The overall objective of this segment is to provide a body of knowledge to help candidates appreciate the nature and diversity of auditing and assurance services. It presents an overview of the audit and assurance process and examines the objectives of assurance engagements and the environment within which the auditor or assurance practitioner operates.

Throughout the Assurance Services and Auditing segment, extensive use is made of the CPA Australia Members' Handbook and there are also many references to the Corporations Act 2001 (Cwlth).

Specifically the segment aims to:

• discuss the framework for assurance engagements, the various elements of an assurance engagement and the ethical guidelines and quality control standards for auditors 
• introduce the financial report audit process and the relevant auditing standards to be considered at this stage of the audit  
• identify the steps that an auditor follows in planning an audit of a financial report, such as the requirement on auditors to obtain an understanding of the entity and its environment, and the auditor's response to the risks of material misstatement in the audit of a financial report
• describe the approaches that an auditor would take in response to the assessed risks at the different stages of the audit of a financial report, and discuss how the IT environment impacts on all aspects of the audit process 
• identify the various forms of an auditor's report, its application and the circumstances in which a modified auditor's report is to be issued
• consolidate material covered in modules 1 to 5 and illustrate, via a case study, the planning, execution and reporting stages of an audit
• illustrate, via an extensive case study, the auditor's responsibility to consider fraud in an audit of a financial report
• illustrate, via an extensive case study, the auditor's responsibility to consider going concern in an audit of a financial report
• introduce performance engagements and discuss in depth the process for conducting a performance audit
• discuss the nature of assurance engagements other than audits or reviews of historical financial information, such as assurance on prospective financial information, non-financial information, systems and processes, behaviour and corporate governance; and the role and function of internal audit
  

The content of the Assurance Services and Auditing segment is as follows:

Module 1: Assurance services framework

• Auditing and Assurance Standards Board  (AUASB)
• structure of pronouncements issued by AUASB
• Preamble to AUASB Standards
• types of assurance engagements: reasonable versus limited
• definitions and objectives of an assurance engagement
• using the assurance framework: financial report audit 
• public sector perspective
• audit judgement
• establishing criteria 
• code of ethics for professional accountants
• quality controls for firms
  

Module 2: Audit of a financial report

• ASA 200 Objectives and general principles governing an audit of a financial report
• ASA 210 Terms of audit engagements
• ASA 220 Quality control for audits of historical financial information
• ASA 230 Audit documentation
• ASA 240 The auditor's responsibility to consider fraud in an audit of a financial report
• ASA 260 Communication of audit matters with those charged with governance

Module 3: Understanding the entity, assessing risk and responding to risks

• overview of standards covering risk assessment and response to assessed risks 
• ASA 300 Planning an audit of a financial report
• ASA 315 Understanding the entity and its environment and accesssing the risks of material mistatement 
• the strategic systems approach to auditing
• techniques used in strategic analysis
• analytical procedures
• internal control
• responding to assessed risks

Module 4: The auditor's response to assessed risks

• sufficient appropriate audit evidence
• controls in an IT environment
• objectives of tests of control
• tests of control procedures
• substantive audit procedures
• audit procedures for assessing going concern issues 
• other auditors and experts
• evidence-gathering in an e-commerce environment
• audit of small businesses
• subsequent events 
• completion

Module 5: Reporting requirements

• reports associated with reasonable assurance engagements
  • financial report audit
  • reporting responsibilities for financial report audits
  • types of auditor's reports
  • modifications to the auditor's report
  • circumstances that may result in an other than unqualified auditor's opinion
  • materiality and pervasiveness
  • audit implications of comparatives
  • impact on the auditor's report of going concern considerations
  • true and fair override
  • auditor's report on financial information other than a general purpose financial report
  • auditor's reporting on concise financial reports
  • reports issued by the external auditor in the public sector
• reports providing limited assurance 
• reports providing no assurance
  

Module 6: Undertaking an audit of a financial report

• client acceptance and continuance 
• ethical consideration
• understanding the entity, and its environment and assessing the risks of material misstatement
• assessing the risk of material misstatement in the sales and cash receipts system
  

Module 7: The auditor's responsibility to consider fraud in an audit of a financial report

• fraud defined 
• responsibilities of those charged with governance and of management 
• auditor's responsibilities for detecting material misstatements due to fraud 
• engagement team communications 
• risk assessment procedures 
• identification and assessment of the risks of material misstatement due to fraud 
• response to risks of material misstatement due to fraud
• management representations 
• communications with management and those charged with governance
• auditor unable to continue the engagement

Module 8: The auditor's responsibility to consider going concern in an audit of a financial report

• what is the going concern assumption?
• responsibilities of those charged with governance and of management
• auditor's responsibilites
• planning the audit and performing risk assessment procedures 
• response to assessed risks which cast significant doubt on the entity's ability to continue operating as a going concern
• audit conclusions and reporting
• communications with those charged with governance
• other reporting considerations

Module 9: Performance engagements

• background
• performance engagements
• understanding performance audits 
• accountability and audit 
• independence and quality controls
• policy issues
• how are performance audits selected?
• examples of performance audits 
• economy, efficiency and effectiveness 
• audit criteria
• audit considerations
• techniques for examining economy, efficiency and effectiveness
• performance indicators
• the performance audit process
• performance audit on the auditor-general's office

Module 10: Other assurance services and internal audit

• the nature and characteristics of assurance services 
• assurance on prospective financial information
• assurance on non-financial information: environmental and sustainability assurance 
• assurance on non-financial information: business performance measurement 
• assurance on systems and processes
• systems reliability: privacy assurance
• assurance on behaviour
• continuous auditing
• core competencies for potential assurance services
• internal audit