ASJ CAF 09 Presentation Autumn 2020 Abdus Salam Jan – FCA, FPFA Faculty Member PAC – Khyber Campus - Peshawar
ASJ Certificate in Accounting & Finance CAF - 09 Audit & Assurance
ICAP’s Grids & Weightings for CAF -09 ASJ SN GRIDS WEIGHTINGS 1 General concepts and principles of audit 15-20 2 Performance of audit and reporting 25-35 3 Specific areas 20-25 4 Computer programming and IT controls 10-15 5 Professional Ethics 10-15 100
Syllabus Topic List 30 to get CAF 09 ASJ A - General Concepts & Principles of Audit C - Specific Areas A1 Intro - IFAC C1 External Confirmations Intro – IAASB A2 C2 Subsequent Events A3 Objective & General Principles C3 Written Representation A4 Responsibility of Financial Statements C4 Related Parties Auditor’s responsibility to consider Fraud A5 C5 Using the work of Internal Auditors & Experts A6 Appointment & Removal of Auditors C6 Review Engagements A7 Terms of Audit Engagements B - Performance of Audit & Reporting D - Computer Programming & IT Controls B1 Planning an Audit D1 Benefits and limitations of Flow charts B2 Assessment of Audit Risk D2 Types of Flow charts B3 Audit Materiality D3 General & Application in IT System B4 Audit Evidence D4 Preventative, Detective & Corrective Controls B5 Audit Sampling D5 Logical Access Controls B6 Substantive Procedures B7 Test of Controls E - Professional Ethics B8 Analytical Procedures E1 Fundamental Principles B9 Documentation E2 Client & Engagement Acceptance B10 Auditors Report & Going Concern
Syllabus Topic List 30 to get CAF 09 ASJ A - General Concepts & Principles of Audit C - Specific Areas A1 Intro - IFAC C1 External Confirmations Intro – IAASB A2 C2 Subsequent Events A3 Objective & General Principles C3 Written Representation A4 Responsibility of Financial Statements C4 Related Parties Auditor’s responsibility to consider Fraud A5 C5 Using the work of Internal Auditors & Experts A6 Appointment & Removal of Auditors C6 Review Engagements A7 Terms of Audit Engagements B - Performance of Audit & Reporting D - Computer Programming & IT Controls B1 Planning an Audit D1 Benefits and limitations of Flow charts B2 Assessment of Audit Risk D2 Types of Flow charts B3 Audit Materiality D3 General & Application in IT System B4 Audit Evidence D4 Preventative, Detective & Corrective Controls B5 Audit Sampling D5 Logical Access Controls B6 Substantive Procedures B7 Test of Controls E - Professional Ethics B8 Analytical Procedures E1 Fundamental Principles B9 Documentation E2 Client & Engagement Acceptance B10 Auditors Report & Going Concern
ASJ Topic List 1. Introduction to audit & assurance - 1 - 2. Ethics and acceptance - 2 & 13 - 3. Risk - 3 - 4. Planning - 3 - 5. Evidence - 4 - 6. Internal Control - 5 & 6 - - 5 - 7. IT Controls 8. Substantive Procedures - 7 8 9 &10 - 9. Review & Reporting - 14 - 10. Specific Areas - 11 12 14 & 15 -
Approach for Coverage ASJ Slides Coverage Slide presentation and teacher’s fuller explanation of the topic by the teacher Text Book Coverage Book Coverage of all the topic in the class Practice by the Teacher Practicing the Theory Based Questions – TBQs including the methodology Practicing the Scenario Based Questions – SBQs including the methodology Practice by the Student Covering all the topics on regular basis Written practice of Theory Based Questions - TBQs Written practicing of Scenario Based Questions – SBQs Revision by the teacher Discussion of yesterday’s topics in the class before starting new topics Review of the section before starting the new one Revision of all topics prior to going for prep for mid mock and final mock Testing at college Weekly test covering both TBQs and SBQs related to topic well prepared by the students Mid Term Mock Examinations Final Mock Examinations Resources Slides downloadable from website [soft form] ICAP Study Text & ICAP Question Bank 2018 [both soft & hard form] Student Pack – Vol 5 - Compiled by me -Available at College [hard form]
ASJ Section 1 Introduction to Audit & Assurance
What is the difference between ASJ Financial Accounting & Financial Reporting? Financial Accounting Financial accounting is preparing financial data of a company's financial performance, financial position and cash flows for an accounting period. Financial Reporting Financial reporting is presenting financial data to the users, of a company's financial performance, financial position and cash flows for an accounting period.
