Principles of Auditing

Arab Open University

ACC302: TMA – FALL 2020

About TMA:

The TMA covers Principles of Auditing & Other Assurance Services. It is marked out of 100 and is worth 20% of the overall assessment component. It is intended to assess students’ understanding of some of the learning points within chapters 1 to 7. This TMA requires you to apply the course concepts.

The TMA is intended to:

• Increase the students’ knowledge about the reality of Auditing as a profession.
• Assess students’ understanding of key learning points within chapters 1 to 7.
• Develop the ability to understand and interact with the nature of the professional standards & internal control.
• Develop students’ communication skills, such as memo writing, essay writing, analysis, and presentation of material.
• Develop basic ICT skills such as using the internet & e-library resources.

The TMA:

The TMA requires you to:

1. Review various study chapters (from Chapter 1 to 7) of ‘Principles of Auditing & Other Assurance Services’ Book and apply some of the concepts within it.
2. Conduct a simple information search using the internet.
3. Present your findings in not more than 1,600 words. The word count excludes headings, references, title page, and diagrams.
4. You should use a Microsoft Office Word and Times New Roman Font of 12 points.
5. You should read and follow the instructions below carefully. Each part of the process will carry marks for the assignment.

Criteria for Grade Distribution:

Criteria	Content	Referencing& e-library	Structure and Presentation of ideas	Total marks
Marks	100	(5)	(5)	100

Financial Reporting on the Internet (NBK)

Access the NBK annual report at below web page: https://www.nbk.com/nbk-group/investor-relations/financial-reports.html then download the NBK Annual report 2019 in PDF Form.

Use the annual report to answer the following questions.

Go to “Report of Independent Registered Public Accounting Firm” & answer the following questions. Read the report carefully

1. In an attestation engagement CPAs provide a report on subject matter or an assertion about that subject matter. Thus, an attestation services provides reliability to decision makers in taking their decisions, explain the attestation services and provide the details from Annual report NBK. (10 marks)

2. In a financial statement audit, the auditors undertake to gather evidence to obtain a high level of assurance that the financial statements follow generally accepted accounting principles, or some other appropriate accounting framework. Is CPA responsible for preparing financial statements? Discuss the responsibility and functions of CPA with evidence of annual report. Also name the different Financial statements that audited by external auditors at NBK. (10 marks)

3. Identify and explain the difference between the Audit Committee Report and independent Auditors Report from annual report of NBK. What is the basic information discussed in these two reports? What do you think which report provides reliable information to stakeholders?

(10 marks)

4. Imagine you are the external auditor of NBK, how do you interpret and what is your view on the “going concern” assumption on the financial stability of a business? (10 marks)

5. What does the term “material misstatement” mean? Does auditor indicate and highlighted any information about material misstatement in annual report?

(10 marks)

6. Reliable accounting and financial reporting aids society in allocating resources in an efficient manner. Explain why audits are demanded by society? Support your answer from the Annual report of 2019 of NBK? (10 marks)

7. Financial statement assertions are important to auditors because they should consider audit risk at the assertion level for all significant account balances, transaction classes, and disclosures. Identify and explain the components of audit risk and provide evidence from Annual report of NBK.

(10 marks)

8. The required understanding of the client is used by the auditors to help plan the audit and to assess the risks of material misstatement at the financial statement and relevant assertion. Describe the nature of the risk assessment procedures that auditors use to obtain an understanding of the client and its environment. Support your discussion from annual report of NBK.

(10 marks)

9. Write the summary on the auditor’s report. Your summary should include the main points of report and auditor’s opinion. Also identify which type of opinion auditor expressed in the annual report-

(10 marks)

10. What do you understand by internal control? Discuss the auditor’s duty in terms of internal control system. Provide reference from annual report.

(10 marks)

In your answer, you should explain each point or inquire separately. Use the following headings (below) to make up the different sections of your answer:

PT3 form (Cover)	Available in LMS.
Contents	Title and contents page
TMA	Financial Reporting on the Internet
Reference list	Recorded according to the Harvard style – Available in LMS.