QUEZON CITY UNIVERSITY

COLLEGE OF ACCOUNTANCY

BACHELOR OF SCIENCE IN ACCOUNTANCY

COURSE TITLE : Auditing and Assurance Principles

COURSE CODE : ACPAUD1
NUMBER OF UNITS : 3 units
PRE-REQUISITE COURSE :

COURSE DESCRIPTION:

This course is designed to expose students both to the demand for and the supply of the
profession’s flagship service - financial statement audits - and to the nature of the value added assurance
services which decision makers demand in the information age.

Topics include: nature of the accounting profession, auditing and assurance fundamentals:
relationship among assurance, attestation, and audit services; consulting vs. assurance services; types of
attestation services (agreed-upon procedures engagement and review engagement); types of audits
(internal, external or financial statement audits, government audit, and special purpose audits);
relationship of accounting and auditing; other services (operational audits, compliance audits, and non-
attest services); professional standards: assurance standards and attestation and auditing standards; public
sector regulation of accounting practice and legal liability; the framework of financial statements
auditing: risk-based approach as audit methodology; audit evaluation and planning, including the concept
of risk and materiality; assessing internal controls, and tests of controls including internal controls in
computer-based business systems; performance of an audit: evidence collection, analysis, and substantive
tests; reporting: reports on assurance services, attestation services, and financial statement audits; and
completing the audit including communications with board of directors and management concerning
internal control weaknesses. Also discussed in detail are the basic professional values and the Code of
Ethics for Professional Accountants and SEC’s Code of Corporate Governance.

After successful completion of this course, the student is expected to:

1. Manifest understanding of the nature and value of financial statement audits and the other non-attest
services
2. Be able to discuss the professional standards to be observed in audits and non-attest services
3. Be able to describe the audit process and the risks involved in the audit
4. Evaluate the strengths and weaknesses of a client’s internal control system
5. Exhibit understanding of the basic professional values and the Code of Ethics for Professional
Accountants and SEC’s Code of Corporate Governance

Textbooks and references:

1. Auditing & Other Assurance Services, 2013 Edition, Baldres, De Leon and Magadia
2. Auditing Theory: A Guide to Understanding PSA, 2018 Edition, Salosagcol, Tiu and Hermosilla,
GIC Enterprises & Co., Inc.
3. Auditing and Assurance Principles, 2012 Edition, Ireneo, Ireneo and James, FC Arellano
Publishing.

Requirements:
1. Class Participation
2. Quiz/Recitation/Assignments/Seatwork/Output
3. Major Examination
DETAILED COURSE OUTLINE

Week Hours Topic Learning Outcomes Strategies/ Assessment of

Activities Learning Outcomes
1-2 6 Classroom Policies and introduction  Define assurance and assurance Lecture / Students to answer
engagement and give examples Discussion exercises and problems
Discussion on the course Syllabus  Discuss the elements of assurance related to the topic
engagements Recitation/Assignment/
1.0 Fundamentals of Auditing and Assurance Services  Classify assurance engagements Seatwork/Group At least 75% of the class
according to structure and according Activity/Case studies get 75% grade in
1.1 Introduction to assurance engagements to level of assurance provided. quiz/assignment
a. Nature, objective and elements  Discuss the meaning of assertion- Quiz /seatwork.
b. Types of assurance engagements (audits, reviews, based engagements and give
other assurance engagements) examples
c. Assurance service vis-à-vis attestation services  Give examples of non-assurance
engagements and describe each one
1.2 Introduction to auditing briefly.
a. Nature, philosophy, and objectives  Define auditing.
b. Types of audit  Enumerate and explain the different
1. According to nature of assertion/data (financial types of audit engagement
statements audit, operational audit, compliance  Know the objective and scope of a
audit) financial audit.
2. According to types of auditor (external
independent financial statements audit, internal
audit, government audit)

