BACT 311

EGERTON UNIVERSITY

FACULITY OF COMMERCE
DEPARTMENT OF ACCOUNTING, FINANCE & MANAGEMENT SCIENCE
COURSE OUTLINE
BACT 311: PRINCIPLES OF AUDITING
Lecturer K. A. Basweti
PRE-REQUISITE: BACT 211, & BACT 212
COURSE OBJECTIVE
The course is intended to give the students a detailed understanding of the principles and procedures of auditing and
its application to public and private organizations. At the end of the course, students should be able to explain and
evaluate all the principles and procedures applied in auditing practice, understand the laws governing audit practice,
perform audit planning and design control processes and be able to prepare audit reports.

INSTRUCTIONAL METHODOLOGIES:
The course shall be conducted by way of lectures, discussions and group presentations

COURSE CONTENT
1. OVERVIEW OF AUDITING Week 1
 Meaning of Auditing
 Auditing versus accounting
 Types of audits.
 The need[economics] of auditing
 Rationale [benefits or advantages] of auditing.
 Structure and activities of CPA firms
 Generally accepted auditing standards [GAAS]
 Kenya auditing standards[KAS 1&2] and guidelines[KAG1-9]
 Quality control standards for CPA firms.
 External versus internal auditing.

2. PROFESSIONAL AND LEGAL ENVIRONMENT IN AUDITING Week 2

 Qualities required of an auditor
 Auditor’s Independence
 Appointment of an auditor
 Rights and duties of an auditor
 Removal of an auditor & disciplinary procedures
 Negligence & Legal liability of an auditor
3. RULES OF PROFESSIONAL CONDUCT Week 3
 Introduction to ethics
 Fundamental Ethics and Guidelines
 Ethics Applicable to Accountants in Public Practice
 Theories on the Demand and Supply of Audit Services

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4. THE APPROACH TO AN AUDIT Week 4 & 5

 Ethical clearance.
 Letters of engagement.
 Opinion versus certificate
 Phases in an audit.

5. AUDIT PLANNING, CONTROLLING AND RECORDING Week 6

 Audit working papers- permanent & current file.
 Planning procedures for an audit.
 Audit programmes, audit control & Recording.
6. REVIEW & EVALUATION OF INTERNAL CONTROL SYSTEMS (ICS)- Week 7 TERM PAPER
 Internal Control System and the auditor
 Significance of internal Control System
 Types of Internal Control System
 Assessing the Internal Control system of a company
 Evaluating the Internal Control System
 Practical aspects of internal controls
 Limitations of Internal Control System

7. AUDITING A COMPUTERIZED ACCOUNTING INFORMATION SYSTEMS Week 8

 Audit of computer based accounting systems.
 Benefits & drawbacks of a computerized accounting information system [CIS]
 Internal control in CIS System
 Use of computer assisted audit techniques [CAATs]
ISA 401: Auditing in a Computer Information System Environment

8. AUDIT EVIDENCE AND SAMPLING Week 9

 Nature of audit evidence.
 Types/varieties of audit evidence.
 Techniques of gathering audit evidence.
 Factors affecting the quality of evidence.
 Limitations of gathering evidence.
 Audit sampling

9. AUDIT TESTING & REVIEW OF FINANCIAL STATEMENTS Week 10

 Walk-through checks.
 Compliance, substantive & rotational tests
 Analytical tests
 Techniques of audit tests
 Review of financial statements

10. AUDIT REPORTS Week 11 Group assignment

 Letters of representation.
 Contents of an audit report
 Types of Audit reports

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REFERENCES
1. Millichamp Alan. H. [2002] ‘Auditing’, Continuum publishers, London. ISBN0-826458556(hardback), ISBN
0-8264-5500X (paperback) Retrieved On 13th May 2019 from
https://books.google.co.ke/books/about/Auditing.html?id=K1E681Cy51AC&printsec=frontcover&source=kp_r
ead_button&redir_esc=y#v=onepage&q&f=false
2. Millichamp Alan & John Taylor (2012) ‘Auditing’ Cengage Learning EMEA, London. ISBN 1408044080,
9781408044087. https://www.abebooks.co.uk/9781408044087/Auditing-Millichamp-Alan-Taylor-John-
1408044080/plp

