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,The audit process
AUE3761
Year module
Department of Auditing
This tutorial letter contains important information
about your module.
BARCODE
, AUE3761/102/0/2023
LESSON 1.1: Auditing concepts (an introduction to auditing)
LEARNING OUTCOME
At the end of the lesson, you should be able to do the following:
• Explain various auditing concepts you will apply later in your auditing studies.
INTRODUCTION
Does the following look familiar: “wud pcm b4 I cul”? Some text “language” is hard to understand
if you have not been introduced to it. (wud pcm b4 l cul = What are you doing? Please call me
before lunch. See you later.)
The same applies to auditing, where you need to learn the meaning that auditors assign to certain
words or concepts. An example is the term “material”. Seamstresses can make clothes from
material, but an auditor uses the term “material” to indicate the significance of amounts or events.
In your AUE2601 studies, you already learnt about various auditing concepts, and it is important
for you to revise them from the references below.
When revising these auditing concepts, don’t learn them by heart as we will not require
you to answer theory questions in your third year of auditing studies. However, it is
important for you to understand them and identify issues relating to these concepts in a
practical scenario.
The concepts that you should revise are set out in figure 1.1.1.
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, FIGURE 1.1.1 Summary of concepts to revise from previous auditing studies
Concept Checklist of concepts that you need to revise and be
familiar with
The auditor • The overall objective of an audit and an auditor.
(Study sources: International • The types, characteristics and classification of auditors.
Standard on Auditing (ISA) 200 • The need for auditors.
para 11, and Auditing notes • Specific theories as they relate to businesses, auditing
Chapter 1) and the profession.
• Difference between assurance and non-assurance
engagements.
• The meaning of the auditing expectation gap.
Assurance and non- • Types of assurance engagements.
assurance engagements • Elements of assurance engagements.
(Study sources: International • Public interest score in terms of the Companies Act 71 of
Standard on Assurance 2008 and an audit of financial statements.
Engagements (ISAE) 3000, ISA • Differentiate between statutory or non-statutory
200 paragraps A47 to A54 and engagements.
Auditing Notes Chapter 1) • Inherent limitations of an audit.
• Roles of various parties in an audit of financial
statements.
Auditing postulates
• Awareness of the meaning and the eight suggested
(Study sources: Auditing Notes auditing postulates.
Chapter 1 Appendix)
The accounting • Identify the domineering accounting bodies in South
profession Africa.
(Study sources: Auditing Notes • Identify the relevant pronouncements that regulate the
Chapter 1) auditing profession.
• Purpose of performing an audit (ISA 200 paragraphs 3 and
A1)
• The auditor's responsibility (ISA 200 paragraph 7)
Objectives of the
independent auditor for • The overall objective of the auditor (ISA 200 paragraph 11)
assurance engagements • What is reasonable assurance? (ISA 200 paragraphs 5; 17
and A30-A54)
(Study sources: ISA 200 • What is materiality? (ISA 200 paragraph 6)
(respective paras as indicated) • What is professional judgment, professional scepticism and
and Auditing Notes Chapter 1) risks of material misstatement? (ISA 200 paragraph 7)
• What is a form of opinion? (ISA 200 paragraph 8; A12-A13)
• Other important definitions (ISA 200 para 13)
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