• The traditional conformance role of auditing
• The development of an enhancing role
  

The development of the assurance engagement framework

• The nature and scope of assurance engagements
• Audit engagements
• Review engagements
• Engagements to perform agreed-upon procedures and compilations
  

Auditing — a shifting paradigm

• Detection of fraud and errors
• Audit approach – satisfying the information needs of users
• Audit independence
• Audit liability
  

The accounting profession and its associated organisations

• Private sector organisations
• Standard setting bodies
• Public sector organisations
  

Corporate Law Economic Reform Program

• Directors’ duties and corporate governance
• Accounting standards
  

Services provided by public professional accountants
Types of audit activity and auditor

• Types of audit activity
• Types of auditor
  

Regulatory framework for ensuring quality services

• Standard setting
• Firm regulation
• Self-regulation
• Government regulation
  

Summary

Chapter 2 - Professional ethics and conduct
The role of a professional accountant

• The concept of a profession
• The duties of a professional accountant
  

Professional ethics and the accountant

• The nature of ethics
• Professional ethics for accountants
• The Joint Code of Professional Conduct
  

Professional independence

• Rules of independence
• Statutory provisions enhancing auditors’ independence
  

Audit quality

• Technical standards
• Quality assurance
  

Fraud and illegal acts

• Current responsibilities for detecting and reporting irregularities
• Meeting public expectations for detecting and reporting irregularities
• Reducing the incidence of undetected irregularities
  

The significance of ethical values for auditing

• The environment affecting professional conduct
• Professional judgement in accounting and auditing
• Priority of duty and loyalty
• Professional competence
• The audit expectation gap
• Corporate governance in reducing the expectation gap
  

Professional discipline

• Disciplinary procedures
  

Summary

Chapter 3 - Auditor's legal liability
The legal environment

• The litigation crisis
  

Liability to shareholders and auditees

• Due care
• Negligence
  
• Privity of contract
• Causal relationship
• Contributory negligence
• Damages
  

Liability to third parties

• Proximity
• Avoidance of litigation
  

Trade practices legislation
The need for legal reform

• Proportionate liability
• More organisational options for auditing firms
  
• Limiting the auditor’s liability and the statutory cap issue
  

Summary

PART 2: AUDIT PLANNING

Chapter 4 - Overview of the financial report audit
Fundamentals of financial report audits

• Demand for financial report audits
• Benefits
• Limitations
  

The Appointment of an independent auditor

• Principles of the appointment of auditors
• The registration of auditors
  
• The removal and resignation of auditors
  

Duties of an independent auditor

• The duty to use reasonable care and skill
• The duty to be independent
• Statutory duties to report to members and Australian Securities Investment Commission
• Professional duties
  

Auditing Standards

• The importance of auditing standards
  

Independent auditor relationships

• Shareholders
• Board of directors and audit committee
• Internal auditors
• Management
  

Management and the auditor – responsibilities

• The relationship between accounting and auditing
• The division of responsibility
  

The audit report and communication with management

• Unqualified audit report
• Modified audit report
• Management letter
  

Summary

Chapter 5 - Audit risk and audit evidence
Audit risk

• Audit risk components
• The relationship among risk components
• Audit risk at the financial report and account balance levels
  

Materiality

• The concept of materiality
• Materiality at the financial report level
• Materiality at the account balance level
• Allocating financial report materiality to accounts
• Preliminary judgements about materiality
• The relationship between materiality and audit evidence
  

Audit objectives

• Management’s financial report assertions
• Specific audit objectives
  

Audit evidence

• The Auditing Standard pertaining to evidence
• Types of corroborating information
  

Auditing procedures

• Types of auditing procedure
• Relationships among auditing procedures, types of evidence and assertions
• Classification of auditing procedures
• Evaluation of evidence obtained
  

Summary

Chapter 6 - Accepting the engagement and planning the audit
Accepting the audit engagement

• Client evaluation
• Ethical considerations
• Preparing an engagement letter
  

Planning the audit

• Steps in planning the audit
• Obtaining an understanding of the entity’s business and industry
• Performing analytical procedures
  

Audit strategies

• Developing the audit strategy
• The relationship between strategies and transaction classes
  

Working papers

• Types of working paper
• The purpose and function of working papers
• Working paper files
  
• Preparing working papers
• Reviewing working papers
• Ownership and custody of working papers
  

Summary

Chapter 7 - Internal control and control risk assessment
Internal control

• The importance of internal controls
• Internal control structure
• Limitations of control
• Application to smaller entities
• Control in computer information systems
  

Procedures to obtain an understanding

• Obtaining an understanding
• Documenting the understanding
  

Preliminary assessment of control risk

• The purpose of the preliminary assessment
• The process of assessing control risk
  

Tests of control

• Tests of design effectiveness
• Tests of operating effectiveness
• Designing tests
• Audit programs for tests of control
• Using internal controls
• Final assessment of control risk
• Documenting the assessed level of control risk
  

Communicating of internal control matters
Summary

PART 3: AUDIT TESTING METHODOLOGY

Chapter 8 - Audit sampling
Basic concepts of sampling

• Sampling risk and non-sampling risk
  
• Statistical and non-statistical sampling
• Other types of testing
  

Use of samples for audit tests

• Planning the sample
• Selecting and testing the sample
• Evaluating the results
  

