Audi7319 Mo

IIE Learn Module Outline AUDI7319
Auditing 3
AUDI7319
MODULE OUTLINE 2024
(First Edition: 2023)
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© The Independent Institute of Education (Pty) Ltd 2024 Page 1 of 34

Table of Contents
Introduction ............................................................................................................................... 3
Using this Module Outline .......................................................................................................... 5
This Module on Learn ................................................................................................................. 6
Icons Used in this Document and on Learn ................................................................................ 7
Module Resources ...................................................................................................................... 8
Module Purpose ......................................................................................................................... 9
Module Outcomes ...................................................................................................................... 9
Assessments ............................................................................................................................. 10
Module Pacer ........................................................................................................................... 15

Introduction
You were introduced to auditing in your second year of studies, and you are now in your third
and final year of your bachelor’s degree and well on your way to becoming a CA(SA).
As mentioned in Auditing 2A, auditing is a very important aspect of your studying career and
working career and is one of the four subjects that you will need to pass in CTA in order to
graduate and commence your articles. Hopefully by now you have a good idea of where you
want to do your articles, if not already signed with an audit firm. Students may decide to do TIPP
(trading inside of public practice) or TOPP (trading outside of public practice) for their articles.
The more common of the two being TIPP, entails three years of working at an audit firm and
conducting audits, hence the subject of auditing is crucial for your success in the audit firm of
your choice and during your articles.
The objective of an auditor, as you learnt in Auditing 2A is to obtain reasonable assurance about
whether the financial statements as a whole are free from material misstatement, whether due
to fraud or error. Reasonable assurance is gained by obtaining sufficient and appropriate audit
evidence to enable the auditor to express an opinion on the fair presentation of financial
statements.
In Auditing 2A you studied, amongst other topics, the need for an auditor, the regulation of the
auditor, the audit process, internal control concepts and business cycles. In Auditing 3 we will be
going into more detail regarding the audit process in order to start equipping you to become the
best article clerk and CA(SA) you can be.
In learning unit 1 we will be looking at planning an audit; why we plan an audit, what it entails
and the relevance and importance of planning an audit. You were introduced to planning an
audit in Auditing 2A and now we will be going into more detail with specific attention being
placed on the following International Standards on Auditing; ISA 300-Planning an Audit of
Financial Statements, ISA 315-Identifying and assessing the risks of material misstatement
through understanding the entity and its environment and ISA 320-Materiality in planning and
performing an audit.
In learning unit 2 you will learn about our responsibility relating to fraud and non-compliance
with laws and regulations in an audit. Is it our responsibility as auditors to identify fraud and non-
compliance with laws and regulations for our clients as part of our audit? (Start thinking about
this and researching it). In learning unit 2 we will also be covering communicating deficiencies in
internal control with those charged with governance and management. What is a deficiency in
internal controls? Which ones should we report and how do we report these? These topics are
not stand-alone topics and you will need to know how to integrate them into the audit process.

Remember that we conduct risk-based audits, which means that we identify, assess and respond
to the audit risks identified. In the planning stage of an audit (learning unit 1) you would have
learnt how to identify and assess these audit risks, now in learning unit 3 and 4 we will be looking
at some of these responses to the audit risks identified. How do we respond to an audit risk? –
By obtaining audit evidence! And how do we obtain audit evidence? – By performing audit
procedures! And so the puzzle pieces of auditing start fitting together.
In learning unit 3 we will focus on audit documentation and obtaining audit evidence and in
learning unit 4 we will learn one of the ways in which we can obtain this audit evidence – through
test of controls. This is where your knowledge of business cycles from Auditing 2A is crucial.
In learning unit 5 you will learn about the Companies Act and The King Code on corporate
governance and how it affects the auditor and their respective audits.
In learning unit 6 we will continue with obtaining audit evidence and you will learn about
substantive audit procedures. We will also go into detail on performing substantive procedures
in a computerized environment, in other words how do we perform a substantive procedure in
a computerised environment using computer assisted auditing techniques?
In learning unit 7 you will see how an audit comes to an end when you study the concluding
phase of an audit. This unit includes evaluating the audit evidence obtained and formulating the
all-important audit opinion. Start looking at listed company’s financial statements and study the
different audit opinions. What is the same in all the audit opinions you have read and what is
different?
Learning unit 8 focuses on using the work of others as part of our audit procedures and audit
evidence. Whose work can we use? When can we use it? What further procedures must we
perform on the work of others before we can rely on it?
By the end of Auditing 3 you would have been through the whole audit process; from planning
an audit to concluding the audit by issuing your opinion. You should have a thorough
understanding of how an audit is conducted. This knowledge is crucial for your CTA year and
your articles, therefore ensure you are not merely “parrot learning” but in fact understanding
what you are learning to enable yourself to transfer your knowledge to different scenarios.
Enjoy the journey of Auditing 3 and always keep your final destination in sight - CA(SA).

