Questions and Answers
What is the main syllabus area weightings for 'Gathering audit evidence' in the CA Sri Lanka Curriculum 2020?
20%
Which knowledge pillar in the CA Sri Lanka Curriculum 2020 focuses on Audit, Assurance, and Ethics (AA&E)?
True or False: Progress tests at the end of each chapter are designed to test practical working life scenarios.
False
One of the key elements in examination success is ____.
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What are the five components of the COSO-2014 internal controls framework?
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IT general controls are crucial in an audit of financial statements.
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Which component of audit planning covers the assessment of risk of material misstatements?
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External confirmation is used to obtain relevant and reliable audit evidence through _____ .
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Match the following audit evidence gathering methods with their descriptions:
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What is the impact of misstatements in opening balances and corresponding figures on the current year audit opinion?
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Which of the following is a key audit matter that needs to be communicated with those charged with governance?
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Emphasis of matter and other matters in audit reporting only relate to financial statements.
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The responsibilities of auditors towards other information included in documents containing audited financial statements are defined in ________.
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Match the following audit quality and ethics components with their descriptions:
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What is an assurance engagement?
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What is the main objective of a statutory audit?
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In an assurance engagement, an independent auditor evaluates the ______ of a company's financial statements.
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Why must auditors in Sri Lanka follow Sri Lanka Auditing Standards (SLAuSs)?
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What is the purpose of an assurance engagement?
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An independent audit of financial statements can provide an impartial view and a knowledgeable review of a company's accounts.
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Directors act as ________ of the shareholders' investments.
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What is the definition of an assurance engagement according to the Sri Lanka Framework for Assurance Engagements?
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What is the objective of a reasonable assurance engagement?
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Limited assurance engagements require more testing and evaluation than reasonable assurance engagements.
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An assurance engagement performed by a practitioner consists of a three-party relationship, subject matter, suitable criteria, evidence, and a written assurance __________.
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Match the following types of assurance engagements with their expression of conclusion:
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Who is responsible for the preparation and fair presentation of the financial statements in accordance with Sri Lanka Accounting Standards?
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What does 'Key Audit Matters' refer to?
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Management is responsible for assessing the company's ability to continue as a going concern.
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What are Specialised Banking Entities (SBEs) in Sri Lanka as per the content?
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According to the content, what are Sri Lanka Auditing Standards (SLAuSs) based on?
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The most recently published set of SLAuSs are applicable for audits of financial statements for periods beginning on or after __.
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What is the role of external auditors?
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Define 'materiality' in the context of financial statements.
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Auditors are responsible for ensuring that financial statements are correct in every detail.
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Study Notes
Introduction to CA Sri Lanka Curriculum 2020
- First edition published in 2020 with ISBN 9781 5097 3124 4
- Published by BPP Learning Media Ltd, copyright owned by BPP Learning Media Ltd
- Permission to reproduce learning outcomes and past examination questions granted by CA Sri Lanka
CL1 Advanced Audit and Assurance
Part A Governance Internal Control Frameworks
- Introduction to External Audit
- Introduction to Internal Control
- Internal Controls Over Specific Business Areas
Part B Audit Planning and Risk Assessment
- Agreeing Terms and Risk Assessment
- Audit Planning
- The Auditor's Responsibilities in Relation to Fraud, Laws and Regulations
Part C Gathering Audit Evidence
- Audit Evidence
- Auditing Non-current Assets
- Auditing Inventory
- Audit of Revenue and Receivables
- Auditing Cash and Bank Balances
- Liabilities, Capital and Expenses
- Sampling and Audit Procedures
- Audit Review and Finalisation
Syllabus Structure
- Main syllabus areas: Governance and Internal Control Frameworks, Audit Planning and Risk Assessment, Gathering Audit Evidence, Auditing in a Digital Environment, Evaluating Evidence and Audit Reporting, Assurance and Related Services, Audit Quality and Ethics, Professional Practice of Internal Audit
- Weightings: 10% for Governance and Internal Control Frameworks, 15% for Audit Planning and Risk Assessment, 20% for Gathering Audit Evidence, 10% for Auditing in a Digital Environment, 15% for Evaluating Evidence and Audit Reporting, 10% for Assurance and Related Services, 15% for Audit Quality and Ethics, 5% for Professional Practice of Internal Audit
Pillar Structure
- The Chartered Accountant of Sri Lanka Curriculum 2020 is structured around four progressively ascending levels of competency: Business I, Business II, Corporate, and Strategic Levels
- The Corporate Level builds technical abilities whilst enhancing interpersonal and communication skills and problem resolution skills as required of a Certified Senior Business Accountant
- The Curriculum is subdivided into specific subject areas or knowledge pillars: Audit, Assurance and Ethics (AA&E), Financial Accounting and Reporting (FA&R), Performance Measurement and Risk (PM&R), Taxation and Law (T&L), Business Management and Strategy (BM&S)
Chapter Features
- Topic list, chapter introduction, learning outcomes, key terms, examples, case study, questions, formula to learn, section introduction, chapter roundup, progress test
Learning Outcomes
- A. Governance Internal Control Frameworks (10%)
- Knowledge components: corporate governance and audit, internal control framework
- Learning outcomes: discuss the need for an audit of financial statements, evaluate components of an integrated internal control system, analyse design, implementation and operating effectiveness of identified controls, outline deficiencies in control activities
- B. Audit Planning and Risk Assessment (15%)
- Knowledge components: terms of engagement, overall audit strategy, risk of material misstatement, materiality, responding to risk, complex issues
- Learning outcomes: explain precondition required to perform an audit, demonstrate the importance of overall audit strategy, assess risk of material misstatements, apply the concept of materiality, outline suitable overall response and further audit procedures### Auditing in a Digital Environment
- Recognize trends in a digital business environment, including Artificial Intelligence (AI), Robotic Process Automation (RPA), blockchain, and digital currencies, and their impacts on internal controls and audit.
