AUDITING NOTES

Compiled by: Ghias ul Hassan Khan

MBA, ACCA, AICS, MCE, MIE, PHD

Chapter 1 and 3
(Audit assurance & Corporate Governance)

ACCA – AA (F8)
WAAN Academy
501- Jakhvani Towers
Bahria Town Karachi
 AUDITING – Bullet points notes
ACCA – Audit & Assurance – AA (F8) 1
Complied by: Ghias ul Hassan Khan

CHAPTER 1 – Audit & Other assurance engagement

Introduction as block

1. Definition of audit
2. Audit objective and report
3. True and Fair view, means
4. Types of reports
5. Stakeholders
6. Stewardship theory and compare with agency

Statutory and non-statutory audit

1. Statutory audit
2. Non-statutory audit - Advantages
i. Setting account in partners
ii. More acceptable for finance
iii. More acceptable for taxation
iv. For sleeping partners confidence
3. Elements of assurance - CREST
a. Three party relation
b. Proper subject matter
c. Suitable criteria
d. Sufficient appropriate evidence
e. Report
4. Reasonable and limited assurance
5. Positive term and negative term
6. Attestation and direct engagement.
7. Comparison of external and internal auditor
8. Assignments of internal auditor.
9. Materiality and limitations
10. LIMITATIONS
a. It’s a judgment issues in some areas
i. Risk assessment
ii. What to test and how much
iii. Error judgment
iv. Opinion it self
b. Not all items in FS tested
i. Sample
ii. Sampling risk
c. Accounting and control systems limitations
i. Non-routine transactions
ii. Human error and Fraud of collusion
iii. CBA and Controls overridden

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 AUDITING – Bullet points notes
ACCA – Audit & Assurance – AA (F8) 2
Complied by: Ghias ul Hassan Khan

d. Report inherent limitations

i. Due to standard format not cover unexpected events
e. Position differ
i. Differ position in between from balance sheet and report date as historic other
f. Evidence indicate possible not certain
i. Estimates
ii. Judgments
iii. Intentions

CHAPTER 3 – Corporate Governance

1. What is corporate governance?

a. By which companies directed an controlled
2. OECD principles
a. Organization for Economic Co-operation & Development
b. Set the rights of shareholder, responsibilities of directors & ensure disclosures and
transparency.
c. AREAS:
i. Remuneration and incentives
ii. Risk assessment
iii. Board practices
iv. Shareholder rights.
d. PRINCIPLES:
i. Should promote transparency
ii. Protect shareholders rights
iii. Equitable treatment for all shareholders even minority, foreign and local.
iv. Encourage cooperation between corporation and stakeholders for growth, jobs,
financially sound & sustainability.
v. Ensure timely & accurate disclosures.
vi. Ensure strategic guidance for monitoring.
3. UK – Corporate governance code
a. Leadership
b. Effectiveness
c. Accountability
d. Remuneration
e. Relations with shareholders
4. Turnbull Guidelines
a. Define process for internal control effectiveness
b. Review regular report on controls
c. Consider key risks and how they manage
d. Adequate actions of weakness and incidents
e. Annual assessment of controls
f. Make statement in annual report for this process of turnbull

Mobile: (+92) 3353130597 WhatsApp: (+973) 36370293

ghiasacca@gmail.com
Google Scholar: https://scholar.google.com/citations?user=O3gRGn4AAAAJ&hl=en
LinkedIn: https://www.linkedin.com/in/ghias-ul-hassan-khan-b47b4132
Orcid: https://orcid.org/0000-0001-8368-1275
 AUDITING – Bullet points notes
ACCA – Audit & Assurance – AA (F8) 3
Complied by: Ghias ul Hassan Khan

5. Audit Committee
a. ROLES & ADVANTAGES
i. Review FS on board behalf – Improve FR quality
ii. Create climate of discipline – Reduce opportunity of frauds.
iii. Enable NEDs – To contribute in in independent judgment.
iv. Provide forum to finance director – to raise and speak about the issues.
v. Strengthen the position of external auditor.
vi. Provide framework to external auditor – To resolve dispute in audits
vii. Strengthen the position of internal auditor.
viii. Increase public confidence.
b. DRAWBACKS
i. Direct perceive detracts
ii. Difficulty in selection NEDs
iii. Increased cost
iv. Formalize reporting procedure may dissuade.
6. Internal controls
a. IMPORTANCE
i. Safeguarding assets
ii. Prevent and detect frauds
iii. Safeguarding shareholder investment

HOME READING ASSIGNMENT

1. Communicate matter charged with CG.
2. Director responsibilities for internal control
3. Auditor’s responsibilities for internal controls.

Mobile: (+92) 3353130597 WhatsApp: (+973) 36370293

ghiasacca@gmail.com
Google Scholar: https://scholar.google.com/citations?user=O3gRGn4AAAAJ&hl=en
LinkedIn: https://www.linkedin.com/in/ghias-ul-hassan-khan-b47b4132
Orcid: https://orcid.org/0000-0001-8368-1275