Using this Module Outline

This module outline has been developed to support your learning. Please note that the
content of this module is on Learn as well as in the prescribed material. You will not succeed
in this module if you focus on this document alone.
• This document does not reflect all the content on Learn, the links to difference resources,
nor the specific instructions for the group and individual activities.
• Your lecturer will decide when activities are available/open for submission and when these
submissions or contributions are due. Ensure that you take note of announcements made
during lectures and/or posted within Learn in this regard.

This Module on Learn

Learn is an online space, designed to support and maximise your learning in an active manner.
Its main purpose is to guide and pace you through the module. In addition to the information
provided in this document, you will find the following when you access Learn:
• A list of prescribed material;
• A variety of additional online resources (articles, videos, audio, interactive graphics, etc.)
in each learning unit that will further help to explain theoretical concepts;
• Critical questions to guide you through the module’s objectives;
• Collaborative and individual activities (all of which are gradable) with time-on-task
estimates to assist you in managing your time around these;
• Revision questions, or references to revision questions, after each learning unit.
Kindly note:
• Unless you are completing this as a distance module, Learn does not replace your
contact time with your lecturers and/or tutors.
• AUDI7319 is a Learn module, and as such, you are required to engage extensively with
the content on the Learn platform. Effective use of this tool will provide you with
opportunities to discuss, debate, and consolidate your understanding of the content
presented in this module.
• You are expected to work through the learning units on Learn in your own time –
especially before class. Any contact sessions will therefore be used to raise and address
any questions or interesting points with your lecturer, and not to cover every aspect of
this module.
• Your lecturer will communicate submission dates for specific activities in class and/or
on Learn.

Icons Used in this Document and on Learn

The following icons are used in all your modules on Learn:
Icon Description
A list of what you should be able to do after working through the learning unit.
Specific references to sections in the prescribed work.
Questions to help you recognise or think about theoretical concepts to be covered.
Sections where you get to grapple with the content/ theory. This is mainly
presented in the form of questions which focus your attention and are aimed at
helping you to understand the content better. You will be presented with online
resources to work through (in addition to the textbook or manual references) and
find some of the answers to the questions posed.
Opportunities to make connections between different chunks of theory in the

module or to real life.
Real life or world of work information or examples of application of theory, using

online resources for self-exploration.
REMEMBER:
You need to log onto Learn to:

• Access online resources such as articles, interactive graphics, explanations, video clips, etc. which
will assist you in mastering the content; and
• View instructions and submit or post your contributions to individual or group activities which are
managed and tracked on Learn.

Module Resources
Prescribed Material (PM) SAICA Student Handbook 2023/2024 Volume 2, SAICA. Lexis
for this Module Nexis, Durban. (PM1)
9781776177530
and
Auditing Fundamentals in a South African context, von Wielligh

and Prinsloo. Latest edition. Oxford University Press Southern
Africa. (PM2)
ISBN: 9780190749040
and
Auditing Fundamentals in a South African context Graded

Questions, Hamel and Kunz. Latest edition. Oxford University
Press Southern Africa. (PM3)
ISBN: 9780190738587
Recommended Readings, Please note that a number of additional resources and links to
Digital, and Web resources are provided throughout this module on the Learn
Resources platform. You are encouraged to engage with these as they will
assist you in mastering the various objectives of this module.
They may also be useful resources for completing any
assignments. You will not, however, be assessed under
examination conditions on any additional or recommended
reading material.
Module Overview You will find an overview of this module on Learn under the
Module Information link in the Course Menu.
Assessments Find more information on this module’s assessments in this
document and on the Student Portal.

Module Purpose
The purpose of this module is for students to gain an in-depth understanding of the audit
process together with relevant risk management principles, governance, and legislation to
complete an audit and form an audit opinion.
Module Outcomes
Apply the principles of pre-engagement activities, planning, gathering, and
MO1
evaluating audit evidence and reporting in a given scenario.
MO2 Formulate tests of controls and substantive procedures manually and digitally.
Assess the work of others in accordance with the requirements of the International
MO3
Standards on Auditing.
MO4 Evaluate and report on internal control risks in the business cycle.
MO5 Apply relevant regulations and legislation to given scenarios.
MO6 Formulate substantive procedures in a manual and automated environment.
Assess the results of audit evidence and the impact of unresolved uncorrected
MO7
misstatements and formulate an appropriate audit opinion and audit report.
Apply the principles of relevant legislation, including the Companies Act and the
MO8
King IV code of corporate governance to a given scenario.

