Lahore University of Management Sciences

ACCT 250 – Auditing

Fall-2020
Instructor Samia Ali
Room No. Room 421 SDSB Building
Office Hours Monday 12-1 pm
Email Samia.ali@lums.edu.pk
Telephone
Secretary/TA Bushra Kanwal/ TBA
TA Office Hours TBA
Course URL (if any)

COURSE BASICS
Credit Hours 3
Lecture(s) Nbr of Lec(s) Per Week 2 Duration One hour and fifteen minutes, each.
Recitation/Lab (per week) Nbr of Lec(s) Per Week N/A Duration N/A
Tutorial (per week) Nbr of Lec(s) Per Week On need Duration Appropriate to cover the content.
basis

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

COURSE DESCRIPTION
This course introduces students to auditing principles and practice. Students learn International Auditing Standards, profession
al and ethical requirements and the Legal & Regulatory Framework to conduct audit engagements. The courses covers
the complete lifecycle of financial statement audits, covers acceptance of audit engagements, developing a competitive
proposal, complying with independence and other ethical requirements, risk assessment, development of audit programs,
finalization of audit and issuing final auditor’s opinion. This course also gives an overview of governance, internal auditing and as
surance engagements other than audit.

COURSE PREREQUISITE(S)

ACCT 221 Corporate Financial Reporting (CFR) – I or

Corporate Financial Reporting

COURSE OBJECTIVES
To develop knowledge and understanding of:
 the auditing and Assurance Services
 the process of carrying out audit and review of financial statements; and

the applicable legal, regulatory and ethical framework.
 Lahore University of Management Sciences
LEARNING OUTCOMES
On completion of this course, students should be able to:
Describe and evaluate the accounting and internal control systems and identify and communicate control risks,

potential consequences and recommendations thereon.
 Explain and evaluate the 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) – Program 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

PROGRAM LEARNING GOALS AND
OBJECTIVES
Goal 1 –Effective Written and Oral
Communication
Goal 2 –Ethical Understanding and
Reasoning
Goal 3 – Analytical Thinking and
Problem Solving Skills
COURSE LEARNING OBJECTIVES COURSE ASSESSMENT ITEM
CP, Quizzes, Project and Final exam
 Understand the nature, purpose and scope
of auditing in public, private and not-for-
profit entities, and its regulatory and
ethical
framework.
 Describe and evaluate accounting and
internal control systems and identify and
communicate control risks, potential
consequences and recommendations
thereon.
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Goal 4 – Application of Information
 Obtain understanding of the entity and its
Technology
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.

Goal 5 – Teamwork in Diverse and

Multicultural Environments
Goal 6 – Understanding Organizational
 Obtain understanding of the entity and its
Ecosystems
environment, assess risks and plan audit of
financial statements.

Goal 7 (a) – Discipline Specific

 Understand the nature, purpose and scope
Knowledge and Understanding
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.
Goal 7 (b) – Understanding the
“science” behind the decision-making
process
 Lahore University of Management Sciences
GRADING BREAKUP AND POLICY
Long Quizzes (4; n-1): 45%
Class Participation and in class quizzes: 10%
Written analysis of case study 5%
Final Examination: 40%

Final Exam will be comprehensive, covering chapters 1-12.

Written analysis of case study would be done in groups and detailed instructions would be circulated later.
An aggregate grade below 50% would tantamount to an F in the course.

