Introductory description

The aim of the module is to enable students to understand the social importance, nature and objectives of the audit function.

Module aims

Outline syllabus

This is an indicative module outline only to give an indication of the sort of topics that may be covered. Actual sessions held may differ.

The module will include some of the following topics:

• The role of the external auditor: An introduction to, and evaluation of, the ethical and regulatory framework in which audit operates.
• The process of an external audit: initial client and engagement acceptance, the method of planning an audit and performing key audit techniques.
• Fraud and money laundering issues.
• The completion stage of the audit: evaluation of going concern, the auditor’s report and types of audit reports.
• Professional scepticism and its links to the use of professional judgement.
• Current issues in audit risk and audit quality.
• Other services offered by professional firms and potential links with ethical principles.

Learning outcomes

By the end of the module, students should be able to:

• Understand the need for external audit.
• Understand the main processes of internal and external audit, and assess whether an engagement has been appropriately accepted, planned and performed.
• Demonstrate, and evaluate the different technical approaches to auditing.
• Identify and explain the key drivers of audit quality and discuss the problems in maintaining audit quality.
• Comment on areas of difficulty in auditing and consider how the profession can or should react to developments in business practice and economic situations.
• Discuss the value of audit to society and consider the relevance and understandability of auditor's reports.
• Critical evaluation of the current auditing framework.

Indicative reading list

The delivery of the module will be based on a mix of textbooks, academic articles and also the use of case study examples, allowing students to apply their knowledge to real life audit scenarios.
Textbooks
I. Gray and S. Manson, (2015), The audit process: principles, practice and cases, Thomson Learning.
S. Collings (2011), Interpretation and application of International Standards on Auditing, Wiley.
Academic articles
Budescu, D.V., Peecher, M.E. and Solomon, I., 2012. The joint influence of the extent and nature of audit evidence, materiality thresholds, and misstatement type on achieved audit risk. Auditing: A Journal of Practice & Theory, 31(2), pp.19-41.
Francis, J.R., 2011. A framework for understanding and researching audit quality. Auditing: A Journal of Practice & Theory, 30(2), pp.125-152.
Houston, R.W., Peters, M.F. and Pratt, J.H., 1999. The audit risk model, business risk and audit-planning decisions. The Accounting Review, 74(3), pp.281-298.
Knechel, W.R., Krishnan, G.V., Pevzner, M., Shefchik, L.B. and Velury, U.K., 2012. Audit quality: Insights from the academic literature. Auditing: A Journal of Practice & Theory, 32(sp1), pp.385-421.
Shibano, T., 1990. Assessing audit risk from errors and irregularities. Journal of Accounting Research, pp.110-140.

Subject specific skills

• Appreciate the need for ethical standards for auditors and apply the principles and requirements to real life audit scenarios.
• Recognise and respond to potential money laundering situations, applying the relevant regulations in the context of external auditing.
• Recognise the circumstances when it is appropriate to apply professional scepticism in an audit context.
• Identification of ethical issues relating to the practicing of auditing.

Transferable skills

Summarising research articles and professional briefings.
Oral and written communication of complex technical issues in a logical and conceptually sound manner.
Searching for, summarising and analysing technical and conceptual information.
Identifying ethical issues in relation to the practicing of an influential discipline.