3. Jack C. Robertson & Frederick G. Davis (. 1996) ‘Auditing’ Business Publications, ISBN 0256027072,
9780256027075. https://archive.org/details/auditing0000robe
4. Arens A.Alivin & Loebbecke K.James, [1997 ]‘Auditing: An Integrated Approach’, Prentice Hall,
Pennsylvania State University. ISBN 0136493858, 9780136493853.
https://books.google.co.ke/books/about/Auditing_an_Integrated_Approach.html?id=b8zZAAAAMAAJ&source
=kp_cover&redir_esc=y
5. Pratt. Michael. J: [1990] ‘Auditing’: Pitman publishing Ltd, ISBN 10: 0582295270 ISBN 13: 9780582295278
. https://www.abebooks.co.uk/9780582296534/Auditing-M-Pratt-0582296536/plp
6. Whittington, O, Ray, Kurt (2007): “Principles of Auditing and Other Assurance Services”, Mcgraw Hill-
Irwin, Boston.
7. Pickett Spencer (2005):, “The Essential Handbook of Auditing”’ Wiley & Sons, Londan.
8. Messier William et al (2006), “Auditing and Assurance Services- A systematic approach”, Irwin /McGraw
Hill, New York. ISBN: 0073527084 9780073527086 0077243536 9780077243531.
https://www.worldcat.org/title/auditing-assurance-services-a-systematic-approach/oclc/981369719?loc=
9. Pickett K. H. Spencer (2008) “Auditing The Risk Management Process” John Wiley & Sons, Inc., Hoboken,
New Jersey, ISBN 0-471-69053-8 (cloth), Retrieved On 8th may 2019 from http://en.bookfi.net/book/1045858
10. Pickett K. H. Spencer & Jennifer M Pickett (2005) “Auditing for Managers: The Ultimate Risk
Management Tool” JohnWiley & Sons, Inc., west sussex, England Retrieved On 8 th may 2019 From
http://en.bookfi.net/book/1057341
11. Hopkins,Bruce R. (2008) “IRS audits of tax-exempt organizations : policies, practices, and procedures”
John Wiley & Sons, Inc., Hoboken, New Jersey. ISBN978-0-470-11516-9 (cloth) Retrieved On 1st April 2019
From http://en.bookfi.net/book/1034780
12. Switzer, Susan, (2007) “Internal audit reports post Sarbanes-Oxley : a guide to process-driven reporting”
JohnWiley & Sons, Inc., Hoboken, New Jersey ISBN: 978-0-470-05084-2 (cloth : alk. paper) Retrieved On 1st
April 2019 From http://en.bookfi.net/book/1029802
13. Moeller, Robert R. (2010) “IT audit, control, and security / Robert Moeller.” John Wiley & Sons, Inc.,
Hoboken, New Jersey. ISBN: 978-0-471-40676-1 (cloth); 978-0-470-87741-8 (ebk); 978-0-470-87767-8 (ebk);
978-0-470-87768-5 (ebk) Retrieved On 1st April 2019 From http://en.bookfi.net/book/1052646
14. Martin A. Krist (2000) “ Effective Use Of Teams For IT Audits” CRC Press LLC (Auerbach) New York.
ISBN 0-203-99758-1 Master e-book ISBN, International Standard Book Number 0-8493-9828-2 (Print Edition).
Retrieved On 1st April 2019 from http://en.bookfi.net/book/1055749
15. Tommie W. Singleton& Aaron J. Singleton Singleton (2010) “Fraud Auditing And Forensic Accounting”
4th ed. John Wiley & Sons, Inc., Hoboken, New Jersey . ISBN: 978-0-470-56413-4; ISBN 978-0-470-87748-7
(ebk); ISBN 978-0-470-87790-6 (ebk); ISBN 978-0-470-87791-3 (ebk). Retrieved On 1st April 2019 From
http://en.bookfi.net/book/1102663.
16. Vona, Leonard W., (2008) “Fraud Risk Assessment: Building a Fraud Audit Program” John Wiley &
Sons, Inc., Hoboken, New Jersey, ISBN 978-0-470-12945-6 (cloth) Retrieved On 8th may 2019 From
http://en.bookfi.net/book/1063466
17. Pickett K. H. Spencer (2003) “The Internal Auditing Handbook” 2nd edition, John Wiley & Sons, Inc.,
Hoboken, New Jersey, ISBN 0-470-84863-4 Retrieved On 8th may 2019 From
http://en.bookfi.net/book/1068043
18. Musaji, YusufalFi (2001) “Auditing and security: AS/400,W , UNIX, networks, and disaster recovery
plans” John Wiley & Sons, Inc., New York , ISBN 0-471-38371-6 (cloth: alk. Paper) Retrieved On 8th may
2019 From http://en.bookfi.net/book/1072755

