Tribhuvan University
Faculty of Management
Office of the Dean
Bachelor of Business Management (BBM)
Course Description
:This course contains a general course on Auditing necessary for corporate organizations. It consists of a conceptual foundation, internal checks and control, vouching, audit of impersonal ledgers, verification and valuation of assets and liabilities, audit of a limited company, audit of divisible profits and dividends, a udit report, audit programs and procedures of different classes of audits, and investigation of the Organization.
Course Objective
:This course is designed to impart know ledge on the conceptual aspects of auditing focused on corporate organizations. The objectives of this course are t o gain an understanding of the relevant audit procedures and techniques in a corporate organization . Similarly, this subject makes students capable of assessing internal control systems by identifying audit risk and helps them able to perform audit work effectively and efficiently by identifying various types of audit. Course Description This course contains a general course on Auditing necessary for corporate organizations. It consists of a conceptual foundation, internal checks and control, vouching, audit of impersonal ledgers, verification and valuation of assets and liabilities, audit of a limited company, audit of divisible profits and dividends, a udit report, audit programs and procedures of different classes of audits, and investigation of the Organization.
Course Contents:
Lecture hours show the approximate classroom time allocated to each unit.
Unit 1. Introduction
- Meaning, objectives, nature and scope of auditing
- Evolution of audi ting practices
- Advantages and limitations of audit
- Prevention and detection of error with practical dealings (rectification of error)
- Qualities of an auditor
- Bookkeeping, accounting and auditing, auditing and investigation
- Terms of audit engagement.
Unit 2. Planning an Audit and Types of Audit
- Knowledge and understanding of the organiza tion
- Audit program: Meaning, objectives, advantages and disadvantages
- Contents of audit program, techniques and preparation of audit progra m
- Tolerable error, audit risks, sampling and determinants of sample s ize
- Audit note books: objectives, procedures and techniques and contents of audit notebooks
- Organization of audit staff: job description, responsibility assigned and liabilities defined
- Types of audit work: continuous audit, periodical audit , interim audit, partial audit, t ax audit, cash audit, c ost audit, management audit, data processing audit
- Scope of work to be determined, instruction to the client, preparation b y the auditor, division of work
- Audit files, audit working papers.
Unit 3. Internal Check and Control
- Concept, objective, essential characteristics, advantages and dis advantages
- Internal check and i nternal audit: effects of inte rnal control and internal audit, auditor’s duties as regard to internal check and internal contro l
- Use/adoption of distinctive ticks, r outine checking, difference in balancing books
- Concept of test checks, advantage s and limitations
- Difference between statutory audit and internal audit
Unit 4. Vouching
- Concept, importance, objectives of vouching
- Vouching of cash transactions, vouching of payments, vouching of receipts, vouching of sales, credit and cash sales
- Internal checks as regard to cash sales, cash discount all owed and return
- Credit sales, r eview of internal check system as regard to credit sales, sales on approval basis, sales under hire purchases system, goods on consignment, goods sent on package and containers, return
- V ouching of purchase, cash purchase, internal check as regard to cash purchase, discount received and return, credit purchase, internal check as regard to credit purchase, discount received and return.
Unit 5. Audit of Impersonal Ledgers
- Capital expenditure, revenue expenditure and deferred expenditure
- Outstanding expenses and income
- re pairs and renewals
- Prepaid expenses, contingent liabilities and asset.
Unit 6. Verification and Valuation of Asset and Liabilities
- Concept, importance
- Distinction betw een verification and vouching, v erification and valuation of assets, vouching and valuation, methods of valuation
- Valuation of fixed assets, current assets and wasting assets
- Auditor’s position as re gards to verification and valuation of assets, Verification of liabilities, capital loans and long -term loans, trade creditors, outstanding liabilities for expenses, bills payable, contingent liabilities
- Confirmation and verification, concept of fair value measurement.
Unit 7. Audit of Limited Company
- Nature of company audit: preliminaries before company audit, statutory audit, audit of preliminary expenses, audit of statutory general meetings, review of memorandum of association and articles of association
- Audit of shares capital, issue of shares at par, premium and discount, issue of share for other than cash, bonus share, calls in arrear and calls in advance, forfeiture and re-issue of forfeited shares, transfer an d conversion of shares, alternation of share capital
- Audit of underwriting commission, transfer fees, brokerage and commission
- Audit of debentures: Debentures issued at par, discount and premium, redemption of debentures, regular redemption and redemption at par, premium and discount, redemption through purchase in open market, conversion of debentures into shares.
Unit 8. Audit Report
- Meaning of audit report, content of audit report
- Types of audit report: statutory report, general report, qualified report, tax audit report
- Evaluation of audit evidence, adequacy and appropriate of audit evidence.
Unit 9. Audit Programs and Procedures of different Classes of Audits
- Audit of educational institutions, co -operative societies, charitable institutions, NGO’s and local government bodies
- Performance audit: Concept, Objectives and distinction between financial and performance auditing.
Unit 10. Investigation
- Concept of investigation, difference between in vestigation and audit, causes for investigation and methods of investigation, identification of objectives of investigation
- Formulation of program, collection and examination of records and evidence
- Types of investigation: Investigation on behalf of inco ming partners, prospective shareholders, prospective moneylenders and suspected frauds
- Duties and liabilities of an investigator.
Suggested Readings:
Gupta & Kamal, Contemporary Auditing, New Delhi: Tata McGraw-Hill Ramaswamy, M.S., Auditing, New Delhi: S. Chand and Co. Saxena, R.G., Principles of Auditing, Bombay: Himalayan Publishing House. B.N. Tandon., Practical Auditing, New Delhi: S. Chand and Co. Company Act, 2063 with amendments, Auditing Standards Board of Nepal.