Assessments
Integrated Curriculum Engagement (ICE)
Minimum number of ICE activities to complete 4 compulsory, 2 optional (out of 4)
Weighting towards the final module mark 10%
Formatives Test 1 Test 2 Integrated Test 3 Test 4 Integrated

Weighting 10% 10% 10% 10%
Duration 90 minutes 90 minutes 90 minutes 90 minutes
Write after After 20 sessions After 40 sessions After 62 sessions After 83 sessions
Learning Units
LU 1 and 2 LU 1 to 4 LU 1 to 5 LU 1 to 6
covered
Open/Closed Limited open Limited open Limited open Limited open
book book book book book
Resources
None None None None
required
Summative Examination
Weighting 50%
Duration 3 hours
Total marks 120
Open/Closed book Limited open book
Resources required None
Learning Units covered All
Limited open-book assessments:

A limited open book approach is followed by SAICA for the Initial Test of Competence (ITC).
All IIE Bachelor of Accounting 3rd year modules follow a similar approach for all tests and
examinations.
The following textbooks may be taken into the assessment venue
SAICA Handbooks:
• Volume 1: International Financial Reporting Standards that form part of the SAICA
handbooks, part A1 and A2 and part B1, B2 and B3 (5 books);
• Volume 2A: International Audit Standards;
• Volume 2B: SAICA and IRBA pronouncements;
• Volume 2C: Local legislation;
• Volume 2D: The King Code;
• Volume 3: The SAICA Tax Legislation Handbook.

Textbook instructions
1. Students are permitted to bring only ONE printed version of the textbooks
2. Only properly bound standard publishers’ editions are permissible. Photocopies, printed
copies of electronic versions, loose sections or isolated pages of texts are prohibited.
3. Students are permitted to highlight, underline, sideline and flag in the permitted texts.
Writing in the permitted texts is prohibited. Writing on flags is permitted for reference and
cross-referencing purposes only (name or number of the standard, statement or section).
4. Any contravention of these regulations will be dealt with as misconduct and shall be dealt
with in terms of the appropriate misconduct policy.

Assessment Preparation Guidelines

Format of the Assessment Preparation Hints
Test 1 and 3 (Limited open book)
Tests 1 and 3 are stand- • Ensure that you work through all the relevant activities,
alone tests. The assessments exercises and revision questions on Learn and in your
will be written with a textbook.
combination of theory and • Brainstorm possible questions based on the learning
application of theory to a outcomes and objectives provided. Then complete these
given scenario. as practise-tests.
You will be given a scenario • During both your preparation for the test and during the
and will need to answer a test itself, pay attention to the instruction words (like list,
selection of pure theory apply, describe, etc.) and to the mark allocations of each
questions and be able to question to ensure that you are able to provide the
demonstrate your correct depth and detail in your answers.
understanding of theory • To prepare effectively for auditing assessments, you need
through application of it to to understand the theory that has been taught and be
the given scenario. able to apply it to different scenarios. The best way to
master this is to do as many questions as possible under
exam conditions. Once you have completed a question,
you need to mark the question and identify where you
went wrong and where you have gaps in your knowledge.
Once these gaps are identified, you need to revise that
work and do more questions on that section.

Test 2 and 4 (Limited open book)

Tests 2 and 4 are integrated • Ensure that you work through all the relevant activities,
with the other core exercises and revision questions on Learn and in your
modules. You will write 4 textbook.
papers of 90 minutes each. • Brainstorm possible questions based on the learning
Each paper will be out of 60 outcomes and objectives provided. Then complete these as
marks. The integrated tests practise-tests.
are designed to prepare you • During both your preparation for the test and during the
for the ITC exam. test itself, pay attention to the instruction words (like list,
apply, describe, etc.) and to the mark allocations of each
question to ensure that you are able to provide the correct
depth and detail in your answers.
• To prepare effectively for auditing assessments, you need
to understand the theory that has been taught and be able
to apply it to different scenarios. The best way to master
this is to do as many questions as possible under exam
conditions. Once you have completed a question, you need
to mark the question and identify where you went wrong
and where you have gaps in your knowledge. Once these
gaps are identified, you need to revise that work and do
more questions on that section.

Examination
The examination will assess • Consult your examination brief for this module, which will
all learning units in this be made available prior to your examination. Make sure
module. that you practise answering the sample questions in the
brief so that you become familiar with the kinds of
The assessments will be questions likely to appear in the examination itself.
written with a combination • Ensure that you work through all the activities, exercises
of theory and application of and revision questions on Learn and in your textbook. You
theory to a given scenario. must have completed close readings of your prescribed
material to ensure that you have prepared adequately for
You will be given a number your examination for this module.
of scenarios and will need to • Pay close attention to the instruction words (like list, apply,
answer a selection of pure describe, analyse, etc.) and to the mark allocations of each
theory questions and be question to ensure that you provide the correct depth and
able to demonstrate your detail in your answers.
understanding of theory • Make sure that you are comfortable in responding to all the
through application of it to objectives for all learning units.
the given scenarios. • Brainstorm possible questions based on the learning
outcomes and objectives provided.
• To prepare effectively for auditing assessments, you need
to understand the theory that has been taught and be able
to apply it to different scenarios. The best way to master
this is to do as many questions as possible under exam
conditions. Once you have completed a question, you need
to mark the question and identify where you went wrong
and where you have gaps in your knowledge. Once these
gaps are identified, you need to revise that work and do
more questions on that section.

