Principles of Auditing Pdf notes MKU

Principles of Auditing notes MKU


Chapter One – Introduction to Auditing

  • Introduction
  • Agency Theory and Auditing
  • Agency Relationship between Shareholders and The Management
  • Conflict between Shareholders and the Management
  • Agency Relationship between shareholders and Creditors
  • Conflict between Shareholders and the Creditors
  • Users of Financial Statements
  • The Purpose of Audit
  • Objectives of Auditing
  • The Auditor and Other Services
  • Qualities of an Auditor
  • Advantages and Disadvantages of Auditing
  • Advantages of an Audit
  • Disadvantages of an Auditor
  • Review Questions

Chapter Two – The Auditor and the Companies Act Cap

  • Introduction
  • Auditors’ Appointment and Remuneration
  • Resolution Relating to Appointment and Removal of Auditors
  • Disqualifications for Appointment as Auditor
  • Right of Access to Books and Attend Meeting
  • Review Questions

Chapter Three – The Accounting Records and the Companies Act

  • Introduction
  • Books of Accounts and Audit
  • Income Statement and Statement of Financial Position
  • General Provisions to Contents and Form of Financial Statements
  • Obligation to lay group accounts before holding company
  • Form of group accounts
  • Contents of group accounts
  • Financial year of holding company and subsidiary
  • Accounts and auditors’ Report to be Annexed to Balance Sheet
  • Directors’ report to be attached to balance sheet
  • Review Questions


Chapter Four – The Auditor and the Professional Ethics

  • Introduction
  • Profession
  • General Rules of Ethics
  • Independence
  • Factors That Can Compromise The Auditor’s Independence
  • Conflict of Interest
  • Advertising
  • Publicity
  • Remuneration
  • Insider Dealing
  • Review Questions

Chapter Five – Engagement Letters

  • Introduction
  • Purpose of Engagement Letters
  • Procedures
  • Contents of an Engagement Letter
  • Example of Engagement Letter
  • Review Questions

Chapter Six – Accounting and Internal Control Systems

  • Introduction
  • Auditor’s Interest in Accounting System
  • Management’s Interest in Accounting System
  • Importance of Accounting Control System
  • Internal Control System
  • Types of Internal Controls
  • Importance of Internal Controls
  • Review Questions

Chapter Seven – Types of Audits

  • Introduction
  • Statutory Audits
  • Private Audits
  • Internal Audits
  • Reliance on Internal Audits
  • Management Audits
  • Review Questions

Chapter Eight – Stages of Modern Audit

  • Introduction
  • Outline of Stages
  • Background Research
  • Audit Plan
  • Review of Accounting System
  • Review of Internal Control System
  • Substantive Testing
  • Analytical Review
  • Preparation of Report
  • Review Questions

Chapter Nine – Audit Evidence

  • Introduction
  • Types of Evidence
  • Primary Evidence
  • Supporting Evidence
  • Circumstantial Evidence
  • Techniques of Collecting Evidence
  • Review Questions

Chapter Ten – Auditor’s Report

  • Introduction
  • Essential Requirements
  • Content of the Auditors Reports
  • Types of Auditors’ Reports
  • Review Questions

Chapter Eleven – Auditing Computerized Systems

  • Introduction
  • Features of Computerized Systems
  • Internal Controls in a Computerized System
  • General Controls
  • Application Controls
  • Auditing In a Computer Environment
  • Planning The Audit In A Computerized Environment
  • Auditor’s Approach in Computerized Environment
  • Auditing Around the Computer
  • Auditing Through the Computer
  • Computer Assisted Audited Techniques
  • Audit Software
  • Audit Software Use
  • Test Data
  • Review Questions

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