THE LICENSURE EXAMINATION FOR CERTIFIED PUBLIC ACCOUNTANTS

(LECPA) SYLLABUS
AUDITING

Effective October 2022 Examination

This subject covers the candidates’ knowledge of the principles and concepts of auditing and
attestation and the practical application of these principles and concepts. There shall be two
parts of this subject: Theory on Auditing and Attestation Services and Auditing Practice.

THEORY ON AUDITING AND ATTESTATION SERVICES

This part covers the candidates’ conceptual knowledge and understanding of auditing and
attestation services performed by professional accountants. Candidates should know and
understand auditing and attestation services, with emphasis to: independent audits of financial
statements or against related standards, assertions or applicable criteria; professional, ethical,
quality management and governance responsibilities; the use of risk-based audit process in
planning, responding to risks and reporting thereon.

In all the areas included, the candidate shall apply the appropriate standards on auditing and
attestation, quality management, ethical and governance standards, and other regulatory laws
and regulations, issued by Philippine and professional standard-setting and regulatory bodies in
effect at the time of examination.

AUDITING PRACTICE

This part covers the candidate’s proficiency in applying risk-based audit and quality management
standards, techniques, and procedures to a typical independent audit of a medium-sized service,
trading or manufacturing concern, that use either a manual or automated business process, or a
combination of both.

Candidates shall be able to assess risk, develop a plan and perform an audit, analyze data for
possible errors and irregularities or nonconformance to standards, assertions or criteria, perform
root cause analysis, perform other procedures, obtain evidence and formulate adjusting entries,
prepare audit working papers, communicate results of audit, prepare audit reports, and complete
the audit.
In all the areas included, the candidate shall apply the appropriate standards on auditing and
attestation, quality management, ethical and governance standards, and other regulatory laws
and regulations, issued by Philippine and professional standard-setting and regulatory bodies in
effect at the time of examination.

Candidates should be able to demonstrate awareness- or proficient-level knowledge of the

competencies cited above. Entry level professional accountants should be able to address the
fundamental requirements of the various parties that the candidates will be interacting
professionally in the future.

The candidates must also be able to communicate effectively such matters pertaining to the audit
work.

New laws, standards and other issuances which are effective as of the date of the examination
shall supersede the related topic listed in the syllabus and will be included in the examination,
unless there is an advisory from the Board of Accountancy to the contrary.

The examination shall have seventy (70) multiple choice questions.

The syllabus for the subject is presented below.

1.0 Theory on Auditing and Attestation Services

1.1 Fundamentals of Auditing and Assurance Services
1.1.1 Introduction to assurance engagements
1.1.1.1 Nature, objective, and elements

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 1.1.1.2 Types of assurance engagements (audits, reviews,
other assurance engagements)
1.1.2 Introduction to auditing
1.1.2.1 Nature, philosophy, and objectives
1.1.2.2 Types of audit
1.1.2.2.1 According to nature of assertion/data
(financial statements audit, operational audit,
and compliance audit)
1.1.2.2.2 According to types of auditor (external
independent financial statements audit,
internal audit, and government audit)
1.2 The Risk-based Financial Statement Audit – Client Acceptance, Audit
Planning, Supervision and Monitoring
1.2.1 Overview of the risk-based audit process
1.2.2 Pre-engagement procedures
1.2.3 Scope and purposes of audit planning
1.2.3.1 Essential planning requirements
1.2.3.1.1 Knowledge of the business
1.2.3.1.2 Preliminary analytical procedures
1.2.3.1.3 Materiality
1.2.3.1.4 Assessing and managing audit risks
1.2.3.1.5 Overall audit plan and audit program (experts, internal
auditor, other independent auditors)
1.2.4 Direction, supervision, and review
1.3 Understanding the Entity and its Environment including its Internal Control
and Assessing the Risks of Material Misstatement
1.3.1 Industry, regulatory and other external factors, including the
applicable financial reporting framework
1.3.1.1 Nature of the entity
1.3.1.2 Objectives and strategies and related business risks
1.3.1.3 Measurement and review of the entity’s financial performance
1.3.2 Internal Control
1.3.2.1 Basic concepts and elements of internal control
1.3.2.2 Consideration of accounting and internal control systems
1.3.2.2.1 Understanding and documentation
1.3.2.2.2 Assessment of control risks
1.3.2.2.2.1 Test of controls
1.3.2.2.2.2 Documentation
1.3.3 Assessing the risks of material misstatement
1.3.3.1 Fraud and errors
1.3.3.2 Risk assessment procedures
1.3.3.3 Discussion among the engagement team
1.3.3.4 Significant risks that require special audit consideration
1.3.3.5 Risks for which substantive procedures alone do not provide
sufficient appropriate audit evidence
1.3.3.6 Revision of risk assessment
1.3.4 Communicating with those charged with governance and management
1.4 Audit Objectives, Procedures, Evidences and Documentation
1.4.1 Nature and significance
1.4.2 Evidential matters
1.4.3 Audit procedures/techniques, including audit selection
1.4.4 Audit working papers
1.5 Completing the Audit/Post-Audit Responsibilities
1.5.1 Completing the audit and audit report preparation
1.5.1.1 Analytical procedures for overall review
1.5.1.2 Related party transactions
1.5.1.3 Subsequent events review
1.5.1.4 Assessment of ongoing concern assumption
1.5.1.5 Obtaining client’s representation letter
1.5.1.6 Evaluating findings, formulating an opinion, and drafting the audit
report
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 1.5.2 Post-audit responsibilities
1.5.2.1 Subsequent discovery of facts
1.5.2.2 Subsequent discovery of omitted procedures
1.6 Reports on Audited Financial Statements
1.6.1 The unqualified auditor’s report
1.6.2 Basic elements of the unqualified auditor’s report
1.6.3 Modified auditor’s report
1.6.3.1 Matters that do not affect the auditor’s opinion
1.6.3.2 Matters that do affect the auditor’s opinion
1.6.4 Report on comparatives
1.6.5 Key audit matters
1.7 Auditing in a Computerized Information Systems (CIS) Environment
1.7.1 Internal control in a CIS environment
1.7.1.1 Introduction
1.7.1.2 Impact of computers on accounting and internal control
systems
1.7.1.2.1 General Controls
1.7.1.2.2 Application controls
1.7.1.3 Unique characteristics of specific CIS
1.7.1.3.1 Stand alone
1.7.1.3.2 On-line
1.7.1.3.3 Database system
1.7.2 Basic approach to the audit of CIS environment
1.7.2.1 Introduction
1.7.2.2 Effects of computers on the audit process
1.7.2.3 Computer assisted audit techniques
1.7.2.4 Electronic commerce
1.7.3 Auditing new technologies
1.8 Attestation Services
1.8.1 Procedures and reports on special purpose audit engagements
1.8.1.1 General considerations
1.8.1.2 Audit of financial statements prepared in accordance with
comprehensive basis of accounting other than GAAP in the
Philippines
1.8.1.3 Audit of a component of financial statements
1.8.1.4 Reports on compliance with contractual agreements
1.8.1.5 Reports on summarized financial statements
1.8.2 Attestation and related services
1.8.2.1 Examination of prospective financial information
1.8.2.2 Engagements to review financial statements
1.8.2.3 Engagements to perform agreed-upon procedures regarding
financial information
1.8.2.4 Engagements to prepare or compile financial information
1.8.2.5 Service organization controls and the service auditor’s report
1.8.2.6 Engagements performed in accordance with other criteria
1.8.3 The role of CPAs in rendering other services (aside from auditing
and attestation)