Module Pacer
Code Programme Contact Sessions Credits
AUDI7319 BAA2 96 30
Learning Unit 1 Planning an audit
Overview:
You are able to conduct preliminary engagement activities when deciding whether to accept
an engagement or not. The next step in the audit process is to plan the audit.
In this learning unit you will learn how to describe the different steps involved in planning an
audit, describe the audit risks at the overall financial statement and assertion level, describe
the aspects to be considered when developing the overall audit strategy and audit plan and
finally calculate materiality.
Therefore, at the end of this learning unit you will be competent in understanding and
answering any question relating to planning an audit of financial statements.
Please work through Themes 1, 2, 3 and 4 on Learn, together with the relevant sections of
your prescribed source/s. To ensure that you are working towards mastering the objectives
for this learning unit, please also ensure that you complete the following activities on Learn:
Activity Estimated
Time on Task
1.1.1 Basics on planning an audit of financial statements 90 minutes
1.2.1 Identifying and assessing risks of material misstatement 90 minutes
1.3.1 Audit Strategy and Audit Plan 90 minutes
1.4.1 Calculating materiality 90 minutes
Estimated total time for this learning unit’s activities 6 hours
The challenges you may experience in this learning unit are describing the risks at the assertion
level and describing the aspects that will affect the audit strategy and audit plan. It is always
important when studying auditing to breakdown every concept into its simplest form and
relate back to real life business scenarios.

Learning Unit 1: Theme Breakdown

Sessions: Theme 1: Planning an audit of financial Prescribed Material (PM)
1-16 statements (ISA300)
Academic Week: LO1: Describe the different steps PM1: Applicable ISA’s
1-4 involved in planning an audit of PM2 and 3: Chapter 11 and
Related financial statements. 12
Outcomes: LO2: Identify the staff involved in
MO001 planning an audit of financial
statements.
LO3: Explain the objective of planning
an audit of financial statements.
LO4: Determine the timing of planning
LO5: Describe the documentation
requirements of the planning
phase of an audit of financial
statements.
LO6: Determine the considerations for
planning a new audit engagement.
LO7: Discuss how preliminary
information obtained can assist in
the planning of an audit of
financial statements.
Theme 2: Identifying and assessing the PM1: Applicable ISA’s
risks of material misstatement (ISA315) PM2 and 3: Chapter 11 and
LO8: Discuss how an auditor obtains an 12
understanding of the entity
including their internal controls
that it is engaged to audit.
LO9: Describe the audit procedures
used to obtain the understanding
of the entity and its environment.
LO10: Describe the audit risks of an entity
at the overall financial statement
level.
LO11: Describe the audit risks of an entity
at the assertion level.
LO12: Assess the identified risks based on
the audit risk formula.

LO13: Describe the documentation

requirements for identifying and
assessing the risks of material
misstatement for an audit of
financial statements.
Theme 3: Audit strategy and audit plan PM1: Applicable ISA’s
(ISA300) PM2 and 3: Chapter 11 and
LO14: Describe the aspects that will have 12
an effect on the scope, timing and
direction of the audit when
developing the overall audit
strategy.
LO15: Describe the aspects that will have
an effect on the nature, timing and
extent of the audit when
developing the audit plan.
Theme 4: Materiality (ISA320) PM1: Applicable ISA’s
PM2 and 3: Chapter 11 and
LO16: Discuss the need for materiality in 12
LO17: Identify the difference between
planning, performance and final
materiality.
LO18: Describe the relationship between
materiality and the risk of material
misstatement.
LO19: Describe the relationship between
materiality and detection risk.
LO20: Calculate the materiality for the
audit of financial statements.

