Auditing is of critical importance for the smooth functioning of financial markets – and thereby it plays a significant role in the allocation of resources within society. However, in recent years, as debacles such as Enron, WorldCom and Tyco in the United States of America, Barings Bank in the United Kingdom,Parmalat in Italy, HIH in Australia and Satyam in India have reached the media headlines, auditors and the audit function have faced severe criticism. This module will explain the critical role and importance of the external audit function to society by exploring broad questions such as: What is audit? What is the value of external financial statement audit? What are the key features of the regulatory framework which governs external financial statement audit? What constitutes the crucial principles and elements of financial statement audit?
This module looks at the International Auditing Standards, which are applicable in most countries.
This module is accredited by major professional accounting and finance bodies, such as ICAEW (Institute of Chartered Accountants in England and Wales) and CIPFA (Chartered Institute of Public Finance and Authority).
This module equips students with practical auditing skills and the course feeds into the accounting qualification.
Full module specification
BEA2001 Financial Accounting
|Duration of module:||
Duration (weeks) - term 2: |
The module aims to give you an understanding of the basic concepts and techniques relating to the provision of audits under the Companies Act and provide you with an understanding of the legal and ethical framework surrounding auditing.
The overall aim of the auditing module is to enable students to understand:
- the social importance, nature and objectives of the audit function,
- the audit process, and
- the principles of audit practice.
ILO: Module-specific skills
- 1. explain the role of the audit function in society
- 2. discuss the need for, and value of, external financial statement audits
- 3. describe the regulatory framework of the financial statement audits of companies comprising statute law, case law, and quasi-governmental and professional regulations
- 4. demonstrate an understanding of the basic concepts which underpin auditing including competence, independence, audit evidence, materiality, audit risk and audit quality
- 5. outline the audit process and the related audit objectives and procedures
- 6. explain the factors that affect auditors desired level of audit risk and materiality levels, and how auditors assessment of audit risk and materiality levels impact the nature, timing and extent of audit tests
- 7. discuss the reporting responsibilities of financial statement auditors to shareholders and to those charged with governance of the reporting entity
- 8. explain the development of auditors legal liability and the steps auditors may take in order to avoid being exposed to liability
- 9. demonstrate an awareness and understanding of current debates in the auditing arena
ILO: Discipline-specific skills
- 10. identify and apply relevant auditing concepts and Auditing Standards (or rules) in given situations encountered in the statutory audit of companies financial statements
- 11. demonstrate an ability to apply research and analytical skills to unresolved issues in auditing
- 12. evaluate the strengths and weaknesses of different opinions on current auditing issues
ILO: Personal and key skills
- 13. demonstrate written and oral communication skills
- 14. demonstrate problem solving skills
- 15. demonstrate group working (i.e. teamwork) skills
Learning activities and teaching methods (given in hours of study time)
|Scheduled Learning and Teaching Activities||Guided independent study||Placement / study abroad|
Details of learning activities and teaching methods
|Category||Hours of study time||Description|
|Form of assessment||Size of the assessment (eg length / duration)||ILOs assessed||Feedback method|
|Self-review questions, quizzes and case study exercises||3 hrs preparation by the students/1hr in class discussion||1-9, 10-12, 13-15||Verbal feedback and suggested solutions on ELE|
Summative assessment (% of credit)
|Coursework||Written exams||Practical exams|
Details of summative assessment
|Form of assessment||% of credit||Size of the assessment (eg length / duration)||ILOs assessed||Feedback method|
|Group research report (2 students per group)||20||2000 words||9, 11-12, 13-15||Written feedback|
|Examination||80||2 hours||1-9, 10, 12, 13-14||Final mark and generic feedback via ELE|
Details of re-assessment (where required by referral or deferral)
|Original form of assessment||Form of re-assessment||ILOs re-assessed||Timescale for re-assessment|
|Group Research Report and exam||Exam (100%) 2 hours||1-9, 10, 13-14||August Examination Period|
For a referred re-assessment, the re-assessment examination will contribute 100% towards the module result examination.
For a deferred re-assessment, the re-assessment examination will contribute 80% towards the module result (with the group research report contributing 20%).
- What is auditing? The development of financial statement auditing and audit objectives
- Conceptual framework of auditing with particular focus on auditors’ independence
- Auditors’ legal and professional duties (including auditors’ responsibilities with respect to fraud
- and other illegal acts)
- Overview of audit process, audit evidence, staffing & documentation
- Commencing an audit: Engagement procedures, understanding the client and identifying risks
- Planning the audit; audit materiality and audit risk
- Internal control and the auditor
- Testing financial statement assertions
- Completion and review
- Auditors’ reports to users of financial statements and those charged with governance
- Development of auditors’ legal liability – and ways of avoiding liability
Indicative learning resources - Basic reading
The required text for the module is:
Principles of External Auditing (4th edition) by Brenda Porter, Jon Simon and David Hatherly. Published by John Wiley & Sons 2014. ISBN 978-0-470-97445-2
Module has an active ELE page?
Indicative learning resources - Web based and electronic resources
www.ifac.org – Source of all International Standards on Auditing and Code of Ethics for Professional Accountants, and International Education Standards.
www.frc.org.uk – Source of all International Standards on Auditing (UK and Ireland) and Ethical Standards.
Last revision date