Audit & Assurance (AAA) Module outline. Last updated: 29 January 2018 AAA118 module outline. charteredaccountantsanz.com

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1 Audit & Assurance (AAA) Module outline charteredaccountantsanz.com Last updated: 29 January 2018 AAA118 module outline

2 [This page has deliberately been left blank] Copyright Chartered Accountants Australia and New Zealand All rights reserved. This publication is copyright. Apart from any use as permitted under the Copyright Act 1968 (Australia) and Copyright Act 1994 (New Zealand), as applicable, it may not be copied, adapted, amended, published, communicated or otherwise made available to third parties, in whole or in part, in any form or by any means, without the prior written consent of Chartered Accountants Australia and New Zealand.

3 Chartered Accountants Program Audit & Assurance Audit & Assurance (AAA) Overview The Audit & Assurance (AAA) module is a technical module in the Chartered Accountants Program. After completing the module you are expected to be able to plan, perform and complete an audit and undertake other assurance services. During the module, you are expected to apply the Auditing, Assurance and Ethics Standards to a variety of practical scenarios. Assumed knowledge It is essential to have a basic understanding of accounting systems and the recording of transactions in order to understand the audit of general purpose financial statements. If you do not understand how the accounting systems work and how a set of financial statements is produced and prepared, then it is very difficult to understand the fundamental auditing concepts. It is assumed that you would have a good understanding of the following concepts from your undergraduate studies: Financial accounting and preparation of general purpose financial statements (refer to the Financial Accounting & Reporting assumed knowledge). Standard business processes, and how they are recorded in the relevant accounting system and reflected in the financial statements: Sales how a sale/revenue and the related trade receivable is recorded in an entity s accounting system, either directly or via a subsidiary. Payroll how components of payroll are recorded by an entity (e.g. gross salary, superannuation/pension contributions, workers compensation payments/insurance, tax deductions and payments). Purchases how the purchase of a good or service is recorded in an entity s accounting system, either directly or via a subsidiary. Inventory how items purchased for manufacture or resale by an entity go through the entity s inventory and COGS (cost of goods sold) accounts. Asset management (property, plant and equipment/intangible assets) how these items are recorded by an entity and how associated depreciation/amortisation/impairment is recorded. The role of an auditor, the objectives of an audit of general purpose financial statements, and the auditor s professional, ethical and legal responsibilities. The need for the auditor to obtain an understanding of the entity and its environment, assess audit risk and determine materiality. The key components of the audit process, the broad categories of audit procedures (tests of control and substantive procedures) for obtaining sufficient appropriate audit evidence to support audit assertions. The types of audit opinions. The difference between audit review and other assurance engagements. It is assumed that you would have a basic understanding of: International Financial Reporting Standards (IFRSs) or national equivalents. International Standards on Auditing (ISAs) or national equivalents. Code of Ethics for Professional Accountants of the International Ethics Standards Board for Accountants (IESBA Code) or national equivalents Module outline Page 1

4 Audit & Assurance Chartered Accountants Program Module plan and time allocation The expected workload for this module is a minimum of 10 hours per week over 12 weeks, or 120 hours in total, excluding module orientation, on-line assessments, final exam and study time for the final exam. You are advised to plan your enrolment carefully around work and other commitments, to ensure you are able to devote the time required to your studies. An example module plan is provided below. A module plan with key dates for the current module is available on MyLearning. AAA118 Suggested module plan JANUARY MODULE COMMENCEMENT 29 January WEEK 1 29 January Unit 1 (6 hrs) Unit 2 (6 hrs) Framework & Audit quality FEBRUARY WEEK 2 5 February WEEK 3 12 February WEEK 4 19 February Unit 3 (10 hrs) Risk assessment Unit 4 (8 hrs) Internal control Unit 5 (6 hrs) Materiality, audit strategy and plan VIRTUAL CLASSROOM LIVE Q&A 1 Planning 13 February ONLINE ASSESSMENT February covering Units 1-4 results: 23 February MARCH WEEK 5 26 February WEEK 6 5 March WEEK 7 12 March WEEK 8 19 March Unit 6 (9 hrs) Tests of controls Unit 7 (15 hrs) Substantive testing Unit 8 (8 hrs) Work of others Unit 9 (12 hrs) Completing audit VIRTUAL CLASSROOM LIVE Q&A 2 Testing 6 March ONLINE ASSESSMENT March covering Units 5-7 results: 16 March APRIL WEEK 9 26 March WEEK 10 2 April WEEK 11 9 April WEEK April Unit 10 (10 hrs) Reporting Unit 11 (8 hrs) Other audits & reviews Unit 12 (14 hrs) Other engagements Unit 13 (8 hrs) Case study & Revision VIRTUAL CLASSROOM LIVE Q&A 3 Completing the audit 3 April VIRTUAL CLASSROOM LIVE Q&A 4 Other engagements 17 April ONLINE ASSESSMENT April covering Units 8-10 results: 13 April EXAM PREPARATION SERIES Available on mylearning Study Break 23 April Exam preparation EXAM 2 May 2018 results: 25 May 2018 charteredaccountantsanz.com Last updated: 25 January 2018 AAA118 Suggested Module plan Page 2 Module outline

