CAP-III SYLLABUS

Advanced Auditing

(One Paper – Three Hours – 100 Marks)

Advanced Auditing is the third paper of CAP-III. It  covers 100 marks in total. It is the Group 1 paper. The syllabus you need to cover in CAP-III under “Advanced Auditing” is as follows: 

Level of Knowledge : Expert

Course objectives :

— To develop candidates’ capability in performing and reporting on audit and assurance to increase reliability of financial and non-financial information.

— To develop candidates’ capability in identifying significant risks and apply risk assessment tools to the engagement

— To develop candidates’ capability to identify, gather and document evidence and assess its sufficiency and appropriateness for an audit engagement.

— To ensure that candidates’ have acquired the competence to provide comprehensive audit and business assurance services, by testing their ability to integrate and apply their knowledge of auditing to realistic problems.

Course contents for advanced auditing

  1. General concepts

Auditing

—  Concept of assurance and concept of audit

— Nepal Standards on Auditing (NSAs), Nepal Standards on Quality Control (NSQC), Practice Statements issued by the Institute of Chartered Accountants of Nepal

—  Provisions governing audit by ICAN Act, Regulations and Circulars/Notices issued by ICAN

—  Provisions of appointment, responsibility and reporting by auditors under prevailing acts Ethics

—  Code of ethics issued by ICAN and IFAC

—  Provisions governing ethics by ICAN Act and Circulars/Notices issued by ICAN

—  Verdict on disciplinary cases

Governance

—  OECD principles on corporate governance

—  Audit committee and its role

—  Introduction to Sarbanes Oxley Act

—  Provisions of corporate governance set forth under various prevailing acts of the country

 

  1. Audit process

Engagement Procedure

—  Legal procedures to comply before acceptance of new assignments

—  Assessment of conflict of interest and threats to independence

—  Communication with previous auditor

—  Issuance of engagement letter

Planning and Risk Assessment

—  Understanding the entity & its environment

—  Assessment of audit risk and materiality

—  Designing procedures to mitigate assessed risk

—  Development of audit plan, program and checklist

Audit Test

—  Quantum of audit evidence

—  Assertion of account balances

—  Audit sampling

—  Compliance and substantive test

— Special audit test procedures of External confirmation of Physical verification

  • Observation of Enquiry
  • Self computations.

— Special audit considerations relating to o Risk based audit

  •  Fraud and error
  • Applicable laws & regulations
  • Using the work of internal auditors and other experts o Opening balances
  • Provisions and contingencies o Events after the reporting date o Related party transactions
  • Accounting policies, estimates and comparatives o Going concern
  • Presentation and disclosures of the financial statements

—  Management representations

—  Audit documentation

Audit Reporting

—  Audit conclusion based upon evidence

—  Management letter

—  Audit report

—  Other reporting responsibilities

—  Subsequent events

Audit of specialized enterprises

—  Insurance companies

—  Banking and financial institutions

—  Stock brokers and commodity dealers

—  Derivatives and hedging instruments

—  Government, constitutional bodies, regulatory authorities and autonomous bodies

—  Manufacturing and Trading organizations

—  Mutual funds and investment companies

—  Retirement benefit funds

—  Educational institutions

—  Agricultural farm

—  Hydro power

—  Hotels and hospitality sector

—  Transport and carriers

—  Real estate agencies and housing companies

—  Union, club and societies

—  Multinational companies

—  Not for profit organizations

  1. Other services

Assurance and related services

—  Engagement to review financial statements

—  Agreed upon procedure of Internal audit

  •  Due diligence on Tax audit
  •   Cost audit
  •  Management audit o Performance audit

—  Engagement to compile financial information

—  Reporting on prospective information

Other services

—  Forensic audit and Investigation

—  Insolvency practitioners

—  Fund controller

—  Financial mediation

 

  1. Audit issues

Audit under computerized environment

—  Concept

—  Impact on controls

—  Specific issues of audit risk

—  Security issues in computerized systems as stated in IFAC guidelines

Computer Assisted Auditing Techniques

—  Concept and benefit

—  Impact on audit process using CAAT

—  Available tools of CAAT

Fraud and auditors’ liability

—  Concept

—  Law and regulation

—  Professional negligence versus criminal charges

—  National and international case studies

— Auditors’ liability with regards to “Money Laundering Act” and other prevailing Act 

Joint Audit and Branch Audit

—  Concept

—  Managing audit process

—  Reporting responsibilities

Audit of fair values

—  Concept

—  Principles and techniques of measurement

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