SB 6e Text & Other
Introduction to Auditing.
Auditors’ Professional Roles and Responsibilities
Independent Auditor’s Report.
Ch 1: LO 1-5, Ch 2: LO 1-5, 6
Inside front cover
HBK: Preface , CAS 200, 220,CSQC-1 Accounting: s.1000 (F/S concepts)
or Part I- Framework
Ch 4: LO 1-7
HBK: OCS 5020, 5021, CAS 700, CAS 705, 706, 710.
RC 1-1, 1-6, 1-8,1-11, 1-13, 1-15, 1-16, 1-19
EP 1-1, 1-4, 1-6, ACA
RC 1- 2-1, 2-2, 2-3, 2-4,2-5, 2-6, 2-8, 2-9,2-17,2-20, 2-21, 2-22,2-25
EP 2-2, 2-4, 2-8, ACA
RC 1 4-3, 4-5, 4-6, 4-7, 4-10, 4-12, 4-13, 4-16
EP 4-1, 4-2, 4-6 4-10, 4-12, 4-13, ACA
- Discuss the objectives and purpose of an audit of financial statements.
- Explain the importance of auditing and the role of the external auditor.
- Explain how information risk arises and how auditors can reduce information risk.
- Distinguish auditing from accounting.
- Explain how professional judgment is performed in an audit.
- Describe the applicable financial reporting framework as being the criteria auditors use to render an opinion on the financial statements.
- Discuss the three party accountability relationship.
- Provide an overview of international auditing and its impact on Canadian Auditing Standards (CAS).
- Discuss the different types of auditors.
- Understand the current regulatory environment of auditing.
- Understand the different types of auditors. (note different types of audit engagements are discussed in unit five).
- Identify and apply Generally Accepted Auditing Standards (GAAS), Relevant Ethical Requirements and the Canadian Auditing Standards
- Discuss the association framework; determine how auditors are associated with financial statements and financial information.
- Discuss the 3 levels of assurance.
- Explain concept of professional skepticism
- Identify and apply the Canadian Quality Control Standards to a problem
- Explain the components of a standard unmodified audit report.
- For a given set of accounting facts and audit circumstances, analyze qualified, adverse and disclaimer audit reports - determine how the standard audit report would change for a scope limitation and a GAAP departure (including change in wording in the opinion paragraph.
- Understand the different types of audit reports
- Understand when an auditor is required to provided an emphasis of the matter paragraph or others matters paragraph.
- Understand how the audit report changes with each type of opinion.
- Understand the use of comparative vs. corresponding approach.
Preliminary Audit Planning: Understanding the Auditee’s Business.
Assessing Risks & Internal Control.
Fraud Risk Assessment.
Control Assessment and Testing
Prelude to Parts 2 and 3 of the Text
Ch 5: LO 1-7, 9 App 5A
Inside back cover
HBK:CAS 210, 230, 240, 250, 300, 320, 520
Ch 6: LO 1-8,
HBK: CAS 315
Ch 7: LO 1-7
Ch 9: LO 1-8
HBK: CAS 330, 260, 265, 610
CSAE 3416 Reporting on Controls at a Service Organization
HBK 5925 An audit of Control Over Financial Reporting that is integrated with an Audit of Financial Statements.
RC 5-1, 5-3,5-4, 5-7,5-8, 5-9, 510, 5-15, 5-15, 5-16, 5-17, 5-18,5-21, 5-22, 5-29, 5--30, 5-31, 5-34, 5-37, 5-39, 5-40, 5-42,52, 5-68, 5-69, 5-70, 5-74,
EP 5-6, 5-7
DC 5-4, ACA
RC 6-2, 6-7,6-8,6-9,6-12, 6-16, 6-18, 6-19, 6-20, 6-25, 6-26, 6-44, 6-54
EP 6-1, 6-2,
DC 6-1, 6-4, 6-5, ACA
RC 7-2, 7-6, 7-8, 7-10, 7-11, 7-12, 7-13
RC 9-1, 9-2, 9-3, 9-5, 9-6, 9-7,9-8, 9-9, 9-16, 9-22, 9-31, 9-33, 9-34, 9-37, 9-38, 9-44, 9-63, 9-64, 9-65, 9-66, 9-67, 9-68, 9-70, 9-72, 9-101
- Describe the activities auditors undertake before starting a financial statement audit engagement - pre-engagement activities
- Explain why auditors need to understand the auditee organization’s business, its environment, and risks at the start of a financial statement audit.
