IPFM AA Syllabus
CIPFA DIPLOMA MANAGEMENT IN INTERNATIONAL PUBLIC FINANCIAL MODULE SYLLABUS: AUDIT AND ASSURANCE 1. MODULE PROFILE Audit and Assurance (AA) is one of four modules comprising the CIPFA Diploma in International Public Financial Management (Dip IPFM). This is the second qualification in CIPFA’s integrated suite of qualifications, the other qualifications being: Certificate in International Public Financial Management (Cert IPFM), comprising three Certificate stage modules Advanced Diploma in International Public Financial Management (Adv Dip IPFM), comprising four Advanced Diploma stage modules Professional Qualification in International Public Financial Management (PQ IPFM), comprising two Strategic stage modules AA is designed to provide candidates with the necessary knowledge, understanding and skills to perform internal and external auditing within the public services. The module focuses on both the theoretical and practical aspects of auditing and is designed to assess the ability of candidates to perform audit work and prepare high quality audit documentation. The module outcomes are based on the requirements of the International Standards of Supreme Audit Institutions (ISSAIs), the requirements of the Institute of Internal Auditors and the tasks found in typical audit job descriptions within public sector organisations. 2. LINKAGES Auditing knowledge and skills are applicable throughout organisations and consequently audit is linked to all other parts of the syllabus. There are particularly strong linkages in respect of the Financial Accounting module in the Cert IPFM. © Chartered Institute of Public Finance and Accountancy 3. OVERALL AIMS On completion of this module, the successful candidate will be able to: A) Identify the scope and legal, regulatory and ethical environment within which audits are performed (20%) B) Demonstrate an understanding of the risk assessment and planning procedures required by internal and external auditing standards (20%) C) Prepare audit working papers documenting the testing performed to obtain sufficient appropriate audit evidence (20%) D) Use audit evidence gathered to form an audit opinion (10%) E) Prepare working papers documenting audit finalisation procedures performed (10%) F) Explain the role of internal audit and perform internal audit tasks (20%) 2014 - Dip IPFM AA syllabus 1.0 Page 2 of 10 Applicable to exams: June and December 2014 4. LEARNING OUTCOMES OVERALL AIM A Identify the scope and legal, regulatory and ethical environment within which audits are performed. LEARNING OUTCOMES The successful candidate will be able to: A1) Explain the legal and related provisions relating to audits in the public sector: General requirements relating to the provision of internal and external audit services Fair presentation and the nature of audit reports Auditor’s rights and duties Auditor’s liability including criminal liability and liability to third parties Impact of International Standards on Auditing (ISA) on internal and external audit work The role of The International Organisation of Supreme Audit Institutions (INTOSAI). A2) Explain the scope of internal and external audits: Basic tenets and concepts of internal and external audit work Power and authority available to internal and external auditors Concepts of independence and objectivity, and customer focus Materiality. A3) Explain the importance of ethical behaviour and the requirements of applicable standards: Ethical and legal principles which relate to auditor behaviour A4) Apply the INTOSAI quality control requirements for an audit. A5) Briefly discuss the impact of governance requirements on the performance of public services audits: Objectives and enforcement of corporate governance Structure and role of an Audit Committee Contribution of internal and external auditors to corporate governance, in particular through their relationship with the Audit Committee The role of the Auditor General 2014 - Dip IPFM AA syllabus 1.0 Page 3 of 10 Applicable to exams: June and December 2014 OVERALL AIM B Demonstrate an understanding of the risk assessment and planning procedures required by external auditing standards and recognised best internal audit practice. LEARNING OUTCOMES The successful candidate will be able to: B1) B2) B3) Explain the audit assurance model underpinning the ISSAI approach to the conduct of audits: Definition of audit risk Importance of professional scepticism Role of professional judgement Identification of potential misstatements Determining combined assessment of risk of material misstatement. Identify and assess the information required for the risk assessment process Understanding of the organisation and its control environment Fraud risks, management’s anti-fraud risk assessment procedures and the related internal controls established Systems descriptions and evaluation of the design and implementation of internal controls Preliminary analytical procedures Matters arising from audit team meeting proceedings Using the work of internal auditors. Identify audit risks and their implications using the information contained in B2 above: Identification of risk at the financial statement or entity level Identification of risk at the assertion or key process level Determination of potential misstatements in respect of each assertion or key process Nature of significant risk and required audit responses Setting of planning and performance materiality. 