Lahore University of Management Sciences

ACCT 250 Auditing

Spring Semester 2015
Instructor
Room No.
Office Hours
Email
Telephone
TA
TA Office Hours
Course URL (if any)

Abdul Rauf/ Syed Zain Ul Abideen

253 ACF Wing
Monday and Wednesday 02:30pm to 04:00pm
abdul.rauf@lums.edu.pk syed.zain@lums.edu.pk
Ext. 8143, 5326
TBA
TBA
Suraj.lums.edu.pk

COURSE BASICS
Credit Hours
Lecture(s)
Recitation/Lab (per week)
Tutorial (per week)

4
Nbr of Lec(s) Per Week
Nbr of Lec(s) Per Week
Nbr of Lec(s) Per Week

2
N/A
On need basis

Duration
Duration
Duration

One hour and fifty minutes, each.

N/A
Appropriate to cover the content.

COURSE DISTRIBUTION
Core
Elective
Open for Student Category
Close for Student Category

Core

COURSE DESCRIPTION
This course introduces students to auditing principles and practice. Students learn International Auditing Standards, professional
and ethical requirements and the Legal & Regulatory Framework to conduct audit engagements.
The courses covers the complete lifecycle of financial statement audit that covers acceptance of audit engagement,
developing
a
competitive
proposal,
complying
with
independence
and
other
ethical
requirements, risk assessment and development of audit program, finalization of audit and issuing final auditors opinion.
This course also gives an overview of governance, internal auditing and assurance engagements other than audit.

COURSE PREREQUISITE(S)

Accounting courses
Corporate Financial Reporting (CFR) I

COURSE OBJECTIVES

To develop knowledge and understanding of:

Auditing and Assurance Services

the process of carrying out audit and review of financial statements; and

applicable legal, regulatory and ethical framework.

Lahore University of Management Sciences

LEARNING OUTCOMES
On completion of this course, students should be able to:

Understand the nature, purpose and scope of auditing in public, private and not-for-profit
entities, and its regulatory and ethical framework.

Discuss the preconditions, requirements of professional ethics and other regulatory requirements
in relation to the acceptance or continuance of audit engagements.

Obtain understanding of the entity and its environment, assess risks and plan audit of financial
statements.

Describe and evaluate accounting and internal control systems and identify and communicate
control risks, potential consequences and recommendations thereon.

Explain and evaluate sources of evidence, describe the nature, timing and extent of tests on class
of transactions and account balances (including sampling and analytical procedures) and design
programs for audit and review assignments.

Evaluate findings, investigate inconsistencies and modify the work program as necessary.

Explain how the conclusions from audit work are reflected in different types of audit report.

UNDERGRADUATE PROGRAM LEARNING GOALS & OBJECTIVES

General Learning Goals & Objectives
Goal 1 Effective Written and Oral Communication
Objective: Students will demonstrate effective writing and oral communication skills
Goal 2 Ethical Understanding and Reasoning
Objective: Students will demonstrate that they are able to identify and address ethical issues in an organizational
context.
Goal 3 Analytical Thinking and Problem Solving Skills
Objective: Students will demonstrate that they are able to identify key problems and generate viable solutions.
Goal 4 Application of Information Technology
Objective: Students will demonstrate that they are able to use current technologies in business and management
context.
Goal 5 Teamwork in Diverse and Multicultural Environments
Objective: Students will demonstrate that they are able to work effectively in diverse environments.
Goal 6 Understanding Organizational Ecosystems
Objective: Students will demonstrate that they have an understanding of Economic, Political, Regulatory, Legal,
Technological, and Social environment of organizations.
Major Specific Learning Goals & Objectives
Goal 7 (a) Discipline Specific Knowledge and Understanding
Objective: Students will demonstrate knowledge of key business disciplines and how they interact including
application to real world situations (Including subject knowledge).
Goal 7 (b) Understanding the science behind the decision-making process (for MGS Majors)
Objective: Students will demonstrate ability to analyze a business problem, design and apply appropriate
decision-support tools, interpret results and make meaningful recommendations to support the decision-maker

Lahore University of Management Sciences

PROGRAM LEARNING GOALS AND
OBJECTIVES
Goal 1 Effective Written and Oral
Communication
Goal 2 Ethical Understanding and
Reasoning

COURSE LEARNING OBJECTIVES

Project, CP, Quizzes, Mid Term

Exam

Understand the nature, purpose and scope

of auditing in public, private and not-forprofit entities, and its regulatory and ethical
framework.

Goal 3 Analytical Thinking and Problem

Solving Skills

Describe and evaluate

internal control systems
communicate control
consequences
and
thereon.

Goal 4 Application of Information

Technology

Obtain understanding of the entity and its

environment, assess risks and plan audit of
financial statements.

Describe and evaluate

internal control systems
communicate control
consequences
and
thereon.

Obtain understanding of the entity and its

environment, assess risks and plan audit of
financial statements.

Understand the nature, purpose and scope

of auditing in public, private and not-forprofit entities, and its regulatory and ethical
framework.

Discuss the preconditions, requirements of

professional ethics and other regulatory
requirements in relation to the acceptance
or continuance of audit engagements.

Obtain understanding of the entity and its

environment, assess risks and plan audit of
financial statements.

Describe and evaluate

internal control systems
communicate control
consequences
and
thereon.

