AUDITING AND ASSURANCE
CPA
CERTIFIED PUBLIC ACCOUNTANTS
PART II
SECTION 4
AUDITING AND ASSURANCE
STUDY TEXT
, AUDITING AND ASSURANCE
CONTENT
10.1 Assurance engagements
- Definition and objectives
- Elements of an assurance engagement
- Types of assurance engagements
- Levels of assurance and reports
- Non-assurance engagements
10.2 Nature and purpose of an audit
- Nature and objectives
- Audit as an assurance engagement
- Development of audit (early audit and modern audit)
- Types of audit and limitations
10.3 Legal framework and regulation
- Regulatory framework within which external audits take place
- Statutory regulations; auditors' liability, appointment, removal, remuneration,
resignation, rights and duties of auditors
- International standards on auditing and other regulations
- Professional ethics/code of ethics for professional accountants
- Fundamental principles, threats and safeguards, other professional guidelines on
audit fees, conflict of interest, advertising and opinion shopping
10.4 Planning and risk assessment
- Obtaining clients acceptance and retention
- Understanding the entity and its environment
- Audit planning, audit programmes and documentation
- Assessing audit risks
- Errors, fraud and other irregularities
10.5 Overview of forensic accounting
- Nature, purpose and scope of forensic accounting
- Types of forensic investigations: Corruption, asset misappropriation, financial
statement fraud, others
- Fraud prevention and deterrence
10.6 Internal control systems
- Internal controls theory and practice
- Evaluation of internal control system and test of control
- Communication on internal control system (management letter)
- Information technology threats and control
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, AUDITING AND ASSURANCE
10.7 Audit evidence
- Financial statement assertions and audit evidence
- Audit evidence procedures/techniques
- Audit sampling and other means of testing
- The audit of specific items (income/expenses/assets/liabilities)
- Using the work of others (internal audit and experts)
- Computer assisted audit techniques
10.8 Overall audit review
- Subsequent events review
- Going concern review
- Contingencies and commitments
- Management representations
- Quality control and review
- Role of auditors in receiverships and liquidation
10.9 Audit reports
- 7th Schedule provisions on audit reports
- Basic elements
- Types of opinions
- Emphasis of master paragraph
- Features of audit reports
10.10 Auditing in the Public Sector
- Introduction to auditing in the Public Sector; regulatory provisions
- Establishment, mandate and functions of public sector auditors; Kenya National Audit
Office (KENAO) and similar national audit bodies
- Role of internal audit function in public entities
- Relationship between external and internal auditors in the public sector
- International Standards on Supreme Auditing Institutions
10.11 Emerging issues and trends
Page 3
, AUDITING AND ASSURANCE
CONTENT
TOPIC PAGE
1. Assurance engagements.................................................................................................... 5
2. Nature and purpose of an audit ..................................................................................... 12
3. Legal framework and regulation.................................................................................... 31
4. Planning and risk assessment ..........................................................................................66
5. Overview of forensic accounting .................................................................................. 113
6. Internal control systems.................................................................................................. 125
7. Audit evidence ................................................................................................................. 139
8. Overall audit review ........................................................................................................ 193
9. Audit reports .................................................................................................................... 211
10. Auditing in the Public Sector ........................................................................................ 224
Revised on: November 2016
Page 4
CPA
CERTIFIED PUBLIC ACCOUNTANTS
PART II
SECTION 4
AUDITING AND ASSURANCE
STUDY TEXT
, AUDITING AND ASSURANCE
CONTENT
10.1 Assurance engagements
- Definition and objectives
- Elements of an assurance engagement
- Types of assurance engagements
- Levels of assurance and reports
- Non-assurance engagements
10.2 Nature and purpose of an audit
- Nature and objectives
- Audit as an assurance engagement
- Development of audit (early audit and modern audit)
- Types of audit and limitations
10.3 Legal framework and regulation
- Regulatory framework within which external audits take place
- Statutory regulations; auditors' liability, appointment, removal, remuneration,
resignation, rights and duties of auditors
- International standards on auditing and other regulations
- Professional ethics/code of ethics for professional accountants
- Fundamental principles, threats and safeguards, other professional guidelines on
audit fees, conflict of interest, advertising and opinion shopping
10.4 Planning and risk assessment
- Obtaining clients acceptance and retention
- Understanding the entity and its environment
- Audit planning, audit programmes and documentation
- Assessing audit risks
- Errors, fraud and other irregularities
10.5 Overview of forensic accounting
- Nature, purpose and scope of forensic accounting
- Types of forensic investigations: Corruption, asset misappropriation, financial
statement fraud, others
- Fraud prevention and deterrence
10.6 Internal control systems
- Internal controls theory and practice
- Evaluation of internal control system and test of control
- Communication on internal control system (management letter)
- Information technology threats and control
Page 2
, AUDITING AND ASSURANCE
10.7 Audit evidence
- Financial statement assertions and audit evidence
- Audit evidence procedures/techniques
- Audit sampling and other means of testing
- The audit of specific items (income/expenses/assets/liabilities)
- Using the work of others (internal audit and experts)
- Computer assisted audit techniques
10.8 Overall audit review
- Subsequent events review
- Going concern review
- Contingencies and commitments
- Management representations
- Quality control and review
- Role of auditors in receiverships and liquidation
10.9 Audit reports
- 7th Schedule provisions on audit reports
- Basic elements
- Types of opinions
- Emphasis of master paragraph
- Features of audit reports
10.10 Auditing in the Public Sector
- Introduction to auditing in the Public Sector; regulatory provisions
- Establishment, mandate and functions of public sector auditors; Kenya National Audit
Office (KENAO) and similar national audit bodies
- Role of internal audit function in public entities
- Relationship between external and internal auditors in the public sector
- International Standards on Supreme Auditing Institutions
10.11 Emerging issues and trends
Page 3
, AUDITING AND ASSURANCE
CONTENT
TOPIC PAGE
1. Assurance engagements.................................................................................................... 5
2. Nature and purpose of an audit ..................................................................................... 12
3. Legal framework and regulation.................................................................................... 31
4. Planning and risk assessment ..........................................................................................66
5. Overview of forensic accounting .................................................................................. 113
6. Internal control systems.................................................................................................. 125
7. Audit evidence ................................................................................................................. 139
8. Overall audit review ........................................................................................................ 193
9. Audit reports .................................................................................................................... 211
10. Auditing in the Public Sector ........................................................................................ 224
Revised on: November 2016
Page 4
