TUNKU PUTERI INTAN SAFINAZ SCHOOL OF ACCOUNTANCY (TISSA)

COLLEGE OF BUSINESS
UNIVERSITI UTARA MALAYSIA

COURSE CODE: BKAA2013

COURSE: AUDIT AND ASSURANCE I
PRE-REQUISITE: B KAF1013 INTRODUCTION TO FINANCIAL
ACCOUNTING/ BKAR1013 FINANCIAL ACCOUNTING
AND REPORTING 1, or BKAL1013 BUSINESS
ACCOUNTING
LECTURER: DR. MOHD SYAHRIR BIN RAHIM

1.0 COURSE SYNOPSIS

This course is an introduction course in Auditing that introduces the various

concepts and principles of auditing. Emphasis is given on the legal
environment faced by auditors in Malaysia, the ethical values expected of
them, as well as their legal liabilities. Other coverage of the course includes
materiality and audit risk, audit planning, sampling, collection of evidence,
internal control evaluation, auditing documentation until the issuance of an
audit report. The fundamental knowledge gained from this course will be
expanded in the Advanced Auditing course.
2.0 COURSE OBJECTIVES

After completing this course, students should be able to: 

2.1 Comprehend applicable regulations, legal responsibilities and ethical

standards and current issues facing the audit profession.
2.2 Understand the need for an external audit and its statutory nature.
2.3 Understand and apply audit risk, materiality, and statistical and non-statistical
audit sampling techniques.
2.4 Understand several audit concepts and the relevant auditing standards.
2.5 Understand the various types of audit reports.

3.0 COURSE LEARNING OUTCOMES

Upon completion of the course the students should be able to do the following:

1
 3.1 Explain the relevance of the institutional framework, auditor's professional
conduct and ethics and legal liability that affects audit profession (C2, A3).
3.2 Explain the objectives of external auditing and the responsibility of external
auditors and management in the audit of financial statements and also their
responsibilities in relation to fraud (C2).
3.3 Identify proper audit procedure in obtaining audit evidence to match
management assertions on financial statements (C1, A1).
3.4 Explain the relationship between materiality and audit risk and apply
appropriate sampling techniques in audit tests (C2, P2).
3.5 Explain the importance of quality audit documentation to support the types of
audit reports issued in accordance to the different circumstances (C5).

4.0 REFERENCES

Main References:

Arens, A. A., Elder, R. J., Beasley, M. S. & Hogan, C. E. (2020). Auditing and
Assurance Services: An Integrated Approach, 17e, Upper Saddle River, NJ:
Pearson.

Che Ahmad, A., Haron, H., Malik, M., Salleh, Z., Hariri, H., Ismail Khan, N.,
Puat Nelson, S. (2018). Fundamentals of Auditing, 1st Edition, Oxford.

International Standards on Auditing (ISA). https://www.mia.org.my

Companies Act 2016 (Act 777). https://www.ssm.com.my

Additional References:

Accountant’s Act 1967 (http://www.mia.org.my/handbook/act)

Akauntan Nasional (MIA) and other related newspapers articles and journals.

Arens, Alvin A., Elder, Randal J., Beasley, Mark S., Amran, N.A., Fadzil, F. H.,
M. Yusof, N.Z., Mohamad Nor, M.N., Shafie, R. (2014). Auditing and Assurance
Services in Malaysia: An Integrated Approach, 3rd Edition, Prentice Hall.

Audit Act 1957 (Incorporating all amendments up to 1 January, 2006,

http://www.agc.gov.my/Akta)

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Eilifsen, A., Messier, W.F., Glover, S. M., Prawitt, D.F., Samsuwatd Zuha Mohd
Abbas, Sharifah Nazatul Faiza Syed Mustapha Nazri, Kalsom Salleh, Nawal
Kasim, Nahariah Jaffar, Aida Hazlin Ismail, Razana Juhaida Johari (2017).
Principles of Auditing & Assurance Services in Malaysia, Kuala Lumpur:
Mcgraw-Hill Education Malaysia Sdn Bhd.

Gul, F.A & Mahzan, N (2017). Auditing: Theory and Practice in Malaysia, 3rd
Edition. Wolters Kluwer, Malaysia.

Hayes R., Wallage, P., Eimers, P. (2021). Principles of International Auditing

and Assurance, 4th Edition, Amsterdam University Press.

