AUE2601
STUDY GUIDE
,AUE2601 – AUDITING THEORY AND PRACTICE
STUDY GUIDE
TOPIC 1: INTRODUCTION TO AUDITING
LEARNING UNIT 1.1: THE AUDITOR
Introduction
Independent auditing firms may be appointed to verify the voting results of major
competitions, including television talent shows such as Idols. The purpose is to have the
results examined by a competent and independent professional. Participants and
members of the public are more likely to trust the outcome when an independent party
confirms that the count is accurate and that the process has not been manipulated.
An audit can therefore strengthen confidence in the results. The auditor may also
identify weaknesses in the process and recommend improvements that could prevent
problems in future events.
The concepts and methods in this study material are most useful when students
understand what auditors actually do, rather than simply memorising definitions, rules
and procedures. It is important to understand both the auditor’s role and what an audit
of an organisation involves.
This learning unit explains the meaning of an auditor, the different categories of
auditors, the characteristics expected of them, the fundamental ethical principles they
must follow, and the reasons organisations need auditors.
1.1.1 The definition, types and characteristics of auditors
Different auditors carry out different types of work. However, a key feature of assurance
work is that the auditor must be independent and provide a conclusion that helps users
assess the information being examined.
1.1.1.1 Study
,What is an auditor?
Study the following materials:
Jackson and Stent (2016:1/2).
SAICA Student Handbook, Volume 2A(1), ISA 200: Overall Objectives of the
Independent Auditor and the Conduct of an Audit in Accordance with
International Standards on Auditing, particularly paragraphs 3 and 13(d).
When reviewing these sources, concentrate on:
The meaning of an auditor.
What it means for an auditor to provide assurance.
The purpose of auditing financial statements.
1.1.1.2 Study
Types, characteristics and classification of auditors
Refer to Jackson and Stent (2016:1/2–1/4).
Although this module mainly examines the work of independent external auditors, it is
also necessary to understand internal auditing and other auditing services.
Pay attention to:
The main categories of auditors and the responsibilities associated with each.
The characteristics that auditors are expected to demonstrate.
Activity 1
Required
Identify the different types of auditors and explain the purpose of each type of audit.
Feedback on Activity 1
, Reference: Jackson and Stent (2016:1/2–1/4).
Use the prescribed textbook section to review the categories of auditors and the
objectives of their work.
The module places particular emphasis on external auditors, who issue an opinion on
the financial statements they examine. Nevertheless, students should be able to
distinguish external auditing from internal auditing and other forms of audit work.
Table 1: Differences between internal and external auditors
The following distinctions are based on Jackson and Stent (2016:1/2–1/4).
STUDY GUIDE
,AUE2601 – AUDITING THEORY AND PRACTICE
STUDY GUIDE
TOPIC 1: INTRODUCTION TO AUDITING
LEARNING UNIT 1.1: THE AUDITOR
Introduction
Independent auditing firms may be appointed to verify the voting results of major
competitions, including television talent shows such as Idols. The purpose is to have the
results examined by a competent and independent professional. Participants and
members of the public are more likely to trust the outcome when an independent party
confirms that the count is accurate and that the process has not been manipulated.
An audit can therefore strengthen confidence in the results. The auditor may also
identify weaknesses in the process and recommend improvements that could prevent
problems in future events.
The concepts and methods in this study material are most useful when students
understand what auditors actually do, rather than simply memorising definitions, rules
and procedures. It is important to understand both the auditor’s role and what an audit
of an organisation involves.
This learning unit explains the meaning of an auditor, the different categories of
auditors, the characteristics expected of them, the fundamental ethical principles they
must follow, and the reasons organisations need auditors.
1.1.1 The definition, types and characteristics of auditors
Different auditors carry out different types of work. However, a key feature of assurance
work is that the auditor must be independent and provide a conclusion that helps users
assess the information being examined.
1.1.1.1 Study
,What is an auditor?
Study the following materials:
Jackson and Stent (2016:1/2).
SAICA Student Handbook, Volume 2A(1), ISA 200: Overall Objectives of the
Independent Auditor and the Conduct of an Audit in Accordance with
International Standards on Auditing, particularly paragraphs 3 and 13(d).
When reviewing these sources, concentrate on:
The meaning of an auditor.
What it means for an auditor to provide assurance.
The purpose of auditing financial statements.
1.1.1.2 Study
Types, characteristics and classification of auditors
Refer to Jackson and Stent (2016:1/2–1/4).
Although this module mainly examines the work of independent external auditors, it is
also necessary to understand internal auditing and other auditing services.
Pay attention to:
The main categories of auditors and the responsibilities associated with each.
The characteristics that auditors are expected to demonstrate.
Activity 1
Required
Identify the different types of auditors and explain the purpose of each type of audit.
Feedback on Activity 1
, Reference: Jackson and Stent (2016:1/2–1/4).
Use the prescribed textbook section to review the categories of auditors and the
objectives of their work.
The module places particular emphasis on external auditors, who issue an opinion on
the financial statements they examine. Nevertheless, students should be able to
distinguish external auditing from internal auditing and other forms of audit work.
Table 1: Differences between internal and external auditors
The following distinctions are based on Jackson and Stent (2016:1/2–1/4).
