module specification

Through the study of this module, you will learn and apply the main concepts and techniques of assurance services, which both aim at critically evaluating assertions made by reporting firms to their stakeholders. The module will also expose you to a sound understanding of the audit process and the regulatory and ethical landscape within which external audits take place. In addition, the role of the independent external auditor in assessing the internal controls of business entities will be explored, emphasising the importance of that role in the robustness of the audit process. Important areas will include the critical evaluation of the procedures for audit planning, risk assessment, gathering and evaluating audit evidence, and the issuance of the appropriate audit report.

The Module aims to:

1. Provide an understanding of the concept of audit and assurance engagements incorporating the functions of audit, within the context to corporate governance, codes of ethics and professional conduct knowledge, including internal and external audit review and reporting functions.

2. Critically appraise and evaluate the audit process which demonstrate how the auditors understand and address the audit engagements, consisting of the entity and its environment, appropriate techniques and judgments in relation to the performance and reporting of financial statement (including the risk of material misstatement – arising from fraud or other externalities or internalities) while performing audit and assurance services. 

3. Develop advanced skills in forming judgements and opinions whilst exercising an appropriate degree of professional scepticism in audit and assurance engagements. This includes the description and evaluation of the internal controls, processes, techniques, audit tests, further incorporating IT systems in identification and communication process to control risk and the potential consequences of making effective recommendations. The description of the scope, role and the function of internal audit is also included. 

4. Understand the application of updated versions of international standards on auditing, Corporate Governance Codes, and other guides relevant to the audit and assurance profession; clarify the differences between an external and an internal audit.

5. Demonstrate employability and technological skills, identifying the techniques employed by auditors to collect sufficient evidence that can inform auditors’ opinion about entities’ reported assertions, and being able to decide on the type of the audit report that is appropriate to the auditor’s opinion.

1. The concept of audit and other assurance engagements, nature and function of the external audit process. (LO1, LO2)

2. Legal and regulatory frameworks of audit and assurance services, fraud, international audit standards and code of ethics. (LO1, LO2, LO4)

3. Corporate governance and its relationship to external auditors, OECD principles of corporate governance UK Corporate Governance Code and the role of corporate governance in governing an entity’s audit, as well as other committees. (LO1, LO4)

4. Internal control system, its objectives and components. Audit Risk Model, planning an audit strategy to deal with audit risks, and assessing control risks. Limitations of and deficiencies in internal control systems. Types of controls in an IT environment (LO3, LO4, LO5).

5. Fraud risk, types of fraud, and conditions for fraud. Assessing the risk of fraud by the external auditor, and identifying the risk of material misstatement due to fraud. Corporate governance oversight to reduce fraud risk- COSO Fraud Risk Management Guide. Responding to the risk of fraud. Documentation of the fraud assessment, as well as the whole audit process. (LO1, LO3, LO4)  

6. Audit report, its elements and conditions. Types of audit reports. The effect of materiality on the audit opinion, and thus the type of the audit report. Conditions requiring a modification of an audit opinion. (LO1, LO5) 

7. Audit Sampling for Tests of Controls and Substantive Tests of Transactions. The concept of representative sample. Sampling risks and techniques to minimize it. Statistical versus Non-statistical sampling, similarities and differences. Probabilistic versus Non-probabilistic sample selection methods. Sampling for exception rates. (LO2, LO3, LO5)

8. Other Assurance Engagements and quality standards. Assurance engagements, their elements and relevant framework. Categories of assurance engagements. Types of assurance engagements, i.e. engagements involving financial information and other than audits or reviews of historical financial information). Quality management and the assurance practitioner. (LO1, LO2, LO4)

The module’s teaching activities comprise weekly lectures and seminars. The 2-hour lecture provides the students with knowledge of the fundamental concepts regarding the assurance profession, while focusing on the auditing process that represents the core of the module. Through the combination of theoretical information and reflection on real case studies, lectures well-equip students with knowledge and skills that are required for each accounting and finance graduate. While seeking to maintain an effective teaching and learning experience, an integral element of lectures is students’ engagement, which is achieved through various ways, like open discussions, commentaries on videos for real cases, Q&A sessions, etc. Moreover, students’ engagement is extensively achieved in the 1-hour seminar, which focuses on students practicing the principles and notions covered in the lectures through exercises, case studies, questions extracted from professional bodies’ certification past exams, etc. This approach has an important consequent benefit, which is enhancing students’    employability skills, which are further developed through dedicating a professional enhancement week. During this week, an accounting professional body, like CIMA, is invited by the course leader to provide the students with a hands-on the practical life that includes a simulation activity.  

