/PW
/Presentation 40 %
·
Mid-Semester
Exam 20%
·
End-Semester
Exam 40%
Total
100%
Essential
Texts
1. Ainapure
V. and Ainapure M., Auditing & Assurance, (2nd Ed), 2009,
PHI Learning Private Ltd., New Delhi, INDIA
2. Boynton,W.C.&
Johnson,R.N. 2006), Modern Auditing, (8th ed.), John Wiley
& Sons, Inc, US
References
- Arens,
A.A. & Loebbecke J.K. (2007) , Auditing An Integrated Approach,
Prentice Hall of India Private Ltd, New Delhi, INDIA