Advanced Auditing APA Lecture Commentary

Advanced Auditing
Auditing Professions Act (Week 10)
Lecture commentary/supplement to go with slides
This is an easy section and is very self-explanatory. You should already have a sound knowledge from
undergrad, and the content and way of examining the topic remains the same. The only area that
will be different in examining of this topic is that we will add more integration with other topics.
The APA is in the standards and textbook, so you can read through both, I have however created this
lecture commentary which should be looked at in conjunction with the lecture slides. Go over these
and the slides and coupled with your existing knowledge you will be ok for this topic.
Note that the IRBA disciplinary rules are not covered in this lecture as they are very similar to those
of the Code of Professional Conduct (CoPC). Both these have been extensively covered in undergrad,
so go over this in your own.
Slide 1
Basic introduction. You are all familiar with this section. It was extensively covered last year. The
content is available in the standards and in Auditing Notes, read up to refresh your memory.
Questions on this topic will be integrated and the IRBA Rules on Improper Conduct, can easily be
examined together with the CoPC. Remember that you can take the legislation with you into the
exams so it is essential that you learn how to apply legislation to a given scenario.
Slide 2
Brief overview into IRBA. Self-explanatory, but I want to emphasize that IRBA governs auditors the
same way that SAICA does CA’s. If auditing was a school, then IRBA would be the principal. IRBA is a
regulator, to which SAICA and the audit firms report to.
Slide 3
Breakdown of the act, the * means sections are important.
Slide 4
Key point here is that SAICA is an accredited professional body with IRBA, so they work together.
Slide 5
A description of the process to register as a RA, with IRBA. You must have the necessary training and
experience to register and you must pay the requisite fee. As a RA, once registered you will be able
to sign off on an audit report.
Slide 6 and 7
Those individuals who are disqualified from registering. If you look through the slides you will notice
that this is quite similar to the rules in the CoSAT relating to directors. CoSAT = Companies Act
Slide 8
This is self-explanatory, but again content here is identical to the CoSAT, in terms of who the CoSAT
prohibits from being appointed as a director.
Slide 9 and 10
S38, Remember the MOI is still the governing document for a company. So you can see that we
could also integrate with the CoSAT, where you are given a scenario of a firm of auditors and have to
assess their compliance with the APA and CoSAT. Key point, every shareholder of the company, must
be a RA, and must also me a director.
Slide 11-15
S41, If you are not a registered auditor then you cannot sign off on an audit or be referred to as an
auditor. I lecture auditing so based on that I have the necessary skills and competencies to perform
an audit, however as I am not registered with IRBA, I cannot perform audits. What about trainee
accountants, they are referred to as auditors, but the difference is that they are working for a RA,
and as such can call themselves auditors as they represent a RA, AND are working under the control
and supervision of a RA.
If working within an organization you can use the designations. So an internal auditor of a client can
use the designation of auditor.
QUESTION: Can the internal auditor of a client be part of the audit team?
Answer: No, if he is then it is against the CoPC as the internal auditor is not independent. But
remember integration with ISA 600 series, relying on the work of internal audit.
Question: Firm A employs Mr X, a 70yr old pensioner who used to be a partner, but resigned from
IRBA @ 65yrs old when he retired as a partner. Is this permissible?
Answer: It will be provided IRBA gives permission, but they need to evaluate his skills and
competence.
Important – RA cannot share his audit fees or profits with anyone not registered with IRBA. So back
to the example of Mr X, if when he retired and resigned from IRBA, he entered into an agreement
with Mr Y, to convince all his previous clients to move to Mr Y’s firm. Will this be permissible?
NO it will not as Mr X is no longer a RA.

Slide 16-20
S44-46
S44, basic components must comply with ISA220R, the way an audit is conducted, sufficient
appropriate evidence, documentation, duty to report RI ect.
Of note an auditor cannot pass closing journal entries. He can however request management to
process journals that result in fair presentation. Remember journal entries are quite commonly
examined in Advanced Accounting, so it’s easy to integrate here.
You have already covered s45, it’s easy. Remember not to manufacture RI’s. If it’s in a question, then
you will be able to spot it. RI’s are easy marks. You are expected to score well here, bank these
marks. This is basic exam technique so make sure to be able to identify and appropriately answer RI
questions.
S46, will be covered later in the year. This is an importation section so pay attention when we cover
it. Generally speaking s46, is a “higher risk” area for being examined at year end. Lots of possibilities
for integration here. It essentially links the entire year’s work. Auditors liability and quality control.
AP Act high level considerations
Tip – Pay attention to the required at all times in relation to Auditors/APA
Frequently examined areas
 RI’s – Any question – Any time – Link with audit report

 Auditors liability – Scope for test 4, exam, ITC, Closely integrated with ISA’s and QC
 Disciplinary action/procedures against auditors as part of the Copc
Integration with Auditing
 Auditors scope limitation, Auditors fee, additional services, auditor ethics/code implications
all related to AP Act – Beware of these in questions.
 Cosat and legislation
 Copc
 Audit standards (ISA’s)
 Audit report
 From now on have to consider APA when answering questions on the above, as it will be
included
Integration with other modules
 Any other module, as easy to add this section onto any existing question

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Advanced Auditing

Auditing Professions Act (Week 10)

Lecture commentary/supplement to go with slides

Breakdown of the act, the * means sections are important.

NO it will not as Mr X is no longer a RA.

AP Act high level considerations

Tip – Pay attention to the required at all times in relation to Auditors/APA

Frequently examined areas

 RI’s – Any question – Any time – Link with audit report

Integration with Auditing

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