2014 - Dip IPFM AA syllabus 1.0 Page 4 of 10 Applicable to exams: June and December 2014 OVERALL AIM C Prepare audit working papers documenting the testing performed to obtain sufficient appropriate audit evidence. LEARNING OUTCOMES The successful candidate will be able to: C1) C2) C3) Identify and document an overall audit response to address assessed risks at both the financial statement level and the assertion level: Use of experienced staff Enhanced supervision Changes in nature, timing and extent of audit tests Considerations regarding the control environment Focus on potential misstatements or key control weaknesses Recognition of need for controls testing Role of substantive testing Use of a combined testing approach. Prepare audit programmes, carry out audit tests and prepare audit working papers: Tests of internal controls Substantive analytical procedures Substantive tests of detail. Explain the role of audit in an IT environment in relation to selecting and evaluating audit evidence: Risks of auditing in an IT environment Guidance available on IT security and related issues Reliance on embedded controls Specialist software for sample selection and testing Practical problems of identifying and downloading computerised records for audit testing. 2014 - Dip IPFM AA syllabus 1.0 Page 5 of 10 Applicable to exams: June and December 2014 OVERALL AIM D Use audit evidence gathered to form an audit opinion: LEARNING OUTCOMES The successful candidate will be able to: D1) D2) Comment on the sufficiency and appropriateness of audit evidence obtained: Relevance and reliability Importance of obtaining written representations Approach to corroborating and conflicting evidence Response to insufficient evidence Use of audit sampling. Discuss the issues that an auditor would consider when assessing whether unadjusted material misstatements or control weaknesses are material, individually or in aggregate: The size and nature of misstatements The nature of control weaknesses Communications with management and those charged with governance Protocols for correction of errors or addressing control weaknesses OVERALL AIM E Prepare working performed: papers documenting audit finalisation procedures LEARNING OUTCOMES The successful candidate will be able to: E1) Identify audit finalisation procedures: Final analytical procedures Subsequent events review Going concern review. E2) Explain best practice in the audit close down process and audit reporting including: Communication within the audit function Audit opinion on financial statements. 2014 - Dip IPFM AA syllabus 1.0 Page 6 of 10 Applicable to exams: June and December 2014 OVERALL AIM F Explain the role of internal audit and perform internal audit tasks. LEARNING OUTCOMES The candidate will be able to: F1) F2) Explain the scope and contribution of internal audit work to an organisation: Scope of internal audit activity within the public services and the private sector Role of internal audit as a contributor to the management of an organisation The impact of regulatory and professional frameworks, including IIA standards, on the conduct of internal audit Ethics relating to internal audit work including independence, objectivity and whistle blowing Internal audit reports Demonstrate internal audit techniques used in the review of internal control and explain the contribution of specialist internal audit engagements Internal audit of internal control Contract audit Fraud investigations Internal performance reviews. 