Course code Ekon5143

Credit points 2

Audit Process

Total Hours in Course80

Number of hours for lectures12

Number of hours for seminars and practical classes12

Independent study hours56

Date of course confirmation19.02.2019

Responsible UnitInstitute of Finance and Accounting

Course developer

author Finanšu un grāmatvedības institūts

Romēna Šulca

Dr. oec.

Prior knowledge

Ekon5082, Financial Accounting I

Ekon5144, Enterpreneurship Financing

Ekon6040, Risk Management Process

Course abstract

The course deepens the knowledge and broadens the understanding of the audit process. Students explore, analyse and assess the theoretical aspects of audit and the historical development of audit, broadly reflecting the theoretical ideas, discussions and reviews. The course summarises and analyses the development of the institutional audit system in the world and Latvia as well as deals with the regulatory framework and basic legal principles for audit. The course focuses on the audit process and compliance with the International Standards on Auditing, the Standards for the Professional Practice of Internal Auditing and the Code of Ethics.

Learning outcomes and their assessment

Students will be able to
1. Demonstrate the knowledge of theoretical aspects and historical evolution of audit Specialised literature studies, a test.
2. Demonstrate an in-depth understanding of the institutional system and legal framework for audit, the International Standards on Auditing, the Standards for the Professional Practice of Internal Auditing and the Code of Ethics Test.
3. Demonstrate an extended knowledge of audit methods and approaches Independent work – theses on how to solve particular problems.
4. Discuss the audit process, independently apply the theoretical knowledge acquired and the method learnt and reasonably argue and substantiate the conclusions drawn Case studies, group work.
5. Independently develop their own competences and analyse and assess the mission of internal and external auditing, given the value of the organisation, contributing to risk-based and unbiased confidence in reliability of financial reports for potential users Independent work – a report and a presentation on key theses.
6. Responsibly plan the completion of the assignments given Independent work.
7. Select information and present the calculations performed and proposals made as well as communicate Independent work.

8. Independently formulate and critically analyse the theoretical and practical knowledge acquired and justify the decisions made as well as, in necessary, do an additional analysis on the application of standards in the audit process, thereby proving the understanding of the audit process and its role in an organisation Tests, a project report.

Course Content(Calendar)

1) Theoretical aspects of the audit process and their historical development. Theoretical aspects of audit: interpretations of audit terms, analysis of historical development, modern approaches. Audit definitions are their common and different elements. Historical development and peculiarities today. Different models, approaches and methods. Common and different in the external and internal audit process. Audit process in accordance with best world practice. Comparative assessment of the cooperation between the internal and external auditor. Development trends of Latvian internal audit: historical chronological distribution. Assessments of audit development provided by various researchers, experts and organizations. (lecture - 2 hours, practical work - 2 hours).
2) Development of the audit institutional system. Development processes of the audit institutional system in the world and in Latvia: the beginnings of the external and internal audit institutional system, development of methodology, development of standardization. Activities of the Association of Sworn Auditors. Activities of the Institute of Internal Auditors. Structure of the audit institutional system, authorization mechanism, audit ethics issues, quality of audit work and professional development. Development of International Standards on Auditing and International Standards for the Professional Practice of Internal Auditing. (lecture - 2 hours, practical work - 2 hours).
3) Regulatory and legal aspects regulating the field of audit. Normative and legal acts regulating the field of audit. Analysis of regulatory enactments, base. Internal audit policy: internal audit coordination and unified long-term development planning of internal audit. Tasks of implementing the internal audit policy. Regulatory enactments regulating the internal audit policy: the Law on Internal Audit, regulations of the Cabinet of Ministers on the procedure for performing and evaluating internal audit. State policy in the field of company audit. Cooperation of the State Supervision of the Latvian Association of Sworn Auditors with the Competent Institutions of Other European Union Member States in the Field of Audit. Latvian and European Union regulatory enactments in the field of auditing: Law “On Sworn Auditors”, Cabinet Regulation No. 536 of 17 June 2009 “Regulations on Verification of Compliance with Audit Services Quality Control Requirements”. Regulation 537/2014 of the European Parliament and of the Council on specific requirements for statutory audits of public-interest entities and repealing Commission Decision 2005/909 / EC.(lecture - 2 hours, practical work - 2 hours).
4) International Standards on Auditing (ISAs). Scope, objectives and requirements of the IAS. Scope, powers and structure of SRSs. The general objective of the independent auditor and the performance of the audit in accordance with the requirements of international auditing standards. Agreement on the terms of the audit engagement. Audit documentation. Financial statement audit planning. Identifying and assessing the risks of significant non-compliance by gaining an understanding of the company and its environment. Materiality in planning and performing an audit. Auditor activities resulting from the risk assessment. Audit evidence. Analytical procedures. Sampling method in audit. Use of the work of internal auditors. Preparation of the auditor's opinion and reporting on the financial statements. Reporting on key audit issues in an independent auditor's report. Modifications to the opinion contained in the independent auditor 's report. Comparable information - relevant indicators and comparable financial statements. (lecture - 4 hours, practical work - 4 hours).