2.0 Auditing Practice

2.1 Governance, Ethics and Quality Management
2.1.1 Corporate governance
2.1.2 Ethical standards and responsibilities of professional accountants
2.1.3 System of quality management
2.1.3.1 Elements of a system of quality management
2.1.3.2 Leadership responsibilities
2.1.3.3 Ethical requirements
2.1.3.4 Acceptance and continuance
2.1.3.5 Human resources
2.1.3.6 Engagement performance
2.1.3.7 Monitoring
2.1.3.8 Documentation of the System of Quality Management
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 2.1.4 Regulatory requirements related to the practice, accreditation and regulation
of public accounting and auditing services
2.2 Planning the Audit and Performing Risk Assessment Procedures
2.2.1 Risk-based audit – overview
2.2.2 Risk assessment – overview
2.2.3 Preliminary activities
2.2.3.1 Engagement acceptance and continuance
2.2.4 Planning the audit
2.2.4.1 Overall audit strategy
2.2.4.2 Determining and using materiality
2.2.4.3 Audit team discussions
2.2.4.4 Understanding and auditing business processes
2.2.4.4.1 Order to cash
2.2.4.4.2 Purchase to pay
2.2.4.4.3 Plan to inventory
2.2.4.4.4 Hire to retire
2.2.4.4.5 Acquire to retire
2.2.4.4.6 Record to report
2.2.4.4.7 Close, consolidate and report
2.2.4.4.8 Financial planning and analysis
2.2.4.4.9 Other business processes
2.2.5 Performing risk assessment procedures – entity wide and business process
level
2.2.5.1 Identification and assessment of inherent risks
2.2.5.2 Identifying objectives and key risks
2.2.5.3 Understanding internal control
2.2.5.4 Evaluating internal control
2.2.5.5 Communicating deficiencies in internal control
2.2.5.6 Concluding the risk assessment phase
2.3 Risks Response
2.3.1 Risk response – overview
2.3.2 Developing the risk-based audit plan
2.3.3 Determining the extent of testing
2.3.4 Documenting work performed
2.3.4.1 Preparation of audit working papers
2.3.4.2 Preparation of analysis worksheets
2.3.4.3 Formulation of adjusting and correcting entries
2.3.5 Written representations
2.3.6 Engagement supervision and consultation
2.4 Audit Communication and Reporting
2.4.1 Reporting –overview
2.4.2 Evaluating audit evidence
2.4.3 Communicating results
2.4.3.1 Criteria and quality of communications
2.4.3.2 Disseminating results
2.4.3.3 Communicating with those charged with governance
2.4.4 Preparing the audit report
2.4.4.1 Modifications to the auditor’s report
2.4.4.2 Emphasis of matter and other matter paragraphs
2.4.4.3 Comparative information
2.4.5 Monitoring and closing the engagement

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 9.2.1 Income tax (5% GIT, ITH incentives, regular income tax)
9.2.2. Other tax incentives (VAT/OPT, excise tax, DST, local taxes)
9.3 Omnibus Investments Code for purposes of determining tax liabilities and tax
incentives
9.3.1 Income tax (ITH incentives, regular income tax)
9.3.2 Other tax incentives (VAT/OPT, excise tax, DST, local taxes)

9.4 Basic principles of tax treaty and specific provisions of Double Taxation Agreement
(DTA) models (e.g. OECD Model Tax Convention, UN Model Double Taxation
Convention and United States Model Income Tax Convention) in determining the tax
implications of various income items of non-residents, such as:
9.4.1 Royalties
9.4.2 Dividends
9.4.3 Interests
9.4.4 Capital gains
9.4.5 Business profits and other income items
9.5 Tax implications of transactions applying the tax rules and regulations, and sound tax
planning strategies within legal and ethical bounds to efficiently manage tax liabilities.

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