Learning Unit 2 Our responsibility relating to fraud and internal control deficiencies
in an audit of financial statements
Overview:
What you have learnt so far in your auditing studies is that auditors give reasonable assurance
on the financial statements of their clients. You have also learnt that the responsibility to
prevent and detect fraud ultimately lies with those charged with governance at your clients.
However, this does not mean that the auditor has no responsibilities relating to fraud.
After this learning unit you will be able to identify the auditor and management’s responsibility
with respect to fraud and compliance with laws and regulations. You will also be able to
formulate audit procedures to obtain appropriate evidence in response to the assessed fraud
risk and when non-compliance is identified or suspected at your client. Finally, you will learn
how to identify the matters that need to be communicated to those charged with governance.
Please work through Themes 1, 2 and 3 on Learn, together with the relevant sections of your
prescribed source/s. To ensure that you are working towards mastering the objectives for this
learning unit, please complete the following activities on Learn:
Activity Estimated Time

on Task
2.1.1 Consideration of fraud in the audit of financial statements 60 minutes
2.2.1 Consideration of laws and regulations in the audit of 30 minutes
financial statements
2.3.1 Communicating deficiencies in internal control to those 60 minutes
charged with governance
Estimated total time for this learning unit’s activities 2 hours 30
minutes
The challenges you may experience in this learning unit are formulating audit procedures to
obtain appropriate evidence in response to the assessed fraud risk and when non-compliance
is identified or suspected at your client. You always need to remember that the point of these
procedures is to obtain evidence as to whether there is in fact fraud or non-compliance – put
your CSI hats on.


Sessions: Theme 1: The auditor’s responsibilities Prescribed Material (PM)
17-20 relating to fraud in an audit of financial
statements (ISA240)
Academic Week: LO1: Identify the responsibilities of PM1: Applicable ISA’s
5 those charged with governance PM2 and 3: Chapter 3
with respect to detection of fraud.
LO2: Identify the responsibilities of the
auditor with respect to detection
of fraud.
LO3: Discuss the auditor’s requirements
on an audit of financial statements
with respect to fraud.
LO4: Identify the risks of material
misstatement due to fraud on an
audit of financial statements.
LO5: Formulate audit procedures to
obtain appropriate evidence in
response to the assessed fraud
risk.
LO6: Discuss any communications that
must be made regarding any fraud
or fraud risk factors identified.
Related Theme 2: Consideration of laws and PM1: Applicable ISA’s
Outcomes: regulations in an audit of financial
MO002 statements (ISA250)
LO7: Identify the responsibilities of
those charged with governance
with respect to compliance with
laws and regulations.
LO8: Identify the responsibilities of the
auditor with respect to compliance
with laws and regulations.
LO9: Discuss the requirements in terms
of the auditor’s consideration of
compliance with laws and
regulations in an audit of financial
statements.

LO10: Describe the audit procedures to

be conducted when non-
compliance is identified or
suspected.
LO11: Discuss the auditors reporting
requirements when non-
compliance is identified or
suspected.
Theme 3: Communication with those PM1: Applicable ISA’s
charged with governance (ISA260
(Revised) and ISA265)
LO12: Describe the objectives of the
auditor with respect to
communication with those
charged with governance.
LO13: Identify the matters that need to
be communicated to those
charged with governance.
LO14: Discuss the requirements of the
auditor when communicating
deficiencies in internal control to
those charged with governance.

Learning Unit 3 Audit documentation and obtaining audit evidence
Overview:
If you consider what you have learnt about the audit process so far, you will see that you have
now mastered the pre-engagement activities and planning an audit. Therefore, in this learning
unit, the next step in the audit process is to obtain audit evidence, you will learn how auditors
obtain audit evidence through performing audit procedures, namely test of controls or
substantive procedures.
However, before you master the skills of obtaining audit evidence, you will learn how to
describe the objectives of auditors when obtaining audit evidence, discuss the considerations
when using the work of an expert, understand the importance of opening balances and
formulate audit procedures to test the opening balances and apply all the concepts of sampling
when obtaining audit evidence.
Please work through Themes 1-2 on Learn, together with the relevant sections of your

on Task
3.1.1 Audit documentation 60 minutes
3.1.2 Audit evidence 60 minutes
3.2.1 Opening balances 60 minutes
3.2.2 Effect of the risk of misstatements on sampling 30 minutes
3.2.3 Sampling process for non-monetary items 60 minutes
3.2.4 Sampling process for monetary items 60 minutes
minutes
The challenges you may face in this learning unit would be describing the auditor’s
requirements when auditing opening balances. Ensure you understand the principle of the
topic and the different procedures that can be performed.


Sessions: Theme 1: Audit documentation and audit Prescribed Material (PM)
21-28 evidence (ISA230 and ISA500)
Academic Week: LO1: Identify the purposes of audit PM1: Applicable ISA’s
6-7 documentation. PM2 and 3: Chapter 11
LO2: Discuss the requirements of the
auditor with regards to audit
documentation.
LO3: Describe the objective of the
auditor when obtaining audit
evidence.
LO4: Define the term appropriateness in
the context of audit evidence.
LO5: Define the term sufficient in the
context of audit evidence
LO6: Discuss the procedures the auditor
will need to conduct before relying
on the work of an expert.
LO7: Discuss the auditor’s actions if there
is inconsistency in or doubts over
the reliability of audit evidence.
Related Theme 2: Obtaining audit evidence – PM 1: Applicable ISA’s
Outcomes: Planning (ISA510 and ISA530) PM2 and 3: Chapter 13
MO003 LO8: Discuss the importance of the
opening balance in the audit of an
initial engagement.
LO9: Formulate the audit procedures to
be conducted by an auditor to audit
the opening balances of initial
engagements.
LO10: Describe the reason that audit
sampling is used.
LO11: Define “population” with regards to
audit sampling
LO12: Define the following terms:
• Sampling risk;
• Stratification;
• Tolerable misstatement.
LO13: Describe the auditor’s requirements
when using audit sampling.

