Audit and Assurance

ACCA Audit and Assurance (AA) belongs to the Applied Skill Level papers. The subject dives deep into understanding the roles and responsibilities of an auditor, the process of auditing all the way from choosing a client to publishing the audit report.

Syllabus Contents

1.What is Audit and who is an Auditor: The initial segment of the syllabus delves into comprehending the purpose and necessity of the audit function, its intended audience, and the duties and obligations of auditors. It also explores the regulations governing the appointment and removal of auditors.

2.Why trust an Auditor: Since auditors are external entities, what criteria should be used to place trust in them? This section focuses on the fundamental principles and ethical considerations that auditors must uphold, which are instrumental in fostering trust. It also provides a brief overview of the Auditing Standards that auditors must adhere to from the commencement to the conclusion of the audit.

3.Whom to Audit: The syllabus then progresses to discuss the criteria for accepting clients, including considerations such as the client’s reputation, business environment, history, size, audit timeline, and fees.

4.Internal Audit and Audit Committees: Up to this point, we have examined external parties scrutinizing financial statements. Why not utilize internal personnel? This section addresses the roles and responsibilities of Audit Committees and the Internal Audit department, along with their interactions with external auditors.

5.Audit Risk: The primary responsibility of an auditor is to determine the accuracy of financial statements. What if the financial statements are incorrect but the auditor affirms their accuracy, or vice versa? This is termed Audit risk. This section explores various types of audit risk, factors that elevate it, and how auditors can mitigate it.

6.Audit Planning: After selecting a client, a plan must be devised for conducting the audit. This section covers the initial strategies and plans, including where to commence the audit, which audit team to assign to different areas, key areas of focus during the audit, and ensuring the highest quality during the audit process.

7.Internal Control System: Financial statements are crafted by a client’s management, and the data within these statements originate from various organizational processes. What happens if these processes lack careful design, operation, or monitoring? This increases the likelihood of errors in financial statements, consequently elevating audit risk. This section emphasizes the significance of internal controls and their connection to the audit function.

8.Substantive Procedures: When a client company exhibits weak internal controls, auditors recognize a higher risk and must conduct more thorough procedures. This section delves into the intensive procedures that auditors perform at client companies to gather evidence regarding the accuracy of financial statements.

9.Gathering Evidence: As mentioned earlier, evidence is crucial. This section explores the various internal and external sources from which evidence is collected, with a particular focus on “Relying on the work of others,” a concept that will be elaborated upon in subsequent lectures.

10.Completion and Audit Report: With evidence collected and the work completed, auditors’ ultimate objective is to issue the audit report. This section details the tasks auditors must perform during the audit’s concluding stages and discusses the preparation of the audit report, including various types of opinions issued.

Exam Format:

The examination will have a duration of 3 hours and will consist of two distinct sections:

Section A: 30 Marks (Comprising 3 cases, with each case containing 5 Objective Test Questions, each worth 2 marks, totaling 10 marks per case)

Section B: 70 Marks (Comprising 3 Constructed Response Questions, worth 30, 20 and 20 marks respectively)

The passing score for all ACCA papers is 50.

Once again, Welcome to Audit and Assurance, and Welcome to ATOMIC ACCA!

We look forward to seeing you in our lectures soon!