5 Chartered Accountants Program Audit & Assurance Competencies and learning outcomes The following table outlines expected competencies at the end of the module and related learning outcomes for each learning element (topic). AAA module Competencies Learning element Plan, perform and complete the audit of historical financial statements Assurance framework and auditor s objectives Audit quality and pre engagement activities Risk assessment Internal control Apply International Auditing Standards or National Generally Accepted Auditing Standards, and applicable laws and regulations to an audit assignment Prepare an auditor s report in accordance with relevant Auditing Standards Undertake significant elements in the planning, performance and completion of other assurance service engagements Explain current issues in assurance and auditing and the impact these will have on clients and professional practice X Learning outcomes Identify and apply the elements and objectives of an assurance engagement Determine which entities are required by the legislation to be audited Consider the overall responsibilities of an auditor Apply the requirements of preparing audit documentation Explain current issues in auditing and the impact these will have on clients and professional practice Apply quality control procedures at a firm and individual audit engagement levels Apply ethical principles and auditor independence requirements to given situations Identify and evaluate issues that the auditor must consider in accepting an audit engagement and prepare an engagement letter Apply the requirements regarding auditor s communication with those charged with governance Design and perform risk assessment procedures Identify and assess risks of material misstatement due to error and fraud Design and perform risk assessment procedures Identify and assess risks of material misstatement due to error and fraud Evaluate the entity s internal control Module outline Page 3

6 Audit & Assurance Chartered Accountants Program AAA module Competencies Learning element Plan, perform and complete the audit of historical financial statements Apply International Auditing Standards or National Generally Accepted Auditing Standards, and applicable laws and regulations to an audit assignment Prepare an auditor s report in accordance with relevant Auditing Standards Undertake significant elements in the planning, performance and completion of other assurance service engagements Explain current issues in assurance and auditing and the impact these will have on clients and professional practice Materiality, audit strategy and audit plan Tests of controls Substantive testing Using the work of others Completing the audit Auditor s reports X Other audits of historical financial information and reviews X Other assurance engagements Learning outcomes Calculate materiality levels for an audit engagement Develop an audit strategy and audit plan, and assess whether changes are required in response to audit findings Design and perform tests of controls and evaluate the results Design and perform substantive procedures and evaluate the results Assess the auditor's responsibilities with respect to using the work of others Design and perform substantive procedures and evaluate the results Evaluate the sufficiency and appropriateness of audit evidence Evaluate the effects of misstatements identified in the audit Apply the requirements regarding auditor s communication with those charged with governance Determine the appropriate audit opinion and prepare the auditor s report Apply auditing standards to engagements other than audits of general purpose financial statements Apply the relevant standards to reviews of historical financial information Determine the appropriate standards to apply to other assurance engagements and related services engagements Plan, perform and complete significant elements of other assurance engagements and related services engagements Explain current issues in assurance and the impact these will have on clients and professional practice Page 4 Module outline

