AUE2601 Summary Notes with Assignments 1&2 COMPLETE GUIDE.

AUE2601 Summary Notes with Assignments 1&2 COMPLETE GUIDE. iii Contents TOPIC PAGE PREFACE OVERVIEW OF THE MODULE V TOPIC 1 INTRODUCTION TO AUDITING 1 TOPIC 2 REGULATION OF THE AUDITOR 31 TOPIC 3 GENERAL PRINCIPLES OF ASSURANCE ENGAGEMENTS 65 TOPIC 4 THE AUDIT PROCESS 107 BIBLIOGRAPHY 127 AUE2601/1 v Pref ace 1 Welcome Dear Student It is with great pleasure that we welcome you to AUE2601: Auditing Theory andPractice. Please take the time to familiarise yourself with this preface and refer back to it as often as you need to since it will certainly make studying this modulea lot easier. The preface outlines the purpose of this module, links to other auditing modules, our teaching strategy and useful hints that will help you to experience a more postive learning experience. We trust that you will enjoy your semester studying for this module and that afterworking through the study material you will develop a keen interest in the field of auditing. 2 Purpose of the module This module is intended for trainee accountants and auditors or such individuals in related fields, for example, people who are interested in qualifying as chartered accountants or registered auditors, to enable them to develop the necessarybasic competencies. The purpose of this module is to provide you with knowledgeand skills in auditing theory and practice, which includes basic auditing concepts, statutory requirements, guidelines and auditing standards. Students credited with this module will know the basic auditing concepts, will be able to apply their knowledge of the role, duties and responsibilities of the registered auditor as well as apply the International Standards on Auditing in the statutory audit of an ordinary company trading in goods and services. 3 Link to other modules It will be clear to you from this overview that this introductory module is the basisfor a range of further Auditing modules. The purpose of and learning outcomes forthis module are therefore aimed at developing your expertise and abilities in the field of auditing. A brief outline of the Auditing 200, 300 and 400 modules offered by the Department of Auditing is provided below. Auditing 200 AUE2601: Auditing theory and practice The purpose was discussed under point 2 above. vi Preface AUE2602: Corporate governance and the auditor The purpose of this module is to provide learners with knowledge and skills in the principles of corporate governance, statutory matters and internal controls in the accounting cycles from the auditor’s perspective, including evaluating internal controls. Auditing 300 AUE3701: Audit planning and tests of controls The purpose of this module is to provide learners with knowledge and skills in audit planning and the performance of tests of control, which include auditing concepts, statutory requirements, guidelines and international standards on auditing. AUE3702: Substantive procedures and finalising the audit The purpose of this module is to provide learners with knowledge and skills in the performance of substantive procedures and the finalisation of an audit, which includes auditing concepts, statutory requirements, guidelines and international standards on auditing. Auditing 400 AUE4861: Advanced auditing The aim is to ensure that students meet 70% of the auditing knowledge requirements of the South African Institute of Chartered Accountants (SAICA) prescribed syllabus in order to produce competent professional accountants. It will also provide a foundation of auditing knowledge that enables students to continue to learn and adapt to change throughout their professional lives. In particular, the module aims to develop core competence (the acquisition of auditing knowledge and skills) in the field of auditing. AUE4862: Applied auditing The aim is to ensure that students meet the other 30% of the auditing knowledge requirements of the SAICA prescribed syllabus in order to produce competent professional accountants. It will also provide a foundation of auditing knowledge that enables students to continue to learn and adapt to change throughout their professional lives. In particular, the module aims not only to develop core competence in the field of auditing, but also to integrate the knowledge obtained in module 4861. Both of these modules will enable a student to adhere to the SAICA requirements for auditing.