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19. Coderre, David G. (2009 “Internal Audit: Efficiency Through Automation” John Wiley & Sons, Inc.,
Hoboken, New Jersey, ISBN 978-0-470-39242-3 (cloth) Retrieved On 8th may 2019 from
http://en.bookfi.net/book/1076940

20. Pickett K. H. Spencer (2008) “Internal Investigations- A Basic Guide Anyone Can Use” John Wiley & Sons,
Ltd, The Atrium, Southern Gate, Chichester, West Sussex PO19 8SQ, England. ISBN 978-0-470-77968-2 (HB).
Retrieved On 8th may 2019 from http://en.bookfi.net/book/1157669
21. Jack F. Georger, CPA (2017) “Audits Of State And Local Governments: What You Need To Know”
Association of International Certified Professional Accountants, Inc. Retrieved On 8 th may 2019 from
https://www.pdfdrive.com/audits-of-state-and-local-governmental-entities-receiving-federal-financial-
assistance-supplement-to-aicpa-audit-and-accounting-guide-audits-of-state-and-local-governmental-units-
e158553130.html

22. Stephen Asbury and Peter Ashwell (2007). “Health and Safety, Environment and Quality Audits”
Elsevier Ltd, London. ISBN-13: 978-0-750-68026-4 ISBN-10: 0-7506-8026-1 Retrieved On 1st April 2019 from
http://en.bookfi.net/book/1039735
23. Kenya Auditing Guidelines [KAG] and Kenya Auditing standards [KAS] by ICPAK
24. Manasseh P.N. [1993], ‘Principles of Auditing’ Focus publications Ltd.
25. Attwood A.F, Stein D.N & De Paula ‘Auditing’, ELBS-Pitman.
26. Howard R.L. ‘Auditing’ ELBS-Pitman.
27. Gray .I. & Monson. S. ‘The Auditing process; Principles, practices and cases’
28. International accounting standards & international standards on auditing- Download from internet.
29. D. Larry Crumbley, Lester E. Heitger, G. Stevenson Smith (2007) “Forensic and Investigative Accounting”
CCH Incorporated, ISBN: 0808017233, 9780808017233
30. Basu sanjib Kumar (2009) “Fundamentals of Auditing” Pearson India. ISBN: 9332500894,
9789332500891. https://www.google.com/search?client=firefox-b-d&q=ISBN+978-81-317-28857
Evaluation
Assignments & Presentations 10%
CATs -2 .... ................. ........., .................................. 20%
FINAL EXAM . ......... .............................................. 70%
TOTAL ...................... .............................................. 1 00%

Instructional methodology
Assigned readings
Discussions/class presentation
Lectures & case studies
NOTE: Students must:
1. Attend all lectures.
2. Submit all assignments within two weeks [14days] from the date of issue.
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