7 Chartered Accountants Program Audit & Assurance How is the AAA module taught? The AAA module offers flexible learning options with the delivery of materials online through mylearning (accessible after you enrol in the module by logging into myaccount and selecting mylearning). Each technical module has a range of resources and supports available, including: Online learning material Introduction. Core content. Worked examples. Activities. Quick reference guides. Readings. Unit quiz. Videos. Additional support Optional virtual classrooms the focus will be on the more challenging topics and activities within the module. Recordings of the virtual classrooms will also be available these can be accessed by all candidates, regardless of whether or not they attended these sessions. Candidate Study Guide after enrolment you will receive a Candidate Study Guide for all technical modules, containing the module core content and the list of required readings for each unit. Discussion forums Technical query forums where you can post specific questions to a technical specialist. Peer-to-peer forums where you can form study groups or discuss issues with other candidates. Exam preparation material to help you prepare for the final exam there will be past exam papers available. FAQs You will find answers to many frequently asked questions on mylearning. Required reading For Australia: Chartered Accountants Australia and New Zealand 2017, Auditing, Assurance & Ethics Handbook 2017 (Australia), John Wiley & Sons Australia Ltd, Milton, Qld. For New Zealand: Chartered Accountants Australia and New Zealand 2017, Auditing, Assurance and Ethics Handbook 2017 (Australia), John Wiley & Sons Australia Ltd, Milton, Qld. Assessment The assessment components are outlined below: 3 online assessments 20%. Final examination 80% (3 hours plus 15 minutes reading time, open book) To pass the module, you must pass the final examination (i.e. achieve 40 or more of the available 80 marks), and pass the module overall (i.e. achieve 50 or more of the available 100 marks). Module outline Page 5

8 Audit & Assurance Chartered Accountants Program Task words Understanding the meaning of task words helps you to know exactly what is being asked of you. Task words direct you and tell you how to go about answering a question. Following is a list of task words as they apply to the Chartered Accountants Program. Word account for advise analyse apply appraise assess calculate classify compare consider construct contrast critique define demonstrate describe design determine develop discuss distinguish evaluate examine explain identify Meaning demonstrate the accounting treament by using a set of accounts communicate appropriately the recommended course of action based on an analysis of specific circumstances examine closely; examine something in terms of its parts and show how they are related to each other use established methods/tools/procedures to resolve relatively straightforward scenario or problem assess the value or quality of something; or to assess its performance decide the value of something in a particular context ascertain or determine by mathematical processes, usually by the ordinary rules of arithmetic place objects/concepts into appropriate categories using an established tool/ methodology or framework critically consider two or more things, emphasising their similarities think carefully about something before making a decision, to look closely or attentively at something build or make something. to form an idea, a process or procedure by bringing together various theoretical and conceptual elements critically consider two or more things, emphasising their differences give a judgement about the value of something and support that judgement with evidence make clear what is meant by something; or use a definition or definitions to explore a concept a practical explanation of how something works or is performed present a detailed account of something focusing on depth of knowledge develop a procedure/process or course of action based on selection of the optimum combination from a range of available options establish the most appropriate or most correct answer or course of action from a range of available options to bring something into existence that has not previously existed, or to reshape something from its initial position into something more refined present a detailed account offering an interpretation of something or focusing on breadth of knowledge separate one from the other by distinct difference determine the value of something, normally with reference to specific criteria inspect something in detail and investigate the implications make clear the details of something; or show the reason for, or underlying cause of, or the means by which something occurs point to the essential part or parts. you might also have to explain clearly what is involved Page 6 Module outline

9 Chartered Accountants Program Audit & Assurance Word illustrate integrate interpret justify list outline plan prepare prioritise produce recommend review select solve state summarise Meaning offer an example, or examples, to show how something happens, that something happens, or make concrete a concept by giving examples combine one aspect of their learning with another to form a holistic understanding of a process, procedure or course of action make clear the meaning of something and its implications provide reasons why certain decisions should be made, conclusions reached and/ or courses of action taken note or itemise in point form go through and identify briefly the main features of something prepare a detailed proposal for doing or achieving something follow established procedures/methods to create a report of financial information or commentary (e.g. using a pro forma spreadsheet) designate or treat something as being very or more important. determine the order for dealing with (a series of items or tasks) according to their relative importance without using a pro forma spreadsheet, or without any guidance, create a report of financial information with commentary advocate a particular outcome or course of action based on an analysis of a range of available options report the main facts about something carefully choose as being the best or most suitable to resolve; to work out to a result or conclusion accurately articulate established principles, concepts, terms etc describe something concisely Module outline Page 7

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Examiner s report F8 Audit and Assurance March 2016

Examiner s report F8 Audit and Assurance March 2016 General Comments There were two sections to the examination paper and all the questions were compulsory. Section A consisted of 12 multiple-choice questions