Explain and evaluate sources of evidence,

describe the nature, timing and extent of
tests on class of transactions and account
balances (including sampling and analytical

Goal 5 Teamwork in Diverse and

Multicultural Environments
Goal 6 Understanding Organizational
Ecosystems
Goal 7 (a) Discipline Specific Knowledge
and Understanding

COURSE ASSESSMENT ITEM

accounting and
and identify and
risks, potential
recommendations

accounting and
and identify and
risks, potential
recommendations

accounting and
and identify and
risks, potential
recommendations

Lahore University of Management Sciences

procedures) and design programs for audit
and review assignments.

Evaluate findings, investigate inconsistencies

and modify the work program as necessary.

Explain how the conclusions from audit work

are reflected in different types of audit
report.

Goal 7 (b) Understanding the science

behind the decision-making process

GRADING BREAKUP AND POLICY

Quizzes (n-1):
Attendance:
Midterm Examination:
Final Examination:

20%
10%
30%
40%

EXAMINATION DETAIL

Midterm
Exam

Yes/No:
Combine Separate:
Duration:
Preferred Date:
Exam Specifications:

Yes
Combined
2 hours
TBA
MCQs and Short cases

Final Exam

Yes/No:
Combine Separate:
Duration:
Exam Specifications:

Yes
Combined
2 hours
MCQs and long cases

COURSE OVERVIEW
WEEK

TOPICS

RECOMMENDED
READINGS

Introduction to auditing and

assurance

Chapter 1, 4
IAASB framework
ISA 200

Legal and Regulatory

Environment and
Overview of government auditing

Chapter 2
CO 1984, Specimen auditors report, ISA
250

SESSION OBJECTIVES

What is assurance?
Levels of assurance
Objective of audit
Materiality
True and fair view
Public sector auditing
Limitations of audit
IFAC, IAASB, ISAs, ISREs, ISQCs
Standard setting procedures
Statutory requirement of audit
and small co. exemption

Lahore University of Management Sciences

3

Corporate Governance and

Internal Audit

Chapter 14
CCG summary
Internal Auditing Standards (IIA)

ICAP Code Of Ethics

Acceptance or Continuance
Procedures

Chapter 3, 5
Code of ethics, ISA 210,
Listing regulations (Selected)

Planning and Risk Assessment

Chapter 6
Chapter
ISAs 240, 250, 300, 315, 320, 520, 500,
330
ISRE 2400

Importance
Basic principles
Audit committees, role,
function, advantages and
disadvantages
External vs. internal, audit
Responsibilities of external
auditor internal auditor, mgt.
BOD.
Public sector perspective
Eligibility, appointment,
removal, tenure, rights and
obligations of auditors
Cases on application of code
Procedures for accepting new
appointments
Engagement letter
Importance of planning
Understanding the entity and
its environment and analytical
procedures
Audit risk and its components
Risk assessment , significant
risk, fraud risks
Special considerations for
NGOs
Materiality assessment
Sources of evidence +
assertions
Development of Audit Strategy
and Plan

Internal Control Framework

Chapter 7
COSO Integrated Framework for
Internal Controls

Importance of IC
Internal Control Objectives
Components of IC
Inherent Limitations
Information Technology
General Control (ITGC)

Documentation and Reporting

Weaknesses

Chapter 8
Sample audit plans, specimen planning,
summary, current file
ISA 315, 230, 260, 265

Documentation
Reporting to management
Reporting to those charged
with governance
Reporting non-compliance of
laws
Reporting fraud and errors

Revision and Mid Term Exam

Lahore University of Management Sciences

9

Tests of Controls

Chapter 7, 8
ISA 330

10

Audit Evidence, Audit Sampling

and Analytical Procedures
&
Verification of Specific Areas and
opening balances

Chapter 9, 10
ISA 540, 510, 550
ISAs 500, 501, 505, 530, 580
Sample Audit Programs

Designing and applying Test of

Controls for:
Sales
Purchases
Payroll
Inventory
Cash and bank
Tests of control and
substantive procedures
Sufficiency and
appropriateness
Sources of evidence
Management representations
Related parties
Designing
and
applying
substantive audit procedures
for:

11

Using the Work of Others

Chapter 13
ISAs 600, 610, 620

12

Review and Finalization

Procedures

Chapter 11
ISAs 450, 560, 570

13

Reporting

14

Reporting (contd) and

Revision and Consolidation of
Learning

Chapter 12
ISAs 700, 705, 706, 710, 720
ISRE 2410, specimen reports
Chapter 12
ISAs 700, 705, 706, 710, 720
ISRE 2410, specimen reports

Receivables
Inventories
Payables
Cash and bank
Fixed assets
Liabilities

Estimates
Using work of:
Experts
Internal auditors
Other Auditors
Subsequent events
Going concern
Quality control
Review
Documentation
Compilation
Review
Documentation
Compilation

Lahore University of Management Sciences

TEXTBOOK(S)/SUPPLEMENTARY READINGS
Recommended Text Book

Rick Hayes, R. D. (2005). Principles of Auditing: An Introduction to International Standards on Auditing (Vol. 2nd
Edition ). Gosport: FT Prentice Hall.
BPP. (2011). Auditing and Assurance (Global). Lahore: BPP.

Other Readings

Selected International Standards on Auditing

Relevant sections of Companys Ordinance 1984
ICAP Code of Ethics for Professional Accountants
Extracts from Code of Corporate governance
Selected Cases and articles