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AT Learning Objectives
Chapter 1: International Audit Overview
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Discuss the responsibilities of an accounting in public practice in dealing with ethical conflicts
that apply to his clients and colleagues.
o Provides professional services.
State the topics of guidance that are particularly relevant to professional accountants working in
industry, commerce, the public sector or education.
Summarise the possible disciplinary actions for violation of ethics codes.
o IESBA has no authority to require disciplinary action
o Penalties reprimand to expulsion or fine/prison.
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The application of relevant training, knowledge and experience within the context
provided by auditing, accounting and ethical standards, in making informed decisions
about the courses of action that are appropriate in the circumstances of the audit
engagement.
Describe professional skepticism
o Having a question mind an performing a critical assessment of audit evidence through
the audit process.
Give the inherent limitations of an audit
o Limitation of scope a limitation of the scope of the auditors work may sometimes be
imposed by the entity (term engagement specify that the auditor will not carry out the
procedure as he believes); by circumstances (timing of the auditors appointment makes
him unable to observe the counting of physical inventories); in the opinion of the
auditor, the entitys accounting records are inadequate or when the auditor is unable to
carry out an audit procedure believed desirable.
o Ability to detect material misstatement; Risk by poor control environment.
Discuss the requirements of International Standard on Quality Control #1
o Applies to all firms of professional accountants to audits and reviews, other assurance
and related services.
o Requirements designed; related guidance.
o ISA 220 deals with the quality control procedures for audits FS>
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Chapter 6 Main Audit Concepts and planning the Audit (ISA 300; 315; 320)
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Characterise the differences between general and application IT controls and how to reduce IT
risk.
o Application IT controls Specific controls over the relevant accounting applications
maintained by the computer. The purpose of application controls is to establish specific
control procedures over the accounting applications in order to provide reasonable
assurance that all transactions are authorized and recorded, and are processed
completely accurate and on a timely basis
o General IT controls Policies and procedures that relate to many applications and
support the effective functioning of application controls by helping to ensure the
continued proper operation of IS. General IT controls commonly include controls over
data centre and network operations; system software acquisition, change and
maintenance; access security; and application system acquisition, development and
maintenance.
Distinguish between the different components of internal control
o Monitoring; information and communication; control activities; risk assessment; control
environment
Describe the elements of the control environment
o Governance
o Management functions
o Attitudes; awareness and actions of those charged with governance
o Management concerning the entitys IC and its importance in the entity
Component of IC
Evaluate how managements objectives are related to risk assessment
o To identify the and assess the risk of material misstatements, due to fraud or error at the
FS and assertions level. Basis of how management determines the risks to be managed
Explain the effects of information and communication on the internal control system
o Information must be identified by management and communicated to people who need
it in a form and time frame that allows them to do their jobs.
Distinguish between the major types of control activities
o Policies and procedures that help ensure that management directives are carried out.
Help ensure risk responses are properly executed. Occur throughout the organization, at
all levels and functions.
A policy establishing ; what should be done
Procedures to effect the policy
Give examples of major types of control procedures (activities)
o Performance reviews; Information processing; physical control; SoD; Authorisation.
Identify monitoring controls
o Assessing design of controls on a timely basis and making corrective actions.
Sources: exception; reporting on control activities; reports by government
regulator; feedback employees; complaints customer & internal audit reports.
Distinguish between hard and soft controls and understand their control objectives
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Hard controls: set of rules; constraints and activities. Tangible character (formal and
visible)
o Intangible factors influence behavior of managers and employees. (in culture or
climate)
Know what is meant by design of controls
Follow what an auditor does in preliminary planning assessments of internal control risk
o Inquiring; Observing and re-performing application; inspecting; tracing transactions.
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