3-5 9 2.0 The Professional Practice of Public Accounting  Enumerate the different sectors of Lecture / Students to answer
accounting practice Discussion exercises and problems
2.1 Public accounting profession  Describe the organizations that affect related to the topic
a. Public accounting as a profession the practice of Accountancy. Recitation/Assignment/
b. Organizations that affect public accounting  Understand the different AASC- Seatwork/Group At least 75% of the class
1. Regulatory government agencies (Professional issued professional standards Activity/Case studies get 75% grade in
Regulatory Board of Accountancy, Commission applicable to services of the CPA quiz/assignment
on Audit, Securities and Exchange Commission,  Appreciate the need for quality Quiz /seatwork.
Bangko Sentral ng Pilipinas, Insurance controls
Commission, Bureau of Internal Revenue)  Enumerate the different elements of a
 2. Standard-setting bodies (Auditing and Assurance system of quality control.
Standards Council, Financial Reporting  Explain the purpose of an
Standards Council) engagement quality control review
c. Regulation of the public accounting practice  Appreciate the need for a Code of
1. Philippine Accountancy Act of 2004 / Ethics
Implementing Rules and Regulations  Know the pertinent provisions of the
2. SEC rulings on financial statement presentation Code of Professional Ethics

2.2 The CPA’s professional responsibilities

a. Philippine Standards on Auditing
b. Code of Ethics for Professional Accountants in the
Philippines
c. Quality control
d. Responsibilities on fraud, error, and noncompliance

6-7 6 3.0 The Financial Statements Audit –Client Acceptance,  Discuss the basic concepts that Lecture / Students to answer
Audit Planning, Supervision and Monitoring underlie a financial statement audit. Discussion exercises and problems
 Define materiality and audit risk\ related to the topic
3.1 Overview of the audit process  Know the major phases of the Recitation/Assignment/
financial statement audit process Seatwork/Group At least 75% of the class
3.2 Pre-engagement procedures  Know the procedures involved Activity/Case studies get 75% grade in
during the pre-engagement activities quiz/assignment
3.3 Scope and purposes of audit planning  State the general objective in Quiz /seatwork.
a. Essential planning requirements planning an audit
1. Knowledge of the business  Describe the standard planning
2. Preliminary analytical procedures procedures
3. Materiality  Understand how the auditor obtains
4. Assessing and managing audit risks an understanding of the client and its
5. Overall audit plan and audit program environment
6. Considerations of the work of others (experts,  Define analytical procedures and
internal auditor, other independent auditors) explain why they are important at the
planning stage of the audit
3.4 Direction, supervision and review  Discuss the contents of the audit plan
and the audit program
 List and explain other planning
considerations.
8-10 9 4.0 Understanding the Entity and its Environment  Define internal controls Lecture / Students to answer
Including its Internal Control and Assessing the  Identify the different components of Discussion exercises and problems
Risks of Material Misstatement internal control system related to the topic
 Describe the basic approach to Recitation/Assignment/
4.1 Industry, regulatory and other external factors, planning an audit based on an Seatwork/Group At least 75% of the class
including the applicable financial reporting understanding of internal control Activity/Case studies get 75% grade in
framework  Know the techniques that may be quiz/assignment
a. Nature of the entity used to document the auditor’s Quiz /seatwork.
b. Objectives and strategies and related business risks understanding of an entity’s internal
c. Measurement and review of the entity’s financial control structure
performance  Know how control risk is assessed,
and the implications of this
4.2 Internal control assessment to the rest of the financial
a. Basic concepts and elements of internal control statement audit process.
b. Consideration of accounting and internal control  Contrast fraud against error
systems
1. Understanding and documentation
2. Assessment of control risks
(a) Test of controls
(b) Documentation

4.3 Assessing the risks of material misstatement

a. Fraud and errors
b. Risk assessment procedures
c. Discussion among the engagement team
d. Significant risks that require special audit
consideration
e. Risks for which substantive procedures alone do not
provide sufficient appropriate audit evidence
f. Revision of risk assessment

4.4 Communicating with those charged with governance

and management

Mid-term examination.
11-12 6 5.0 Audit Objectives, Procedures, Evidences and  Define audit evidence Lecture / Students to answer
Documentation  Identify the attributes of audit Discussion exercises and problems
evidence related to the topic
5.1 Nature and significance  Understand the relationship between Recitation/Assignment/
assertions, audit objectives, and audit Seatwork/Group At least 75% of the class
5.2 Evidential matters procedures Activity/Case studies get 75% grade in
 List down and explain the different quiz/assignment
5.3 Audit procedures / techniques types of audit procedures according Quiz /seatwork.
to purpose and according to nature.
5.4 Audit working papers  Define substantive tests. Long Exam/ Case Output for students
 Classify the different substantive Studies (20% of CS grade)
procedures performed in an audit
 Define audit documentation and list
down the factors which affect the
form and content of audit
documentation
 Classify working papers and
enumerate the element of working
papers
 Know the pertinent considerations
regarding the ownership, custody
and confidentiality of working
papers

