Advanced Auditing and Assurance CPA KASNEB notes

Topic 1: Assurance and non-assurance engagements

• The concept of assurance and non-assurance engagements
• Engagement letters for assurance and non-assurance engagements
• Agreed upon procedures
• Compilation engagements
• Types of assurance reports
• Key Audit Matters
• Different types of audit opinions based on audit evidence gathered
• Entities/Companies that are exempt from audit in Kenya.

Topic 2: Audit framework and regulations

• Objective and general principles of auditing
• Legal framework
• International, regulatory framework for audit and assurance services
• Auditors’ professional liability and legal responsibilities

Topic 3: Professional and ethical considerations

• Code of ethics for professional accountants in line with International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants
(IESBA Code)
• Fundamental principles, threats and safeguards
• Advertising, publicity, obtaining professional work and fees and money laundering
• Professional skepticism (in the context of errors and fraud) – Professional Liability.

Topic 4: Management of audit practice

• Client acceptance and retention
• Tendering for audit services for public listed entities and nonpublic entities
• Professional appointments for public listed entities and nonpublic entities
• Planning and performing audits. The concept of materiality and assessing risk of
misstatement. Identify significant risks as outlined in International Standards on
Auditing
• Methods and techniques of auditing high risk areas.
• Use and evaluation of internal control system auditors to address audit risks
identified.
• Use of technological tools (data analytics) to analyze and evaluate audit evidence
gathered during the audit and how it addresses risk of misstatement.
• Preparation and retention of audit working papers as required the Companies
Act
• Archiving of audit files.

Topic 5: Audit evaluation and reviews

• Audit assertions and how to identify the relevant assertions during the audit
process
• Subsequent events. Audit work done between financial year end and date of
signing the financial statements.
• Going concern assumption as a financial statement risk
• Related parties. Risks associated with related parties. Process of identifying
related parties management. Disclosure of related parties in the management
representation letter and in the financial statements
• Drafting management letter representation
• Group audit/joint/component audit. Preparation of group reporting instructions to component auditors
• Analytical review
• Evidence and testing considerations
• Using the work of others such as internal auditors, other experts (tax, actuaries,
valuers, lawyers etc.) and another auditor
• The company audit
• Audit of consolidated financial statements
• Audit of banks and non-banking financial institutions
• Audit of general insurance companies
• Audit of cooperatives societies(SACCOs)
• Audit under taxation laws
• Other special audit assignments
• Role of Audit Committee in the audit process

Topic 6: Audit related assurance services

• Prospective financial information, investigations and due diligence
• Special audit assignments (social and environment audit)
• Operations and internal audit management
• Audit under computerised information systems. Identification and testing of
relevant IT general controls (ITGC) during an audit – Audit of public sector
undertakings – Integrated reporting
• Audit of performance information (predetermined objectives) in the public sector
• Special aspects of auditing in an automated environment.

Topic 7: Forensic accounting

• Difference between a statutory audit and a forensic audit
• Conduct of forensic investigations: accepting the investigation, planning, evidence
gathering, reporting
• Rules of evidence in court proceedings
• Regulations and standards on forensic accounting
• Applicable codes of ethics

Topic 8: Concluding and reporting

• Quality control and peer review
• Reports to those charged with governance/Board of directors – Management letterissues identified during the audit process
• Reporting on compliance and other information (Chairman’s statement and
directors report) and for listed entities, reporting on remuneration report for the
directors – Auditors report on financial statements – Reporting on other
assignments.

Topic 9: Regulatory Environment

• International regulatory frameworks for audit and assurance services.
• Money Laundering
• Laws and regulations
• Other Regulators with interest in the audit space in Kenya such as Central Bank
of Kenya, Insurance Regulatory Authority, Capital Market Authority and Retirement
Benefit Authority and their requirements

Topic 10: Contemporary issues and emerging trends

• Professional and ethical developments
• Other current issues
• Effects of pandemics on audit processes. The concept of remote auditing and
additional procedures put in place to obtain sufficient audit evidence.

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