Statistical sampling techniques

• Attribute sampling plans
• Variable sampling plans
• Probability-proportional-to-size sampling
• Choice of statistical sampling method
  

Non-statistical sampling techniques

• Why use non-statistical sampling?
• Formal and informal non-statistical sampling
  

Summary

Chapter 9 - Designing substantive procedures
Determining detection risk

• Assessing control risk for account balances
• Effects of preliminary audit strategies
• Detection risk for individual substantive procedures
  

Designing substantive procedures

• Nature
• Timing
• Extent
• Audit risk and the choice of substantive procedures
• Computer-assisted audit techniques as substantive procedures
  

Developing audit programs for substantive procedures

• Assertions, audit objectives and substantive procedures
• Illustrative audit program
• Framework for developing audit programs
• Audit programs in initial engagements
  

Special considerations in designing substantive procedures

• Profit and loss statement accounts
• Accounts involving accounting estimates
• Related parties
• Balances that have specific audit requirements
  

Summary

PART 4: AUDITING TRANSACTIONS AND BALANCES

Chapter 10 - Auditing sales and receivables
Audit objectives
Sales, cash receipts and sales adjustment transactions

• Credit sales transactions
• Cash receipts transactions
• Sales adjustment transactions
  

Developing the audit plan

• Audit strategy considerations
• The control environment
• Assessment of control risk
• Final assessment
  

Substantive procedures

• Determining detection risk
• Designing substantive procedures
  

Summary

Chapter 11 - Auditing purchases, payables and payroll
Audit objectives
Purchase, payment and payroll transactions

• Purchase transactions
• Payment transactions
• Payroll transactions
  

Developing the audit plan

• Audit strategy considerations
• Control environment
• Assessment of control risk
• Final assessment
  

Substantive procedures

• Determining detection risk
• Designing substantive procedures
  

Summary

Chapter 12 - Auditing inventories and property, plant and equipment
Inventory

• Audit objectives
• Recording inventory transactions
• Developing the audit plan
• Substantive procedures for inventories
  

Property, plant and equipment

• Audit objectives
• Developing the audit plan
• Substantive procedures for property, plant and equipment
  

Summary

Chapter 13 - Auditing cash and investments
Cash

• Audit objectives
  
• Developing the audit plan
• Substantive procedures for cash balances
• Other issues
  

Investments

• Audit objectives
• Developing the audit plan
• Substantive procedures for investments
• Substantive procedures for consolidated financial reports
  

Summary

PART 5: COMPLETING THE AUDIT, REPORTING AND OTHER SERVICES

Chapter 14 - Completing the audit
Completing the fieldwork

• Undertaking a subsequent-events review
• Considering the appropriateness of the going-concern assumption
• Reviewing for contingent liabilities
• Obtaining the management representation letter
• Performing analytical procedures
  

Evaluating the findings

• Making the final assessment of materiality and audit risk
  
• Undertaking the technical review of the financial report
• Undertaking the final review(s) of working papers
• Formulating an opinion and drafting the audit report
  

Communicating with the entity

• Communicating matters with management
• Communicating matters with the audit committee
  

Summary

Chapter 15 - Reporting on financial reports
Standards of reporting

• Financial report
• Accounting Standards and UIG Consensus Views
• Relevant statutory and other requirements
• Expression of opinion
• Unqualified audit report
  

Modified audit reports

• Qualified audit reports
• Circumstances that give rise to a qualification
• An emphasis of matter
  

Other reporting considerations for corporate entities

• Reporting on consolidated accounts
• Comparatives
• Initial engagements – opening balances
• Half-year accounts
  

Summary

Chapter 16 - E-Commerce and auditing
The information economy and business environment

• A conceptual model of information economy
  

The nature and development of e-commerce

• The evolution of electronic commerce
• The extent of e-commerce activities
• The relationship between e-commerce and information
• Business strategic issues
  

E-commerce – Audit and assurance services

• An e-commerce environment
• Audit and assurance services
  

Audit risk and control considerations

• Audit planning
• Risk assessment
• Control considerations
• Audit and assurance issues
  

Cyber crimes and forensic auditing

• Cyber crimes and electronic crimes
• Forensic auditing
  

Summary

Chapter 17 - Internal, operational and government auditing
Internal auditing

• A definition of internal auditing
• The evolution of internal auditing
• The objectives and scope of internal auditing
• Standards for the professional practice of internal auditing
• The relationship between internal and external auditors
  

Operational auditing

• A definition of operational auditing
• Phases of an operational audit
• The involvement of an independent auditor
  

Auditors in the public sector

• The requirements of public accountability
• Parliamentary committees
• Auditor-general
• Audit mandates
• Financial statement audits
  
• Performance auditing
• Phases of a performance audit
  

Summary

PART 6: FUTURE DIRECTIONS

Chapter 18 - Contemporary issues in auditing and assurance
Information technology

• Advances in financial software
• The mobile Internet
  

Current issues of the profession

• A framework for auditor independence
• Restructuring of accounting firms
  

Quality benchmarking and the auditor

• The ISO 9000 series
• Total quality management and the auditor
  

Value reporting and environmental auditing

• Developments in environmental auditing
• Standards for environmental auditing
  

Summary