- Explain why auditors need to communicate with the predecessor auditor for new engagements.
- Define engagement letters and understand why engagement letters are prepared, including the various components of an engagement letter.
- Explain the purpose of preliminary analytical procedures and business risk analysis in the audit planning process.
- Explain the concept of materiality.
- Determine planning materiality and performance materiality by assessing users and their information needs, qualitative factors, quantitative factors and make a final recommendation for each of planning materiality and performance materiality.
- Describe the principal assertions in management’s financial statements and their application in establishing audit objectives.
- Explain how the preliminary planning activities are integrated in the overall audit strategy.
- Describe the basic components of internal control: control environment, management’s risk assessment process, information systems and communication, control activities, and monitoring.
- Define fraud.
- Outline the auditor’s and management responsibility for fraud.
- Discuss the fraud risk factors also referred to as the fraud triangle
- Explain how the auditor’s understanding of an organization’s internal control helps to assess the risk that its financial statements are misstated.
- Discuss the risk assessment procedures used to understand internal controls.
- Describe the conceptual audit risk model and its components, and explain its usefulness and limitations in conducting the audit.
- Understand how the components of the audit risk model are related.
- Explain how auditors assess the auditee’s business risk through strategic analysis and business process analysis.
- Outline the relationships among business processes, accounting processes/cycles, and management’s general purpose financial statements.
- Illustrate how business risk analysis is used in a preliminary assessment of the risk that fraud or error has led to material misstatement at the overall financial statement level.
- Define seven internal control objectives, relating them to the management assertions in financial account balances.
- Discuss the three phases of internal control.
- Describe general and application control activities, document accounting systems, identify key controls and weaknesses, and write key controls for an audit program.
- Outline the auditor’s responsibility when internal control evaluation work detects or indicates a high risk of fraudulent misstatement.
- Explain reasonable assurance and cost-benefit in the context of control risk assessment and development of the audit approach.
- Understand how the auditor documents internal controls.
- Explain the limitations of internal controls.
- Identify strengths and deficiencies in internal controls.
- Understand the auditor’s and management responsibilities for internal control.
Audit Evidence and Assurance
Ch 8: LO 1-5, ACA
HBK: CAS 240, 330, 500, 501, 505, 540, 550, 610, 620
Writing audit procedures
Ch 10, LO 1-8
HBK: CAS 530
RC 8-1, 8-3, 8-4, 8-5, 8-6, 8-8, 8-11, 8-15, 8-16, 8-20, 8-31, 8-41, 8-43, 8-44, 8-46, 8-47
EP 8.1. 8-3, ACA
DC 8-5, 8-7
RC 10-1,10-2,10-3,10-5,10-6, 10-18, 10-19, 10-22, 10-23, 10-28, 10-31, 10-33, 10-34, 10-43, 10-46
- Outline seven general audit techniques (audit procedures) for gathering evidence.
- Identify the procedures and sources of information auditors can use to obtain evidence for understanding an auditee’s business and industry, assessing risk, and responding to assessed risk.
- Explain audit evidence in terms of its appropriateness and relative strength of persuasiveness.
- Describe the content and purpose of the audit plan as well as the specific audit programs and detailed procedures it contains.
- Discuss working papers, types and purpose of working papers.
- Test of controls & related control objectives
- Substantive test & related management assertions
- Develop a simple audit program for a test of a client’s internal control procedures / Develop a simple audit program for an account balance, considering the influence of risk and tolerable misstatement.
- Specify objectives and a population of data.