13 3 6.0 Audit Sampling  Define audit sampling Lecture / Students to answer

 Explain the difference between Discussion exercises and problems
6.1 Basic audit sampling concepts sampling and nonsampling risk. related to the topic
 Distinguish between statistical and Recitation/Assignment/
a. Nature and purpose nonstatistical sampling. Seatwork/Group At least 75% of the class
b. Non-statistical and statistical sampling  Describe how the basic concepts Activity/Case studies get 75% grade in
c. Attribute and variables sampling technique apply to audit sampling. quiz/assignment
d. Sampling and nonsampling risk  Distinguish between attributes and Quiz /seatwork.
e. Testing procedures which do not involve sampling classical variables sampling risk.
 Discuss the effects of changes in
6.2 Factors affecting sample design various population characteristics
a. Audit objectives and sample requirements on requried
 b. Population and its characteristics sample size.
c. Risk and assurance  Describe how the auditors plan,
d. Tolerable error perform, and evaluate an audit
e. Expected error in the population sample
f. Variation in the population

6.3 Factors affecting sample size

6.4 Sample selection methods

6.5 Evaluation of sample results

14-15 6 7.0 Completing the Audit / Post-Audit Responsibilities  Identify the different procedures Lecture / Students to answer
performed to complete an audit Discussion exercises and problems
7.1 Completing the audit and audit report preparation engagement. related to the topic
a. Analytical procedures for overall review  Know the types of subsequent Recitation/Assignment/
b. Related party transactions events. Seatwork/Group At least 75% of the class
c. Subsequent events review  Understand the auditor’s Activity/Case studies get 75% grade in
d. Assessment of going concern assumption responsibility regarding subsequent quiz/assignment
e. Obtaining client’s representation letter events. Quiz /seatwork.
f. Evaluating findings, formulating an opinion and  Know the audit procedures used to
drafting the audit report identify subsequent events
 Understand how to identify and
7.2 Post-audit responsibilities assess entities with on-going concern
a. Subsequent discovery of facts problems.
b. Subsequent discovery of omitted procedures  Know the requirements of PSAs for
the other different completion
procedures.
 Describe the purpose and content of
management representation letters,
management letters, and
communications with management
and those charged with governance.

16 3 8.0 Reports on Audited Financial Statements  Understand the standard financial Lecture / Students to answer
statement audit report with an Discussion exercises and problems
8.1 The unqualified auditor’s report unqualified opinion. related to the topic
  Know the situations to include an Recitation/Assignment/
8.2 Basic elements of the unqualified auditor’s report emphasis of matter paragraph and Seatwork/Group At least 75% of the class
other matters paragraph in a financial Activity/Case studies get 75% grade in
8.3 Modified auditor’s report statement audit report with an quiz/assignment
a. Matters that do not affect the auditor’s opinion unqualified opinion. Quiz /seatwork.
b. Matters that do affect the auditor’s opinion  Know the conditions that lead to
modification of the auditor’s
8.4 Report on comparatives opinion.
 Know the other types of financial
statement audit reports.
 Understand the effect of materiality
on the auditor’s choice of financial
statement audit reports.
 Understand the auditor’s reporting
on comparatives.
 Know the auditor’s responsibility for
other information in documents
containing audited financial
statements.