Learning Unit 4 Internal control concepts
Overview:
As has been discussed in multiple learning units to date, auditors follow a risk-based audit
which means that auditors identify risks of material misstatement, they then assess them at
the overall and assertion level. These two steps are primarily during the planning phase of an
audit. The final step in a risk-based audit is to respond to the risks identified. An auditor
responds to the risks of material misstatement by obtaining sufficient and appropriate audit
evidence to determine if there are in fact material misstatements. Audit evidence is obtained
by performing audit procedures. Audit procedures can be split into three broad categories:
risk assessment procedures, test of controls or substantive procedures.
In learning unit 4 you will learn how to apply general and application controls in a
computerised environment. You will then move onto formulating test of controls in a manual
and automated environment for four of the business cycles covered in AUDI6211, namely;
revenue and receipts, acquisition and payments, inventory and production and finally the
payroll and personnel cycle.

on Task
4.1.1 Categories of general controls 30 minutes
4.1.2 Programme checks 30 minutes
4.1.3 Recommending general and application controls 60 minutes
4.2.1 Revenue and receipts cycle 90 minutes
4.2.2 Payments and Acquisition cycle 90 minutes
4.2.3 Inventory and Production cycle 60 minutes
4.2.4 Payroll and personnel cycle 60 minutes
The challenge you may face with this learning unit is formulating test of controls in an
automated environment. It is important that you always think about the control being in a real
life scenario and think logically how you would be able to test it.


Sessions: Theme 1: Controls in an automated Prescribed Material (PM)
29-44 system
Academic Week: LO1: Apply general controls in a PM2 and 3: Chapter 5, 13
8-11 computerised environment. and 14
LO2: Apply application controls in a
computerised environment.
Related Theme 2: Test of controls (ISA330) PM1: Applicable ISA’s
Outcomes: PM2and 3: Chapter 6, 7, 8,
MO004 LO3: Formulate the test of controls in a9, 13 and 14
manual environment for the
revenue and receipts cycle.
LO4: Formulate the test of controls in
an automated environment for the
revenue and receipts cycle.
LO5: Formulate the test of controls in a
acquisition and payment cycle.
acquisition and payment cycle.
inventory and production cycle.
inventory and production cycle.
Payroll and personnel cycle.
Payroll and personnel cycle.
Sessions: Revision LU1 to LU4 Prescribed Material (PM)
45-48
Academic Week:
12

Learning Unit 5 The Companies Act and The King Code on Corporate Governance
Overview:
In AUDI6211 you learnt about the Auditing Profession Act and the Code of Professional
Conduct. There are two more pieces of legislation that you need to know in order to run an
effective audit; The Companies Act and the King IV report on Governance.
In this learning unit you will learn how to apply the principles of the Companies Act and King
IV report on Governance to various scenarios.

on Task
5.1.1 Companies Act 120 minutes
5.2.1 King Code IV 120 minutes
5.2.2 Board Committees 90 minutes
minutes
Students generally struggle with identifying the ‘concerns’ relating to the Companies Act and
King IV report on Governance in a given scenario. The only way this can be resolved is by doing
as many practice questions as possible. Practice makes perfect!


Sessions: Theme 1: Companies Act principles Prescribed Material (PM)
49-62
Academic Week: LO1: Apply the following sections of the PM1: The Companies Act
13-15 Companies Act to a given scenario: PM2 and 3: Chapter 3 and 4
• Section 2-4 {AMENDED}
• Section 8
• Section 15
• Section 19-22
• Section 24, 27-30
• Section 35-48
• Section 57-78
• Section 86-94
• Section 213-214
Related Theme 2: King IV report on Governance PM1: King IV report on
Outcomes: Governance
MO004 LO2: Apply the principles of the King IV PM2 and 3: Chapter 3 and 4
MO005 Report on Governance for South {AMENDED}
Africa to a given scenario.