2014 - Dip IPFM AA syllabus 1.0 Page 7 of 10 Applicable to exams: June and December 2014 6. EXAMINABLE STANDARDS NB: The following table is intended to provide a general indication only of the extent to which knowledge and application of each standard may be tested in the Audit and Assurance examination. Syllabus guidelines, learning materials and the specimen examination paper will provide further detail on the specific aspects of each standard that candidates should focus their attention on and the style of examination question that they are likely to encounter. EXAMINATION STATUS OF INTERNATIONAL STANDARDS OF SUPREME AUDIT INSTITUTIONS (ISSAIs) Audit and Assurance at level ISSAI A B C Prerequisites for the functioning of SAIs 30 Code of ethics 40 Quality control for SAIs X X General auditing guidelines on financial audit 1000 General introduction to the INTOSAI financial audit guidelines 1003 Glossary to financial audit guidelines 1200 Overall objectives of the independent auditor and the conduct of an audit in accordance with International Standards on Auditing X 1210 Agreeing the terms of audit engagements Not examinable 1220 Quality control for an audit of financial statements X 1230 Audit documentation X 1240 The auditor’s responsibilities relating to fraud in an audit of financial statements 1250 Consideration of laws and regulations in an audit of financial statements 1260 Communication with those charged with governance X 1265 Communicating deficiencies in internal control to those charged with governance and management X 1300 Planning an audit of financial statements X 1315 Identifying and assessing the risks of material misstatement through understanding the entity and its environment X 2014 - Dip IPFM AA syllabus 1.0 Not examinable X X X Page 8 of 10 Applicable to exams: June and December 2014 1320 Materiality in planning and performing an audit X 1330 The auditor’s responses to assessed risks X 1402 Audit considerations relating to an entity using a service organization 1450 Evaluation of misstatements identified during the audit X 1500 Audit evidence X 1501 Audit evidence – specific consideration for selected items X 1505 External confirmations X 1510 Initial audit engagements – opening balances 1520 Analytical procedures 1530 Audit sampling 1540 Auditing accounting estimates, including fair value accounting estimates, and related disclosures 1550 Related parties X 1560 Subsequent events X 1570 Going concern X 1580 Written representations X 1600 Special considerations – audits of group financial statements (including the work of component auditors) Not examinable 1610 Using the work of internal auditors X 1620 Using the work of an auditor’s expert 1700 Forming an opinion and reporting on financial statements X 1705 Modifications to the opinion in the independent auditor’s report X 1706 Emphasis of matter paragraphs and other matter paragraphs in the independent auditor’s report X 1710 Comparative information – corresponding figures and comparative financial statements X 1720 The auditor’s responsibilities relating to other information in documents containing audited financial statements Not examinable Special considerations – audits of financial statements prepared in accordance with special purpose frameworks Not examinable 1800 2014 - Dip IPFM AA syllabus 1.0 X X X X X X Page 9 of 10 Applicable to exams: June and December 2014 1805 1810 Special considerations – audits of single financial statements and specific elements, accounts or items of a financial statement Not examinable Engagements to report on summary financial statements Not examinable General Auditing Guidelines on Performance Audit 3000 Implementation guidelines for performance auditing 3100 Performance audit guidelines: key principles appendix X X General Auditing Guidelines on Compliance Audit 4000 General introduction to guidelines on compliance audit 4100 Compliance audit guidelines for audits performed separately from the audit of financial statements X 4200 Compliance audit guidelines related to audit of financial statements X X Levels of knowledge required for the examination Level A: A thorough knowledge with a solid understanding of the subject matter and some experience in its application in practice sufficient to: exercise reasonable professional judgement in the application of the subject matter in those circumstances generally encountered in practice; and recognise when the assistance of a specialist may be required. This level of knowledge is lower than that of a specialist. Level B: A working knowledge with a broad understanding of the subject matter and a modicum of experience in its application sufficient to: apply the subject matter in straightforward circumstances; and identify issues requiring professional attention in more complex situations. Level C: a general knowledge with a basic understanding of the subject matter and training in its application sufficient to: identify significant issues; evaluate their potential implications or impact; and recognise that additional work or advice may be required to be performed by a person technically competent in this area of expertise. This level of knowledge is significantly greater than that of a layperson. [END OF SYLLABUS] 2014 - Dip IPFM AA syllabus 1.0 Page 10 of 10 Applicable to exams: June and December 2014
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