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Auditing II 2 ا را
ACCT 329
Level 6
By
Trabelsi Slaheddine
&
Jihan Morsi Mohammed eladawy
Code: ACCT-329
Course Name: Auditing - II Course Type: Core
Course Level:
Year 1: Semester 1 Semester 2 Summer Semester
Course Description:
This course exposes the students to the theoretical and practical aspects of auditing regarding
audit examination and reporting on financial statement according to Generally Accepted
Auditing Standards. The main focus of the course is auditing requirements and standards in
Saudi Arabia, and dealing basically with advanced techniques in auditing especially, analytical
review, sampling and auditing of EDP.
Objectives:
On completion of this course, students will be able to understand:
• Audit Procedures
• sampling and auditing of EDP
• Audit of Limited Companies
• Audit of Public Sector Undertaking and Banks
• Audit of Insurance Companies and audit of non-profit Organizations
Learning Outcomes:
The expected learning outcomes of this course are:
• Audit Procedures
• sampling and auditing of EDP
• Audit of Limited Companies
• Audit of Public Sector Undertaking and Banks
• Audit of Insurance Companies and audit of non-profit Organizations
Students are encouraged to make use of IT facilities particularly web sites to support research
and reading.
Learning Resources:
Text Books
e- Library Reserves
• http://www.emeraldinsight.com/insight
• http://www.businessnation.com/research/subject/accounting
Internet
• Auditing
• International journal of Auditing
• Accounting forum
• Advances in Accounting
• Critical perspective on Accounting
• The British Accounting Review
• International journal of accounting
Delivery and Teaching Strategy: (Lecture, Online, Physical, blended, self directed
through CD, web based courses and DVD)
Assessment Strategy:
•
First Mid Term Exam: 20 Marks to be held on..…….Day,…….Month, 20..
•
Second Mid Term Exam: 20 Marks to be held on……Day,……Month, 20..
•
Attendance, Participation & Assignment: 10 Marks
•
Final Exam: 50 Marks
•
Total: 100 Marks
Syllabus Change Policy: This syllabus is a guide for the course and is subject to
change with advanced notice.
Course Contents:
Audit of Public Sector Undertaking and Banks: Special features concerning Audit of
departmental undertakings, Statutory Corporations and Government Companies, Procedure of
appointment of Auditors and Special features relating to the audit of Banks.
Unit 1
Audit Procedures
Introduction
1- Only competent and independent person can carry out the audit.
2- Work should be well planned in audit.
3- Sufficient and accurate evidence is to be gathered and tested before opinion
is put.
4- Appropriate judgment of an auditor is very important and it depends upon
the professional knowledge of auditor.
Thus, the above verification program along with the supportive documents is
selected for audit.
Audit evidence:
Definition:
It is a proof that an auditor uses to express his opinion on the accounts and
financial operations of the firms.
It is include check,records, invoices, contacts, and others information.
An auditor must collect sufficient and appropriate audit evidence to make his
judgment of opinion.
Auditor obtain such evidence from tests that determine how well accounting
control work (compliancetest) and tests of accounting detail such as
completeness ( substentativetest)
By it, the auditor can take all the assertions that the financial statements which
given to him are true and fair.
• Audit in depth:
It is the examination of the system in a business to trace certain transactions
from their origin to the end, investigating at each stage the books of accounts
(records) for authorization.
Auditor has to examine a few transactions in detail from the origin of the
transactions till their end .
- Every record maintained relating to particular transaction is scrutinized.
- The technique of audit in depth is based upon test checking.
Test checking,
Auditor’s approach to statistical sampling,
And routine checking
Testchecking:
It is the selection and checking of representative sample from a large number of
sample items.
- In big house where the number of transactions to be checked is very large and
the time at the disposal of auditor is a little, a few transactions may be checked
at random, that means the test checking is adopted in big business houses.
* The months for the test check should be different from the last test check.
3- Selection of entries to be checked should be at random.
4- Test check is not applied to the cash book.
5- The transactions should be same for test checking.
6- The test check should be so arranged that the work done by every clerk is
checked.
7- The good internal control system in the company means less sample size.
Audit sampling:
The process of using of audit procedures to less than 100% of the items within
a class of transactions to help the auditor to form an opinion.
- Sampling makes the audit very simple because it is not possible to study
single items.
*Sampling take random:that mean each unit has equal chance of being
selected
(If the risk in not checking an item is a high, the auditor may not leave checking
it)
6- Previous history :
Previous audit history of the entry will determine the sample size.
Routine checking
Routine checking is the regular monitoring of business accounts, books and
ledgers to detect any error either accidently or fraudulently, it is done by closely
examining all the books, ledgers or accounts for the arithmetic errors.
Advantages:
Routine checking is easy to perform and ensures that a business is operating to
its full potential. If errors are detected, it could also potentially save company
money, especially if fraud is involved.
Disadvantages:
Routine checking can be expensive for company. And it is tedious for the
employee who must perform it
Major errors or fraudulent changes in books and ledgers can be overlooked as
well , especially if the person performing the routine checking has not been
thoroughly educated in locating them
Vouchers
• Vouchers:
It is documentary evidence in support of a transaction in the books of account.
• Vouching:
The act of establishing the accuracy and authenticity of entries in the account
books using documentary evidence by the auditor
It means testing the truth of items appearing in the financial statements.
Why we do vouching?
1- Any incorrect entry or any omission can easily discover through vouching.
2- The auditor checks whether the transaction has been properly recorded and
entered in the books of account .
3- Frauds can be discovered only by proper vouching.
4- The auditor satisfies himself about the truth and authenticity of the books of
account .