Leung, P., Coram, P., Cooper, B. & Richardson, P. (2018) Audit and Assurance
Services, 1st Edition. Wiley.

Louwers, T., Bangley, Blay, A. , Strawser, J., Thibodeau, J. & Sinason D. (2021).
Auditing & assurance services, 8th Edition, Mcgraw-Hill Education, NY.

Malaysian Institute of Accountants Members Online Handbook (Effective Jan

2010). http://www.mia.org.my/handbook/guide.

Malaysian Institute of Accountants By-Laws on Professional Ethics, Conduct and

Practice (Effective Jan 2011). http://www.mia.org.my/handbook/bylaw_new/

Messier W.F., Glover, S. & Prawitt, D. (2019). Auditing & Assurance Services: A
Systematic Approach, 11th Edition. Mcgraw-Hill Education.

Porter, B., Simons, J. & Hatherly, D. (2014). Principles of External Auditing, 4th
Edition, John Wiley & Sons Ltd.

Ricchiute, D. N. (2005) Auditing, 8th Edition, South-Western College Pub.

Whittington, R. & Pany, K. (2021). Principles of Auditing & Other Assurance

Services, 22nd Edition, Mcgraw-Hill.

Relevant professional, academic journals and approved accounting

standards in Malaysia.

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5.0 COURSE CONTENT

Learning Week
Topic References Hours
Level * s

1. An Introduction to Auditing 1,2 1 Che Ahmad et al. 3

 Development of Auditing (1)
 Nature of auditing Arens et al. (1)
 Purpose of auditing Messier (1)
 Types of audit and auditors Millichamp (1,2)
 Differences between auditing and ISA200
accounting
 Principles of stewardship, accounting
and agency
 Introduction to Auditing standards
and its importance
 Statutory Audit and Companies Act
2016
 Differences between types of audit
opinions issued
 Framework of auditing (IFAC, MIA,
Auditing Standards, professional
bodies)

2. Statutory and Regulatory 1, 2 2 Che Ahmad et al. 3

Requirement (2)
 Companies Act Requirement Arens et al. (2),
Responsibility, power & rights of (5)
auditor, appointment, resignation and Messier (1)
termination of auditors Companies Act
 Accountant Act 1967, ISAs and 2016
MASAs Accountant Act
 Engagement/ appointment letter 1967
ISA 210
Che Ahmad et al.
3. Objectives and Scope of Financial 1,2 3 (3) 3
Statement Audit Arens et al. (6)
 Audit Objectives and Basic Messier (2)
Principles Governing an Audit Millichamp (20,
 Auditor’s responsibility for detecting 31)
fraud ISA 200
 Management Assertions ISA 220

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 Learning Week
Topic References Hours
Level * s
ISA 240
(revised)
ISA 250
(revised)

4. Code of Ethics for Auditors 1,2,3 4 Che Ahmad et al. 3

 Fundamental principles of ethics (16)
and professional conduct in Arens et al. (4)
accordance to MIA By-law Messier (19)
 The importance of professional Millichamp (6)
ethics MIA By-Laws
 Independence in assurance
engagements
 Marketing public practice
services
 Fees and other types of
remuneration
4
5. Auditor’s Legal Liability 3,4, 5 & 6 5 Che Ahmad et al.
 Legal Environment (17)
 Liability under the statutory law Arens et al. (5)
 Liability under common law Messier (20)
 Approaches to minimise legal Millichamp (31)
liability Companies Act
2016

6. Materiality and Audit Risk 1,2,3,4 6-7 Che Ahmad et al. 5

 Concepts of audit risk and (5)
materiality Arens et al. (9)
 Common bases and qualitative Messier (3)
factors for considering Millichamp (10)
materiality ISA 320
 Audit risk model and its ISA 315
components ISA 400
 Relationship of risks and audit
evidence
 Application of materiality and
audit risk model to audit process

7. Audit Planning 1,2,3,4, 5 & 8 Che Ahmad et al. 4

 Planning activities 6 (5)
 Determination of audit objectives Arens et al.(8,12)

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 Learning Week
Topic References Hours
Level * s
 Understanding the client’s Millichamp (10)
business and accounting system Messier (4, 5)
 Fundamental concepts of ISA 300
materiality and risk in auditing ISA 315
 Relationship between test and ISA 320
evidence ISA 400
 Preparation of audit plan, ISA 500
programme and budget ISA 520
 Analytical procedures: Planning, ISA 700
fieldwork and final stage (revised)