5) Internal Audit Professional Practice Standards (hereinafter - Standards). Purpose of the standards. Minimum requirements for standards. Code of ethics: norms of professional ethics. There are two main categories of standards: organizational and performance standards. Internal audit in the organization. Purpose, authority and responsibility of internal audit. Independence and objectivity of the internal audit unit. Competence and due professional care. Internal audit quality assurance and improvement system. Performance standards: the essence of internal audit, quality criteria. Management of the internal audit unit. Planning. Internal audit activity plans and resource requirements. Resource management. Internal audit policy and procedures for managing the internal audit unit. Internal audit coordination. Reporting to senior management. Outsourcing. Management. Risk management. Control. Task planning. Task work program. Execution of the task. Identification of information. Analysis and evaluation. Documentation of information. Task supervision. Communication of results, criteria, quality and dissemination. Workflow monitoring. Resolution on risk accepted by senior management: level of residual risk, risk appetite.(lecture - 2 hours, practical work - 2 hours).

Requirements for awarding credit points

Test with a mark, accumulative evaluation of study results. During the acquisition of the study course, 2 tests are written, which are assessed with marks. 1) International auditing standards (20%). 2) Internal Audit Professional Practice Standards (20%). Prepare and submit a report-project "Evaluation of the audit process: Audit of financial statements in the company" or "Evaluation of the audit process: Internal audit in the organization" (60%)

Description of the organization and tasks of students’ independent work

To master and strengthen the issues of theory, to study the literature in preparation for tests. Develop individual work and present it.

Criteria for Evaluating Learning Outcomes

Accumulative assessment of study results (100%). 2 tests (20% + 20%). Independent work (60%).
10% corresponds to one point on the 10-point assessment scale.

Compulsory reading

1. Bruna I. Enterprise Internal Audit and Control. Riga, University of Latvia, 2010, pp.166.
2. Gray I. The audit process. Principles, Practice and Cases. 6th Edition. Cengage Learning EMEA, United Kingdom, 2015, pp. 920.
3. Mālderis G. Grāmatvedība, audits, revīzija. Rīga: Biznesa augstskola Turība, 2008, 144 lpp.
4. Reding K., F., Sobel P., J. Anderson U. L., Head M. J., Ramamoorti S., Salamasick M., Riddle C. Internal Auditing. Assurance & Advisory Services. Third edition. The Institute of Internal Auditors Research Foundation. Florida, 2013, pp.315.
5. Rittenberg L. COSO Internal Control-integrated Framework. Turning Principles into Positive Action. The Institute of Internal Auditors Research Foundation. Florida, 2013, pp. 80.
6. Sawyer Lawrence B., Dittenhofer Mortimer A., Scheiner James H. Sawyer’s Internal auditing. The Practice of Modern Internal Auditing. The Institute of Internal Auditors. Florida, 2003, pp.1446.