Learning Unit 6 Formulating Substantive Audit Procedures
Overview:
In AUDI7311 you learnt how to plan an audit of financial statements and you started learning
how to obtain audit evidence through test of controls. We will continue in AUDI7319 with
obtaining audit evidence through substantive procedures all the while remembering our
ultimate destiny, issuing an opinion on the fair presentation of the financial statements of our
clients.
In this learning unit you will gain an understanding of the principles of substantive procedures
and the difference between test of details and analytical procedures along with the purposes
of these tests. You will be able to apply your knowledge of the business cycles learnt in
AUDI6211 and AUDI7319 to formulating substantive audit procedures in a manual and
automated environment, to address the risks identified when planning an audit.
Please work through Themes 1 and 2 on Learn, together with the relevant sections of your
learning unit, please also ensure that you complete the following activities on Learn:
Activity Estimated
Time on Task
6.1.1 Introduction to substantive audit procedures 120 minutes
6.1.2 Analytical procedures 120 minutes
6.2.1 Auditing Inventory using CAATs 120 minutes
6.2.2 Substantive procedures for Accounts Receivable 120 minutes
6.2.3 Substantive procedures for Inventory 60 minutes
6.2.4 Substantive procedures for Payroll 90 minutes
Estimated total time for this learning unit’s activities 10.5 hours
The challenge you may experience in this learning unit is being able to put down on paper the
substantive procedure you believe should be executed to address the identified risks. The key
is to always plan your question properly before writing your answer as well as always referring
back to the assertions.


Sessions: Theme 1: Introduction to Substantive Prescribed Material (PM)
63-83 procedures and Analytical procedures
(ISA330 and ISA520)
Academic Week: LO1: Describe the reasons for formulating PM1: Applicable ISA’s
16-20 substantive procedures. PM2 and 3: Chapter 13 and
Related LO2: Describe the nature, timing, and 14
Outcomes: extent of substantive procedures.
MO001 L03: Describe how understatements and
overstatements affect the direction
of testing.
LO4: Describe analytical procedures
LO5: Discuss the benefits of analytical
procedures.
LO6 Formulate analytical procedures
LO7: Investigate the results of analytical
procedures.
Theme 2: Principles of formulating PM1: Applicable ISA’s
Substantive procedures in a manual and PM2 and 3: Chapter 13 and
an automated environment (ISA330, 14
ISA505, ISA520, ISA540)
LO8: Formulate substantive procedures in
a manual environment for all the
business cycles.
LO9: Formulate substantive procedures
with the assistance of computer
assisted auditing techniques (CAATS)
for all the business cycles.
LO10: Define an external confirmation.
LO11: Discuss the reasons as to why an
external confirmation is a reliable
source of audit evidence.
LO12: Identify the accounts that an
auditor will obtain external
confirmations for.
LO14: Discuss the actions the auditor will
take when management refuses to
allow the auditor to send out
external confirmations.

LO14: Discuss the actions of the auditor

when no response is received from
an external confirmation.
LO15: Apply the external confirmation
process.
LO16: Evaluate the responses received
from external confirmations.
LO17: Formulate substantive procedures
for external confirmations.
LO18: Describe an accounting estimate
LO19 Describe the auditor’s requirements
when auditing accounting estimates.

Learning Unit 7 Evaluating and concluding
Overview:
This is the final stage in the audit process. Once the auditor has obtained sufficient and
appropriate audit evidence through performing test of controls and substantive procedures,
the auditor finally needs to evaluate all this evidence and conclude on the audit by issuing the
audit report.
In this learning unit you will learn how to apply the requirements of auditing related party
transactions, subsequent events and going concern to given scenarios in order to evaluate the
audit evidence obtained. You will also learn how to evaluate misstatements identified and
accumulated during the audit. Finally, you will learn how to formulate an audit report.
Please work through Themes 1 and 2 on Learn, together with the relevant sections of your

on Task
7.1.1 Related Parties 60 minutes
7.1.2 Subsequent Events 120 minutes
7.1.3 Going Concern 60 minutes
7.1.4 Evaluating Misstatements 90 minutes
7.1.5 Steps in assessing misstatements 60 minutes
7.2.1 Audit Report/Opinion 60 minutes
7.2.2 Unresolved matters 90 minutes
The challenges you may face in this learning unit would be formulating audit procedures for
the evaluation of related party transactions, subsequent events and the going concern
consideration. The key to success here is to refresh your knowledge on learning unit one and
the accounting standards on these sections.


Sessions: Theme 1: Evaluating an Audit (ISA450 and Prescribed Material (PM)
84-92 ISA550-ISA580)
Academic Week: LO1: Define a related party. PM1: Applicable ISA’s
21-22 LO2: Define a related party transaction. PM2 and 3: Chapter 14 and
LO3: Describe the auditor’s requirements 15
when auditing related party
relationships, balances and
transactions.
LO4: Define a subsequent event.
LO5: Identify the different dates involved
in subsequent event considerations.
LO6: Describe the requirements of the
auditor with regards to identifying
and auditing subsequent events.
LO7: Define the going concern basis of
accounting.
LO8: Discuss the responsibilities for the
assessment of the entity’s ability to
continue as a going concern.
LO9: Describe the requirements of the
auditor regarding the auditing of the
going concern assumption at an
entity.
LO10: Describe the use of the
management representation letter
as audit evidence.
LO11: Describe the auditor’s
requirements with regards to.
obtaining written representations
LO12: Describe the requirements of
evaluating misstatements identified
during the audit.
Related Theme 2: Concluding on an Audit (ISA700 PM 1: Applicable ISA’s
Outcomes: – ISA720 (excluding ISA710)) PM2 and 3: Chapter 15
MO003 LO13: Express an opinion on financial
statements.
LO14: Formulate an unmodified audit
opinion.
LO15: Describe key audit matters to be
included in an audit report.