ASJ Users of financial statements I Primary Users L S INVESTORS LENDERS SUPPLIERS C M E CUSTOMERS MANAGEMENT EMPLOYEES P G Secondary Users PUBLIC GOVT.
Informational Needs of Users ASJ Investors Suppliers Lenders • are interested in their • need to know if they will • need to know if they will potential profits and the be paid. be paid. security of investment. Employees Customers Government • need to know if an • need to know that a • The tax authorities also employer can offer company can continue use financial statements secure employment pay to supply them. to assess tax. rises. Public • may wish to assess the effect of the company on the economy.
ASJ Management’s Informational Needs Management can also use financial statements, however, they would predominantly use monthly management accounts as their main source of financial information and not the financial accounts. As a preparer of financial statements they have to cater the needs of other external users.
ASJ Separation of Ownership from Management Ownership Management
ASJ Separation of Ownership from Management Ownership Management Audit & Assurance Services by independent auditor become vital when MANAGEMENT of business is separated from OWNERSHIP to ensure more transparency in financial reporting .
ASJ Separation of Ownership from Management Auditor Ownership Management Audit & Assurance Engagement by independent auditor become vital when MANAGEMENT of business is separated from OWNERSHIP to ensure more transparency in financial reporting .
ASJ What is an Assurance? “ Assurance engagement ” means an engagement in which a practitioner expresses a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the evaluation or measurement of a subject matter against criteria. Audit & Review of Financial Statements are two types of Assurance Engagements included in our Syllabus.
ASJ What Audit & Assurance do? Audit & Assurance enhances the CONFIDENCE of users of financial statements and reduces the risk.
Types of Assurance ASJ There are two types of assurance engagement a practitioner is permitted to perform: A reasonable assurance engagement (positive but not absolute) & = Audit of Financial Statements A limited assurance engagement. (moderate & negative). = Review of Financial Statements Reasonable Limited
ASJ Element of Assurance Engagement Practitioner Subject Matter Responsible Party Criteria Intended User Evidence Conclusion
Elements of Assurance Engagement ASJ An assurance engagement performed by a practitioner will consist of the following five elements: • A three party relationship: • Practitioner – the individual providing professional services that will review the subject matter and provide the assurance. E.g. the audit firm in a statutory audit • Responsible party – the person(s) responsible for the subject matter. E.g. the Directors are responsible for preparing the financial statements to be audited • Intended users – the person(s) or class of persons for whom the practitioner prepares the assurance report. E.g. the shareholders in a statutory audit • Subject matter : This is the data such as the financial statements that have been prepared by the responsible party for the practitioner to evaluate. Another example might be a cash flow forecast to be reviewed by the practitioner. • Suitable criteria : This can be thought of as ‗the rules‘ against which the subject matter is evaluated in order to reach an opinion. In a statutory audit this would be the applicable reporting framework (e.g. IFRS and company law). • Evidence : Information used by the practitioner in arriving at the conclusion on which their opinion is based. This must be sufficient (enough) and appropriate (relevant). • Assurance Report : The report (normally written) containing the practitioner‘s opinion. This is issued to the intended user following the collection of evidence.
ASJ Objective of An Audit Engagement The objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared , in all material respects, in accordance with an applicable financial reporting framework. An audit of financial statements is a type of an assurance engagement.
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