Lahore University of Management Sciences

ACCT 250 – Auditing

Spring 2021
Instructors Samia Ali/Mahin Moazzam
Room No. TBA/421
Office Hours TBA/TBA
Email [email protected] [email protected]
Telephone
Secretary/TA Bushra Kanwal / Saba Yaqub
Email [email protected] [email protected]
TA Office Hours TBA/ TBA
Course URL (if any)

Course Teaching Methodology

Teaching Methodology:
• Blend of synchronous & asynchronous.
• Lecture slides will be uploaded on LMS before a lecture which will be conducted live via Zoom during regular class time.
• Recording of each live Zoom lecture will be provided to students afterwards to review in their own time.

Lecture details:
• 80% live interaction lectures

COURSE BASICS
Credit Hours 3
Lecture(s) 2 Duration 75 minutes
Recitation/Lab (per week) On need basis Duration On need basis
Tutorial (per week) On need basis Duration On need 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,
professional 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 assurance engagements other than audit.

COURSE PREREQUISITE(S)
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ACCT 220 Corporate Financial Reporting I

COURSE OBJECTIVES & LEARNING OUTCOMES

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.

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 understand 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).
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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

Indicate below how the course learning objectives specifically relate to any program learning goals and objectives.

MAPPING OF OBJECTIVES
PROGRAM LEARNING GOALS COURSE LEARNING OBJECTIVES COURSE ASSESSMENT ITEM
AND OBJECTIVES
Goal 1 –Effective Written and Oral Students get a number of opportunities to CP, Quizzes, Assignments and Exams
Communication demonstrate their ability to communicate
effectively

Goal 2 –Ethical Understanding and Understand the nature, purpose and scope of CP, Quizzes, Assignments and Exams
Reasoning auditing in public, private and not-for-profit
entities, and its regulatory and ethical framework.
Goal 3 – Analytical Thinking and Describe and evaluate accounting and internal CP, Quizzes, Assignments and Exams
Problem-Solving Skills control systems and identify and communicate
control risks, potential consequences and
recommendations thereon.
Goal 4 – Application of Information Visiting Faculty Experts
▪ 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 Discussion and debate thereon of diverse topics in CP and Assignment
Multicultural Environments classroom will allow this objective to be met.

Goal 6 – Understanding CP, Assignment and Visiting Faculty

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

Goal 7 (a) – Discipline Specific CP, Quizzes, Assignment and Exams

▪ Understand the nature, purpose and scope of
Knowledge and Understanding
auditing in public, private and not-for-profit
(Subject Knowledge)
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.
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▪ 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 N/A N/A
“science” behind the decision-
making process

GRADING BREAKUP AND POLICY

Class Participation: 10%

Long quizzes (4; n-1) 45%
Assignments 15%
Final Exam 30%

Course Instructions:
Students must have access to a computer with MS Word and MS Excel as well as a steady internet connection to attempt quizzes
and assignments.
Final Exam will be comprehensive, covering chapters 1-12.
Detailed instructions for assignment would be circulated later.
Quizzes will be conducted on LMS outside of class time. The quiz will be active for a certain time window, on a pre-communicated
time and date, and the students will have a fix amount of time to attempt and submit their quiz.
Students who demonstrate academic dishonesty in any of the individual graded components, will be dealt with in accordance with
LUMS policies.
An aggregate grade below 50% would tantamount to an F in the course.

EXAMINATION DETAIL

Yes/No: Yes
Combine/Separate: TBA
Quizzes
Duration: TBA
Preferred Date: TBA
Exam Specifications: TBA
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Yes/No: No
Combine/Separate: N/A
Midterm
Duration: N/A
Exam
Preferred Date: N/A
Exam Specifications: N/A

Yes/No: Yes
Combine Separate: TBA
Final Exam
Duration: 3 hours
Exam Specifications: TBA

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
• General Considerations
• Professional Skepticism
• Quality Control
Long Quiz 1 (Chapters 1 – 4)
5 Acceptance or Continuance Chapter 5 • Eligibility, appointment,
Procedures removal, tenure, rights and
obligations of auditors
• Cases on application of code
• Procedures for accepting new
appointments
• Engagement letter
6 Planning and Risk Assessment & Chapter 6 • Importance of planning
Using the work of Others (ISAs 240, 250, 300, 315, 320, 520, • Understanding the entity and
500, 330, 600, 610, 620 & ISRE its environment and analytical
2400)
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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
Long Quiz 2 (Chapters 5 – 6)
7 Internal Control Framework Chapter 7 • Importance of IC
(COSO Integrated Framework for • Internal Control Objectives
Internal Controls) • Components of IC
• Inherent Limitations
• Information Technology
General Control (ITGC)
8 Tests of Controls Chapter 7 (Remainder) Designing and applying Test of
Controls for:
• Sales
• Purchases
• Payroll
• Inventory
• Cash and bank
9 Analytical Procedures & Audit Chapter 8 & Appendix • The Analytical Review Process
Sampling • Audit Sampling and Other
Selective Testing Procedures
Long Quiz 3 (Chapters 7 – 8)
10 Auditor’s Response to Assessed Risk Chapter 9 • Basis of Evidence
(ISA 330, 500) • Assertions
• 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
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• 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 Impact of COVID-19 on Audit

Final review

TEXTBOOK(S)/SUPPLEMENTARY READINGS
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

Other Readings
• Relevant sections of Company’s Act 2017
• ICAP Code of Ethics for Professional Accountants
• Extracts from Code of Corporate governance