Overview
External auditing is an independent examination and
evaluation of an organization's financial statements and related financial
information by a qualified auditor who is independent of the organization. The
primary purpose of an external audit is to enable the auditor to express an
independent opinion on whether the financial statements are prepared, in all
material respects, in accordance with the applicable financial reporting
framework.
External auditing plays a critical role in promoting financial
reporting credibility, transparency, accountability, investor confidence, and
good corporate governance. It provides assurance to users of financial
statements—including shareholders, lenders, investors, regulators, creditors,
and other stakeholders—that the financial statements have been subjected to an
independent audit process.
External auditing is therefore much more than checking whether accounting
figures add up. It involves understanding the organization, identifying risks
of material misstatement, evaluating relevant internal controls, obtaining
sufficient and appropriate audit evidence, testing financial information,
assessing accounting estimates, and ultimately forming an independent audit
opinion.
Target Participants
- External auditors
- Internal auditors
- Accountants
- Finance managers
- Audit associates
- Tax professionals
- Compliance officers
- Risk officers
- Finance and accounting students
- Managers responsible for financial reporting
FUNDAMENTALS
AND PLANNING OF EXTERNAL AUDITS
Module
1: Introduction to External Auditing
- Meaning and purpose of external auditing
- Objectives of an external audit
- Importance of external auditing
- External audit versus internal audit
- External audit versus tax audit
- Types of external audits
- Role and responsibilities of the external auditor
- Users of audited financial statements
- Limitations of external auditing
Module
2: Professional Ethics and Auditor Independence
- Fundamental ethical principles
- Integrity and objectivity
- Professional competence and due care
- Confidentiality
- Professional skepticism
- Auditor independence
- Threats to independence
- Safeguards against independence threats
- Conflicts of interest
- Professional judgment
Module
3: Audit Standards and Regulatory Framework
- International Standards on Auditing (ISAs)
- Applicable accounting frameworks
- Generally accepted auditing principles
- Auditor responsibilities under applicable laws and
regulations
- Corporate governance requirements
- Role of professional accountancy bodies
- Regulatory oversight of auditors
Module
4: Audit Planning and Risk Assessment
- Understanding the client's business
- Understanding the industry and operating environment
- Audit engagement acceptance
- Audit strategy
- Audit plan
- Materiality
- Audit risk
- Inherent risk
- Control risk
- Detection risk
- Risk assessment procedures
- Identifying significant risks
INTERNAL
CONTROLS, EVIDENCE AND AUDIT TESTING
Module
5: Understanding and Evaluating Internal Controls
- Meaning and objectives of internal controls
- Components of an internal control system
- Control environment
- Risk assessment
- Control activities
- Information and communication
- Monitoring controls
- Preventive and detective controls
- Segregation of duties
- Authorization controls
- IT controls
- Control walkthroughs
- Testing operating effectiveness
Module
6: Financial Statement Assertions
- Existence
- Completeness
- Accuracy
- Valuation
- Rights and obligations
- Cut-off
- Classification
- Presentation and disclosure
- Linking assertions to audit procedures
Module
7: Audit Evidence
- Meaning and importance of audit evidence
- Sufficient and appropriate evidence
- Reliability of audit evidence
- Documentary evidence
- Physical evidence
- Electronic evidence
- External confirmations
- Inspection
- Observation
- Inquiry
- Recalculation
- Reperformance
- Analytical procedures
Module
8: Audit Sampling and Testing
- Purpose of audit sampling
- Audit population
- Sampling risk
- Statistical sampling
- Non-statistical sampling
- Random sampling
- Systematic sampling
- Judgmental sampling
- Sample size considerations
- Testing selected transactions
- Evaluating sampling results
SUBSTANTIVE
AUDITING, COMPLETION AND REPORTING
Module
9: Substantive Audit Procedures
- Substantive analytical procedures
- Tests of details
- Revenue audit
- Purchases and expenses
- Cash and bank balances
- Accounts receivable
- Inventory
- Property, plant and equipment
- Accounts payable
- Borrowings
- Equity
- Payroll
- Tax liabilities
Module
10: Audit of Estimates and Complex Areas
- Accounting estimates
- Provisions
- Impairment
- Fair value measurements
- Depreciation
- Expected credit losses
- Contingent liabilities
- Related-party transactions
- Going concern
- Subsequent events
Module
11: Audit Completion Procedures
- Review of audit evidence
- Evaluation of audit differences
- Misstatements
- Material misstatements
- Going-concern assessment
- Subsequent events
- Related-party review
- Management representations
- Final analytical procedures
- Review of audit working papers
- Audit quality review
Module
12: Auditor's Report and Audit Opinions
- Purpose of the independent auditor's report
- Basic elements of an audit report
- Unmodified opinion
- Qualified opinion
- Adverse opinion
- Disclaimer of opinion
- Basis for modified opinions
- Key Audit Matters
- Emphasis of Matter
- Other Matter paragraphs
- Communicating significant audit findings
- Management letter