17 3 9.0 Auditing in a Computerized Information Systems  Describe the nature of various types Lecture / Students to answer
(CIS) Environment of computer systems Discussion exercises and problems
 Distinguish between general control related to the topic
9.1 Internal control in a CIS environment activities and application control Recitation/Assignment/
a. Introduction activities Seatwork/Group At least 75% of the class
b. Impact of computers on accounting and internal  Explain the manner in which the Activity/Case studies get 75% grade in
control systems auditors obtain an understanding of quiz/assignment
1. General controls internal control in computer Quiz /seatwork.
2. Application controls environment.
c. Unique characteristics of specific CIS  Discuss the ways in which the
1. Stand alone auditors may test controls in a
2. On-line computer environment.
3. Database system  Describe the nature of some audit
techniques and the ways that they are
9.2 Basic approach to the audit of CIS environment used by the auditors.
a. Introduction  Learn the basic concept of electronic
 b. Effects of computers on the audit process commerce and its effect on the audit
c. Computer assisted audit techniques of financial statements.

18 3 10.0 Other Assurance and Nonassurance Services  Identify the types of special reports Lecture / Students to answer
that auditors issue. Discussion exercises and problems
10.1 Procedures and reports on special purpose audit  Understand the procedures and related to the topic
engagements reports on special purpose audit Recitation/Assignment
a. General considerations engagements. Seatwork/Group At least 75% of the class
b. Audit of financial statements prepared in  Learn the process involved in the Activity/Case studies get 75% grade in
accordance with a comprehensive basis of examination of prospective financial quiz/assignment
accounting other than GAAP in the Philippines information Quiz /seatwork.
c. Audit of a component of financial statements  Learn the auditor’s responsibilities
d. Reports on compliance with contractual agreements and approach on engagements Long Exam/ Case Output for students
e. Reports on summarized financial statements involving review of financial Studies (20% of CS grade)
statements.
10.2 Nonaudit engagements: procedures and reports  Understand the responsibilities and
a. Examination of prospective financial information approach in performing agreed-upon
b. Engagements to review financial statements procedures regarding financial
information
10.3 Nonassurance engagements  Understand and perform
a. Engagements to perform agreed-upon procedures engagements involving compilation
regarding financial information of financial statements.
b. Engagements to compile financial information
Final Examination
EXPECTATIONS FROM STUDENTS:
1. The student is responsible to come to each class prepared.
2. The student is expected to take all examinations on the date scheduled.
3. The student is expected to read the assigned chapter and solve exercises/problems prior to
Class.
4. The student is expected to attend each class and participate actively in the discussions.
5. The student is expected to do the seatwork/exercises that will be assigned by the instructor
inside the classroom.

ACADEMIC DISHONESTY:
Academic dishonesty is subject to University’s rules and regulations.

POLICY on ABSENCES:
1. Missed Classes: Students who miss class are responsible for content. Any student who misses a
class has the responsibility for obtaining copies of notes, handouts, assignments, etc. If additional
assistance is still necessary, an appointment should be scheduled with the instructor. Class time is
not to be used to go over material with students who have missed class.
2. Incurrence of three tardiness is equal to one absence.
3. Incurrence of three consecutive absences is considered unauthorized dropped.
4. Incurrence of four absences is considered unauthorized dropped.

GRADING SYSTEM:
Midterm Grade (MG) Pre-Final Grade (PFG)
Midterm Exam Final Exam
Class Standing 40% Class Standing 40%
Quiz 15% 60% Quiz 15% 60%
Recitation 10% Recitation 10%
Assignment 5% Assignment 5%
Seatwork 10% Seatwork 10%
Output 20% Output 20%
100% 100%

Final Grade (FG)= (MG + PFG) / 2

POINT POINT
GRADE REMARKS GRADE REMARKS
Equivalent Equivalent

98-100 1.00 Excellent 77-79 2.75 Satisfactory

95-97 1.25 Excellent 75-76 3.00 Passed

92-94 1.50 Very Good Below 75 5.00 Fail

89-91 1.75 Very Good INC Incomplete

86-88 2.00 Good OD Officially Dropped

83-85 2.25 Good UD Unofficially Dropped

80-82 2.50 Satisfactory

Prepared by: Approved by: Noted by:

Bryan Patrick A. Lafrades, CPA Dr. Rosenda De Gracia

Faculty Member Chairperson VP for Academics

I have read the course syllabus and I understand that I have to comply with the requirements of the course
and the expectations from me as a student of ______________ during the __ Semester of _________. I
am fully aware of the consequences of non-compliance with the above-mentioned requirements and
expectations.

________________________________
Printed name and signature of student

________________________________
Date