Course Catalogue

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

  1. Arens, A.A. & Loebbecke J.K. (2007) , Auditing An Integrated Approach, Prentice Hall of India Private Ltd, New Delhi, INDIA