- Determine sample size and select sample units.
- Evaluate evidence from performing test of controls, / evaluate monetary error evidence from a balance audit sample.
- Explain the role of professional judgment in audit sampling decisions.
- Distinguish audit sampling work from non-sampling work.
- Compare and contrast statistical and non-statistical sampling.
- Differentiate between sampling and non-sampling risk
- Explain the use of stratification in sampling.
- Discuss sampling and non sampling error.
- Explain how sample size is related to the related factors that determine sample size.
Completing the Audit.
Applying Professional Judgment to Form the Audit Opinion and Issue the Audit Report.
Auditors’ Ethical and Legal Responsibilities
Ch 15: LO 1-6
Ch 16: LO 1-7
Ch 3: LO 1 -6
HBK: CAS 260,450, 520, 540, 550, 560, 570
Ch 3: LO 1-6
RC 15-1, 15,3, 15-8, 15-0, 15-11, 15-12, 15-14, 15-15, 15-24, 15-26, 15-28, 15-29, 15-30, 15-33
EP 15-4, 15-5
RC 16-6, 16-7, 16-8, 1-18, 16-19, 16-21, 15-22, 16-23, 16-24, 15-25, 16-26, 16-27, 16-33, 16-24, 16-25, 16-26, 16-27, 16-33, 16-35, 16-37, 16-40, 16B-1, 16B-2, 16B-3
- Describe the balance sheet account groups that the major revenue and expense accounts are associated with, as well as the substantive analytical procedures applied to audit revenue and expenses.
- Outline the overall analytical procedures to be performed at the final stage of a financial statement audit, including analysis of the income statement, cash flow statement, financial statement presentation, and disclosures.
- Explain why written management representations are obtained, and what items are generally included in the representation letter, including identification of related parties Explain the purpose of lawyers’ letters (letters of enquiry) and how they are used at the completion stage of an audit to identify any contingencies.
- Given a set of facts and circumstances, classify a subsequent event by type and proper treatment in the financial statements, and outline the implications of the timing of discovery of the event for the auditor’s report.
- Outline procedures for subsequent events, contingencies and related party transactions.
- Explain the final evaluation and conclusion stage of the audit: adjustments resulting from the audit, evaluation of evidence and misstatements to form the audit opinion, and reviews of working paper files.
- Apply the CPA professional rules of conduct
- Explain independence and objectivity
- Apply the independence framework.
- Understand concept of Common Law liability
- Understand concept of Statutory liability
- Apply rules of conduct to a problem
- Discuss the components of negligence
- Discuss who the auditor owes a duty of care to
- Discuss how auditors can respond to legal liability
Other Assurance and Non-Assurance Engagements
Group financial statements
Other Positive Assurance Engagements
Future oriented financial information
Other Types of Audit Engagements
in the public sector
Other Assurance Engagements
CAS 800, 805, 810
3416, 5925, PS 5300
9200, 9110, CSRS 4460,
7150, 7170, 7200, 7500,
AuG 6, AuG 16
Audit, Continuous Audits, Forensic Audits, Comprehensive Audits, Environmental
3000, 3001, 3410, 3416, 3530, 3531
PS 5000, 5400, 6410, 6420
CSAE 3000- Attestation Engagements Other than
Audits or Reviews.
CSAE 3001- Direct Engagements
CSAE 3410 Assurance engagements on greenhouse gas
CSAE 3530 and CSAE 3531
Recent Auditor General's Report
Discuss the other types of assurance and non-assurance engagements and the auditor's involvement in each of these engagements
Understand the auditors requirements and ethical requirements to accept other types of assurance and non-assurance engagements
Understand the level of assurance provided in each of these engagements
Identify and assess the appropriate framework or set criteria to apply to an engagement
Discuss operational audits, continuous audits, forensic audits, environmental audits and auditing in the public sector
Discuss the nature of the reports for other types of assurance and non-assurance engagements
There are no key chapters from the text
assigned to unit five because it does not exist.
Assigned readings are from the CPA Handbook