LO16: Formulate a modified audit opinion.

LO17: Formulate an emphasis of matter
and paragraphs on other matter in
the audit report.
LO18: Discuss the auditor’s
responsibilities relating to other
information in documents
containing audited financial
statements.

Learning Unit 8 Using the work of others
Overview:
In the journey of learning how to conduct an audit of financial statements, we also need to
consider the fact that there may be others, outside the audit team, that could be involved in
the audit. It is important that you understand their purpose and the considerations needed to
be made before we use the work of someone outside of our audit team.
In this learning unit you will learn the procedures and requirements necessary to be executed
when auditing a group company, using internal auditors and using an auditor’s expert.
Please work through Themes 1, 2 and 3 on Learn, together with the relevant sections of your

on Task
8.1.1 Using the work of component auditors 120 minutes
8.2.1 Using the work of internal auditors 120 minutes
8.3.1 Using the work of an expert on an audit of financial 90 minutes
statements
8.3.2 Assessing the work of an expert 90 minutes
The challenges you may experience in this learning unit are formulating the audit procedures
necessary to be conducted before contracting someone outside the audit team as well as
formulating the procedures to be conducted to evaluate their work once done. This challenge
can be overcome by using your ISA standards smartly and always following the same approach
when answering these questions.


Sessions: Theme 1: Audits of Group Financial Prescribed Material (PM)
93-96 Statements (ISA600)
Academic Week: LO1: Obtain an understanding of a group PM1: Applicable ISA’s
23 audit. PM2 and 3: Chapter 14
LO2: Obtain an understanding of a
component auditor.
LO3: Describe the definitions contained in
ISA600, paragraph 9.
LO4: Apply the requirements of auditing a
set of group financial statements to
a given scenario.
Related Theme 2: Using the work of Internal PM1: Applicable ISA’s
Outcomes: Auditors (ISA610) PM2 and 3: Chapter 14
MO002 LO5: Determine whether the work of an
internal audit function can be used.
LO6: Determine to what extent the work
of an internal audit function can be
used.
LO7: Discuss the use of the internal audit
function’s work for the external
audit.
LO8: Determine whether the internal
auditors can be used as direct
assistance.
LO9: Determine to what extent the
internal auditors can be used as
direct assistance.
LO10: Discuss the use of internal auditors
as direct assistance to the external
audit.
Theme 3: Using the work of an Auditor’s PM1: Applicable ISA’s
Expert (ISA620) PM2 and 3: Chapter 14
LO11: Describe the auditor’s responsibility
for the audit opinion.
LO12: Apply the requirements of using the
work of an auditor’s expert to a
given scenario.

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IIE Learn Module Outline AUDI7319

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Using this Module Outline

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This Module on Learn

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Icons Used in this Document and on Learn

Specific references to sections in the prescribed work.

Questions to help you recognise or think about theoretical concepts to be covered.

Opportunities to make connections between different chunks of theory in the

Real life or world of work information or examples of application of theory, using

You need to log onto Learn to:

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Auditing Fundamentals in a South African context, von Wielligh

Auditing Fundamentals in a South African context Graded

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MO5 Apply relevant regulations and legislation to given scenarios.

MO6 Formulate substantive procedures in a manual and automated environment.

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Formatives Test 1 Test 2 Integrated Test 3 Test 4 Integrated

Limited open-book assessments:

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Assessment Preparation Guidelines

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Test 2 and 4 (Limited open book)

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Learning Unit 1: Theme Breakdown

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LO13: Describe the documentation

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Activity Estimated Time

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Learning Unit 2: Theme Breakdown

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LO10: Describe the audit procedures to

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Learning Unit 3 Audit documentation and obtaining audit evidence

Activity Estimated Time

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Learning Unit 3: Theme Breakdown

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Learning Unit 4 Internal control concepts

Activity Estimated Time

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Learning Unit 4: Theme Breakdown

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Activity Estimated Time

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Learning Unit 5: Theme Breakdown

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Learning Unit 6 Formulating Substantive Audit Procedures

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Learning Unit 6: Theme Breakdown

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LO14: Discuss the actions of the auditor

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Learning Unit 7 Evaluating and concluding