Principles of Auditing

Course Code: BBA-AUD 230
Credit Hours: 3
Semester Offered: Year 2 – Semester 3

Course Description

This course introduces students to the fundamental concepts, principles, and practices of auditing. It covers the nature, scope, and objectives of auditing, the regulatory and ethical framework governing auditors, and the process of planning and conducting audits. Emphasis is placed on understanding internal control systems, audit evidence, audit risk, and the auditor’s responsibilities in ensuring the accuracy and fairness of financial statements.

Course Objectives

By the end of the course, students should be able to:

1. Explain the nature, scope, and purpose of auditing in business organizations.

2. Understand the legal, ethical, and professional responsibilities of auditors.

3. Identify and evaluate internal control systems and their role in audits.

4. Distinguish between different types of audits (statutory, internal, forensic, compliance, etc.).

5. Apply the audit process including planning, evidence gathering, testing, and reporting.

6. Interpret and prepare audit reports in accordance with international standards.

Learning Outcomes

Upon successful completion, students will be able to:

• Demonstrate knowledge of auditing principles and standards (e.g., ISA).

• Assess internal control systems and identify weaknesses.

• Explain audit risk, materiality, and sampling techniques.

• Apply ethical principles in auditing practice.

• Draft audit working papers and reports.

Key Topics

1. Introduction to Auditing

   • Definition, objectives, scope, and importance of auditing

   • Evolution and history of auditing

   • Types of audits (financial, internal, compliance, forensic, IT audits)

2. The Audit Environment

   • Regulatory framework of auditing

   • Role of professional bodies (e.g., IFAC, IAASB)

   • Auditor independence and ethics

3. Audit Planning & Risk Assessment

   • Audit objectives and strategy

   • Materiality and audit risk

   • Audit engagement process

4. Internal Controls & Audit Evidence

   • Elements of internal control systems

   • Evaluating and testing internal controls

   • Types and reliability of audit evidence

5. Audit Procedures & Techniques

   • Substantive procedures and compliance tests

   • Audit sampling methods

   • Computer-assisted audit techniques (CAATs)

6. Audit Documentation & Working Papers

   • Purpose of working papers

   • Documentation standards

   • Audit trails and review processes

7. Audit Reporting

   • Types of audit opinions (unqualified, qualified, adverse, disclaimer)

   • Structure and components of audit reports

   • Communication with management

Teaching Methods

• Lectures and interactive discussions

• Case studies of real-world audit failures

• Practical exercises on audit planning and evidence gathering

• Group presentations on audit reports

Assessment Methods

• Midterm Exam (20%)

• Assignments & Case Studies (20%)

• Class Participation & Presentations (10%)

• Final Exam (50%)

???? Recommended Textbooks & References

1. Arens, A. A., Elder, R. J., & Beasley, M. S. – Auditing and Assurance Services: An Integrated Approach

2. Whittington, O. R., & Pany, K. – Principles of Auditing and Other Assurance Services

3. International Standards on Auditing (ISA) – IFAC/IAASB publications