The module’s Weblearn page also plays a critical role in supporting the teaching and learning process. The page includes all materials covered in both lectures and seminars, lecture recordings, core and additional reading lists, full information about the module’s assessment components, and important announcements. Accordingly, this represents a structured guide for the independent study part required from the students throughout the semester, including their preparation for the assessments. In this context, the Weblearn page includes the material for the revision lecture that summarises the main topics covered throughout the semester, as well as a mock exam training that precedes the 3-hour exam held at the end of the semester.

On completing of the module students will be able to:

LO1: Understand the concept of audit and assurance, incorporating the functions of audit in context to corporate governance which includes the ethics and professional conduct knowledge. 

LO2: Critically appraise and evaluate the audit processes which demonstrate the audit engagements consisting the entity and its environment appropriate techniques and judgments while performing audit and assurance services.  

LO3: Implement advanced skills in forming judgements and opinions using the knowledge of the internal controls, processes, techniques, audit tests; use IT systems identification and communication process to control risk incorporating potential consequences to make effective recommendations. 

LO4: Understand the application of the updated versions of international standards on auditing and other relevant codes and guides; have the ability to distinguish between external and internal audit. 

LO5: Evaluate the internal controls using the appropriate audit software, test data and the data analytics tool; further identifying, describing the work and the evidence obtained by the auditors; demonstrate employability skills, further explaining the following concepts:
a. Auditors report reflection
b. Final review and report
c. Assurance engagements and practices

Core readings:

Arens, A. A., Elder, R. J., Beasley, M. S., & Hogan, C. E. (2023). Auditing And Assurance Services An Integrated Approach (18th Edition, Global Edition ed.). Harlow, Essex, United Kingdom: Pearson Education Limited.
https://rl.talis.com/3/londonmet/items/E235EB44-95A9-5202-F7D3-4D5D67F39E0B.html

Eilifsen, A., Messier Jr, W., Glover, S., & Prawitt, D. (2013). Auditing and Assurance Services (Third International Edition ed.). Berkshire: McGraw-Hill UK Higher Ed.
https://ebookcentral.proquest.com/lib/londonmet/detail.action?docID=6212409

Additional readings:

Millichamp, A. R., & Taylor, J. R. (2022). Auditing (Twelfth edition ed.). Hampshire, United Kingdom: Cengage Learning, EMEA.
https://search.ebscohost.com/login.aspx?direct=true&AuthType=ip,sso&db=nlebk&AN=3134191&site=ehost-live

Gray, I., Manson, S., & Crawford, L. (2019 ). The audit process: principles, practice and cases (Seventh edition ed.). Hampshire, United Kingdom: Cengage.
https://rl.talis.com/3/londonmet/items/2B60628F-D222-8D5A-F9B3-4D4CED282F4D.html

Porter, B., Simon, J., & Hatherly, D. J. (2014 ). Principles of External Auditing (Fourth Edition ed.). Chichester, West Sussex, UK: Wiley.
https://www.perlego.com/book/2583038/principles-of-external-auditingpdf?partner_id=619220

Websites:  

International Federation of Accountants                                                    https://www.ifac.org/
Financial Reporting Council                                                                            www.frc.org.uk
ICAEW                                                                                                                     www.icaew.com
ACCA                                                                                                                      www.accaglobal.com
Organisation for Economic Co-operation and Development                     https://www.oecd.org/
Committee of Sponsoring Organizations of the Treadway Commission   https://www.coso.org/                                                      

For further reading please access London Metropolitan University Library online on https://student.londonmet.ac.uk/library/.