EXAMINATION DETAIL

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

Yes/No: Yes
Final Exam Combine Separate: Combine
Duration: 2.5 hours
Exam Specifications: Free Response & MCQs

COURSE OVERVIEW
RECOMMENDED OBJECTIVES/
WEEK TOPICS
READINGS APPLICATION
1 Introduction to Auditing/Assurance Chapter 1  What is assurance?
(including Internal Audit) (IAASB framework  Levels of assurance
ISA 200 & Internal Auditing  Objective of audit
Standards)  Materiality
 True and fair view
 Public sector auditing
 External vs. internal, audit
 Limitations of audit
 Corporate Governance
2 Legal and Regulatory Environment Chapter 2  IFAC, IAASB, ISAs, ISREs, ISQCs
and (CO 1984, Specimen auditor’s  Standard setting procedures
Overview of government auditing report, ISA 250)  Statutory requirement of
audit and small co. exemption
3 Ethics for Professional Accountants Chapter 3  ICAP Code Of Ethics
(Code of ethics, ISA 210,  Enforcement of Ethical
Listing regulations - selected) Requirements
4 Auditor’s Services Chapter 4  Elements of an Assurance
(ISA 220) Engagement
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Long Quiz 1 (Chapters 1 – 4)
5 Acceptance or Continuance
Procedures
6 Planning and Risk Assessment &
Using the work of Others
Long Quiz 2 (Chapters 5 – 6)
7 Internal Control Framework
8 Tests of Controls
9 Analytical Procedures & Audit
Sampling
Long Quiz 3 (Chapters 7 – 8)
10 Auditor’s Response to Assessed Risk
 General Considerations
 Professional Skepticism
 Quality Control
Chapter 5  Eligibility, appointment,
removal, tenure, rights and
obligations of auditors
 Cases on application of code
 Procedures for accepting new
appointments
 Engagement letter
Chapter 6  Importance of planning
(ISAs 240, 250, 300, 315, 320, 520,  Understanding the entity and
500, 330, 600, 610, 620 & ISRE its environment and analytical
2400) 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
Using work of:
 Experts
 Internal auditors
 Other Auditors
Chapter 7  Importance of IC
(COSO Integrated Framework for  Internal Control Objectives
Internal Controls)  Components of IC
 Inherent Limitations
 Information Technology
General Control (ITGC)
Chapter 7 (Remainder) Designing and applying Test of
Controls for:
 Sales
 Purchases
 Payroll
 Inventory
 Cash and bank
Chapter 8 & Appendix  The Analytical Review Process
 Audit Sampling and Other
Selective Testing Procedures
Chapter 9  Basis of Evidence
(ISA 330, 500)  Assertions
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 Tests of control and
substantive procedures
 Sufficiency and
appropriateness
 Sources of evidence
11 Audit Evidence & Chapter 10  Management representations
Verification of Specific Areas and (ISA 540, 510, 550  Related parties
opening balances ISAs 500, 501, 505, 530, 580  Designing and applying
Sample Audit Programs) substantive audit procedures
for:
 Receivables
 Inventories
 Payables
 Cash and bank
 Fixed assets
 Liabilities
 Estimates
 Working Papers
 Document Retention
 Permanent & Current Files
 Preparation of Working
Schedule
12 Review and Finalization Procedures Chapter 11  Subsequent events
(ISAs 450, 560, 570)  Going concern
 Quality control
Long Quiz 4 (Chapters 9 – 11)
13 Reporting Chapter 12  Review
(ISAs 700, 705, 706, 710, 720  Documentation
ISRE 2410, specimen reports)  Compilation
 Reporting to management
 Reporting to those charged
with governance
 Reporting non-compliance of
laws
 Reporting fraud and errors
 Evolution of Audit Report
14 Final Exam Review

TEXTBOOK(S)/SUPPLEMENTARY READINGS
 Lahore University of Management Sciences
Recommended Text Book

 Rick Hayes, R. D. (2014). Principles of Auditing: An Introduction to International Standards on Auditing (Vol. 3nd Edition ).
Gosport: FT Prentice Hall.

Other Text Books

 International Standards on Auditing
 BPP. (2014). Auditing and Assurance (Global). Lahore: BPP.

Other Readings
 Relevant sections of Company’s Ordinance 1984
 ICAP Code of Ethics for Professional Accountants
 Extracts from Code of Corporate governance
 Selected Cases and articles