8. Internal Control System 1,2,3 9 Che Ahmad et al. 3

 Fundamental concepts (4)
- Objectives, characteristics and Arens et al. (10)
limitations Millichamp (9)
- Definition of internal control Messier (6)
(COSO, Cadbury and Auditing ISA 400
Standards in Malaysia) COSO
 Importance of internal control to Framework
auditors
 Relationship of internal control and
audit evidence
 Review and documentation of
internal control system
 Internal control’s compliance test in
transaction cycle
 Strengths and weaknesses of internal
control
 management letter

9. Audit Evidence and Auditing 1,2,3 10 Che Ahmad et al. 3

Procedure (6)
 Types of audit evidence Arens et al. (7)
 Quality and adequacy of audit Millichamp (11)
evidence Messier (4)
 Auditing procedure used to collect ISA 500
evidence ISA 520
 Types of audit procedure and audit
test
 Compliance and substantive test
 Test of transaction and balance

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 Learning Week
Topic References Hours
Level * s

10. Introduction to Sampling 1,2,3,4, 5 & 11-12 Che Ahmad et al. 5

 Fundamental concepts of 6 (8)
sampling Arens et al. (15,
 Sampling risk and non-sampling 17)
risk Messier
 Probabilistic vs. Non- Millichamp (12)
probabilistic sampling ISA 300
 Statistical vs. non-statistical ISA 320
sampling ISA 400
 Sampling procedure – statistical ISA 530
& non statistical
 Test of control: Attribute
sampling
 Substantive Test: Monetary unit
sampling/probability
proportionate sampling

Che Ahmad et al.

11. Audit Documentation 1,2 13 (7) 3
 Importance of audit working papers Arens et al. (7)
 Types of working papers Millichamp (18)
 Indexing, audit cross-footing and Messier (4)
extension. ISA 230
 Types of audit file
 Control and rights to the audit
working papers.
 Confidentiality

12. Auditor’s Report 1,2,3,4, 5 & 14 Che Ahmad et al.

 Objectives and format of audit report 6 (15) 3
 The needs for an audit report Arens et al. (3)
 Types of audit report Millichamp
- Unqualified report (24,25,26,27,28)
- Circumstances requiring a Messier (18)
departure ISA 570
- Modified unqualified (revised)
auditors’ report. ISA 580
- Emphasis of matter ISA 700
- Going concern (revised)
uncertainty ISA 720
- Significant uncertainty (revised)

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 Learning Week
Topic References Hours
Level * s
due to pending litigation Companies Act
- Non-compliance with an 2016
approved accounting
standard but the auditor
concurs.
- Qualified report
- Types of qualified report
- Circumstances requiring a
departure
 Disclaimer of responsibility
 Materiality and pervasiveness
 Other information accompanying
audited financial reports

TOTAL CONTACT HOURS 42

* Learning Levels (Bloom’s Taxonomy)

1. Knowledge
2. Comprehension
3. Application
4. Analysis
5. Synthesis
6. Evaluation

6.0 COURSEWORK / ASSESSMENT

o Coursework: 40%

 Quizzes : Online - 10%

 Individual Assignment : Report Writing Rubric – 10%
 Group Assignment : Report Writing Rubric – 10%
: Presentation Rubric – 5%
: Professionalism and Ethical Values Rubric – 5%

o Final Examination: 60%

DESCRIPTION OF COURSEWORK

Quizzes
Short questions, MCQs and T/F

Assignments
Individual & Group Assignment

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 Project and Presentation
Group project
FINAL EXAMINATION
All topics evaluated within 3 hours examination. Comprise of essay questions and
case study.

7.0 TEACHING METHODS

Besides attending lectures and tutorial, students are expected to complete some
project papers/assignment (case studies, article review, library research), quizzes
(MCQ, short question, T&F, essay question), presentation and participate in class
discussion.

8.0 ATTENDANCE

Attendance for lectures and tutorials is compulsory. Students who do not fulfil
the 80% attendance requirement will be barred from taking the final examination
papers as stated in the Graduation Rules. The 20% absent from lectures and
tutorials include all reasons, such as medical leave (MC) and others.

9.0 ACADEMIC MISCONDUCT

Disciplinary action will be enforced to student caught for unethical behaviour

such as plagiarisms, cheating, copying, and sitting exam for other student, also
other academic misconducts.