7. Spencer K.H. Pickett. The Internal Auditing Handbook. Third edition. A John Wiley and sons, Ltd, UK, 2010, pp.1070.

Further reading

1. Alexander D.,Britton A.,Jorissen A. International financial Reporting and Analysis.Fourth Edition.Cengage Learning EMEA, United Kingdom,2009, pp.894.
2. Arens A.A., Loebbecke K.J. Auditing. An Integrated Approach. Seventh Edition. Prentice Hall, Upper Saddle River, New Jersey, 1997, pp.823.
3. Boynton W.C, Kell W.G. Modern Auditing. Sixth Edition. John Wiley&Sons,Inc. USA,1996,pp.928.
4. Guy D.M., Alderman C.W., Winters A.J. Auditing. Fourth Edition. The Dryden Press. Harcourt brace College Publishers, USA, 1996, pp.889.
5. Harison W.T.Jr.,Horngren T. C.,Financial Accounting. Sixth Edition.Prentice Hall,Upper Saddle River, New Jersey, 2006,pp.720.
6. Starptautisko revīzijas, apliecinājuma pakalpojumu un Ētikas oficiālo paziņojumu rokasgrāmata. Starptautiskā grāmatvežu federācija, 2003, 742 lpp.

7. Wahlen M.J.,Baginski P.S.,Bradshaw T.M. Financial Reporting, Financial Statement Analysis, and valuation A Strategic Perspective. South-Western, Cengage Learning. USA, 2011, pp.1261.

Periodicals and other sources

1. Eiropas Komisijas mājaslapa (revīzijas joma). Pieejams: http://ec.europa.eu/finance/auditing/index_en.htm
2. Eiropas Parlamenta un Padomes Regula 537/2014 par īpašām prasībām attiecībā uz obligātajām revīzijām sabiedriskas nozīmes struktūrās un ar ko atceļ Komisijas lēmumu 2005/909/EK. Pieejams: http://eur-lex.europa.eu/legal-content/LV/TXT/?uri=uriserv:OJ.L_.2014.158.01.0077.01.LAV
3. Ētikas kodekss. Pieejams: https://global.theiia.org/standards-guidance/mandatory-guidance/Pages/Code-of-Ethics.aspx
4. Globālais iekšējais auditoru institūts. Pieejams:https://global.theiia.org/standards-guidance/Pages/Standards-and-Guidance-IPPF.aspx
5. Iekšējā audita likums (2012) Pieejams: http://likumi.lv
6. Iekšējā audita politika. Pieejams: http://www.fm.gov.lv/lv/sadalas/iekseja_audita_politika/
7. Iekšējā audita profesionālās prakses starptautiskos standarti. Pieejams: https://global.theiia.org/translations/PublicDocuments/IPPF-Standards-2017-Latvian.pdf
8. Latvijas Zvērinātu revidentu asociācijas mājaslapa. Pieejams: http://www.lzra.lv/
9. Noteikumi par revīzijas pakalpojumu kvalitātes kontroles prasību ievērošanas pārbaudi. MK 17.06.2009. noteikumi Nr.536
Pieejams: http://likumi.lv
10. Par Pasākumu plānu iekšējā audita sistēmas pilnveidošanai:
MK 24.02.2010. rīkojums Nr.114. Pieejams: http://likumi.lv
11. Iekšējā audita veikšanas un novērtēšanas kārtība.
MK 09.07.2013. noteikumi Nr.385. Pieejams: http://likumi.lv
12. Iekšējo auditoru sertifikācijas kārtība. MK 30.04.2013.
Noteikumi Nr.238. Pieejams: http://likumi.lv
13. Revīzijas jomu Latvijas un Eiropas Savienības reglamentējošie normatīvie akti. Pieejams: http://www.fm.gov.lv/lv/sadalas/gramatvedibas_un_revizijas_politika/
revizijas_politikas/normativie_akti/
14. Revīzijas pakalpojumu likums. Likuma nosaukums 15.12.2016. likuma redakcijā, kas stājas spēkā 01.01.2017. (03.05.2001.)
Pieejams: http://likumi.lv

15. Starptautiskās grāmatvežu federācijas mājas lapa. Pieejams: https://ifac.org.

Notes

Restricted elective study course for the academic master's study program "Economics" in the specialization direction "Financial Management and Accounting" for full-time students