- Recognize the use of big data and analytics as business intelligence tools and potential risks associated with big data.
- Demonstrate the use of cloud-based audit working papers, audit automation tools, and their limitations.
- Discuss the use of data analytics software, including CAATs, in planning and gathering audit evidence.
- Outline controls required to mitigate cybersecurity risk.
Evaluating Audit Evidence and Audit Reporting
- Evaluate the effects of material misstatements on audit opinion.
- Evaluate the effect of misstatements in opening balances and corresponding figures on current year audit opinion.
- Explain matters to be communicated with those charged with governance.
- Apply Key Audit Matters (KAM) for a given scenario.
- Apply modified audit opinions and going concern reporting requirements for a given scenario.
- Apply emphasis of matter and other matter for a given scenario of audit reporting.
- Apply special purpose audits, including audit of single financial statements/elements to a given scenario.
- Explain auditor's responsibility towards other information included in documents containing audited financial statements.
Assurance and Related Services
- Apply framework for assurance engagements in identifying and accepting assurance engagements.
- Apply Sri Lanka Standard on Assurance Engagement (SLSAE) 3000 for general subject matters and subject matter specific assurance standards.
- Apply Sri Lanka Standard on Related Services (SLSRE) 4400 & SLSRE 4410 for agreed-upon procedures and compilation as required by engagement circumstances.
- Outline key elements of reports used in assurance and related services.
Audit Quality and Ethics
- Demonstrate the elements of the framework for audit quality.
- Demonstrate the elements of a system of quality controls of the firm.
- Explain the requirements to implement quality control procedures at the audit engagement level, including the engagement quality control review.
- Analyze threats applicable to professional accountants in public practice in complying with fundamental and ethical principles.
- Apply conceptual framework approach to analyze threats relating to auditors' independence.
- Evaluate threats associated with provision of non-assurance services and methods of mitigating such threats.
Professional Practice of Internal Audit
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Recognize the importance of professional practice in internal audit using the elements of the International Professional Practice Framework (IPPF) of the Institute of Internal Auditors (IIA).
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Propose an internal audit charter to govern an internal audit function for a given entity considering entity-specific circumstances.
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Develop an audit universe and a plan aligned to organization's strategies, objectives, and risks.
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Advise the extent to which internal auditor can support risk management initiatives of an entity using assurance and advisory services.
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Outline key considerations in setting engagement objectives, engagement planning, and conducting an internal audit engagement for a given business scenario.
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Advise on the process of structuring a governance audit and a culture audit.
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Advise on the oversight role to be played by the audit committee in ensuring the independence and effectiveness of internal audit function.### Knowledge Process
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Action Verbs Checklist: A list of verbs used to describe the cognitive process of learning.
- Tier - 1 Remember: Define, Recall, Draw, Identify, List, Relate, State
- Tier - 2 Comprehension: Calculate/Compute, Discuss, Explain, Interpret, Recognise, Record, Summarise, Classify, Describe, Provide
- Tier - 3 Application: Apply, Assess, Demonstrate, Graph, Prepare, Prioritise, Reconcile, Solve
- Tier - 4 Analysis: Analyse, Compare, Contrast, Construct, Differentiate, Outline, Write
- Tier - 5 Evaluate: Advise, Conclude, Convince, Criticise, Determine, Evaluate, Justify, Review, Validate
- Tier - 6 Synthesis: Compile, Design, Develop, Propose, Anticipate, Draft, Formulate, Plan, Report, Submit, Suggest, Synthesize
Governance Internal Control Frameworks
- Corporate Governance and Audit: The need for an audit of financial statements using agency theory.
- Governance internal control frameworks: An introduction to governance internal control frameworks.
Introduction to External Audit
- Assurance Engagements: An engagement in which a practitioner expresses a conclusion designed to enhance the degree of confidence of the intended users about the outcome of the evaluation or measurement of a subject matter against criteria.
- Objectives of Statutory Audits and the Audit Opinion: The objectives of statutory audits and the benefits and limitations of the audit opinion.
- Regulation of Auditors: The regulation of auditors in Sri Lanka and the introduction to Sri Lanka Auditing Standards (SLAuS).
- Sri Lanka Auditing Standards (SLAuS): Auditors must follow SLAuS when carrying out an audit.
Case Study: Amanthi's Business
- Agency Theory: Amanthi's business expansion and the need for an independent audit of financial statements.
- Stakeholders: The various parties interested in the accounts of a company, including shareholders, creditors, employees, and taxation authorities.
- Accountability and Stewardship: The accountability of directors to shareholders and the duties of stewards to manage the company's business and accounts.
- Shareholders' Expectations: The expectations of shareholders from their investment, including capital growth and dividends.
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Test your knowledge of Advanced Audit and Assurance, including governance internal control frameworks, external audit, and internal controls over specific business areas.
