AFM 208
Professional Practice
Assurance
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Instructor: Laura Simeoni, CPA CA CIA
WELCOME TO CLASS 1
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VIDEO 1
• SLIDES 3 – 16 CAN BE
REFERENCED AS YOU
WATCH VIDEO 1 –
• OBJECTIVES OF VIDEO
1 – REVIEW THE
COURSE OUTLINE
• READ THE COURSE
OUTLINE BEFORE YOU
WATCH VIDEO 1
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Week One - Agenda
Introductions
Course outline – key points
Assessments
Staying on track
Resources
New technical: What is auditing and why do we need it?
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Introductions
• CPA CA CIA
• External and internal
auditing
• Consultant
• Lecturer
• Volunteer boards
• For fun … sports, and
new found sport …
Pickleball and travel to
see family
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Introductions
Course outline – key points
Assessments
Staying on track
Resources
What is auditing and why do we
need it?
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Learning Outcomes
Learning Outcomes
Competencies
1. Apply the external audit process to the financial
statements of for-profit businesses and not-for-profit
organizations.
2. Explain the CPA Rules of Professional Conduct
and be able to apply them to various scenarios.
3. Demonstrate the CPA enabling competencies:
professional and ethical behaviour, problem solving
& decision-making, communication, self
management and teamwork and leadership through
self -reflections, office hour and email
communications, and course work.
Technical
Enabling
4. Communicate the audit process and its
application to various scenarios through written
communication including the final case assignment.
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Course Outline – key points
• Course outline – key points
• Contact information – note the link for Office Hours
• Post lectures (slides and videos) by Tuesday
morning
• No assigned textbook
• Various assessment opportunities
• Familiarize yourself course and university policies
• Schedule
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Assessments
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Self-reflections –
20%
Quizzes – 30%
Video reviews –
20%
Final Assignment –
30%
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Staying On Track
• Staying on track
– Do your weekly research,
readings and assignments
– Do your problems on your
own
– Discuss your answers with
classmates … collaborate
– Use office hours using the
Cisco WebEx platform
– Email me as necessary
– Review information posted
on Learn
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Resources
• No textbook …why not?
• Review lecture slides and notes
• Read parts of the CPA Handbook … what is it and
how do I read it? (next slide)
• Reference the Competency Map
• Read other assigned readings
• Do your own research based on your interests
– PWC website/CRA CERB audits
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CPA Handbook
https://www.cpacanada.ca/
• A set of rules, principles and guidelines
• Accounting Handbook - with several
sections- “chapters”
– IFRS, ASPE, NOT-FOR-PROFIT
• The Assurance Section has several
“chapters” related to assurance services
• Chapters are topic specific with paragraphs
• Access through the U of W library
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Finding the CAS
• Go to the online library on the University of
Waterloo website
(https://lib.uwaterloo.ca/web/home).
• Under the resources tab on the banner,
select databases.
• Browse by database titles starting with the
letter C … CONTINUE NEXT SLIDE
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Finding the CAS… continued
• Select CPA Canada Standards and
Guidance Collection (CPACHB) and log in
with WatIAM ID to access.
• Select assurance tab on the left of the
CPACHB once logged in.
• Handbook post-auditor reporting.
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Find in the CAS
• Preface to the CPA Canada Handbook –
Assurance - Introduction
• Read the following paragraphs and
summarize in your notes: 1-4,17-21,32-34
• Glossary of terms – glance through the terms
• Read and familiarize yourself with the
following terms: (next slide)
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Some new words:
Audit documentation
Audit evidence
Audit file
Auditor
Engagement documentation
Internal auditor
Professional judgment
This Photo by Unknown Author is licensed
under CC BY-SA-NC
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Professional standards
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End of Video 1
Thank you!
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VIDEO 2
• SLIDES 17 – 27 CAN BE
REFERENCED AS YOU
WATCH VIDEO 2 –
• OBJECTIVES OF VIDEO 2
– INTRODUCE NEW
AUDIT TERMS, LINK
AUDIT TO ACCOUNTING,
LEVELS OF ASSURANCE,
CONSIDER USERS
• COMPLETE HOMEWORK
BEFORE YOU WATCH
VIDEO 3
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Some new words:
Audit documentation
Audit evidence
Audit file
Auditor
Engagement documentation
Internal auditor
Professional judgment
This Photo by Unknown Author is licensed
under CC BY-SA-NC
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Professional standards
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What is auditing?
• Auditing … the accumulation and evaluation
of evidence about information to determine
and report on the degree of
correspondence between the information
and established criteria.
•
Cited from page 3 – Auditing THE ART AND SCIENCE OF ASSURANCE ENGAGEMENTS – Canadian Thirteenth
Edition – Alvin. A. Arens, Randal J. Elder, Mark S Beasley, Joanne J. Jones
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Criteria
•
•
•
•
IFRS
ASPE
NPOs
Other – bank covenants, government
policies, internal policies
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What is auditing?
• Auditing vs. Assurance
– Auditing is the highest level of assurance that
auditors can provide in their report …
– But what is “assurance” –
– Homework - find definitions for the word
“assurance”
• Per CAS - Reasonable assurance (in the context
of an audit of financial statements and CSQC 1) –
A high, but not absolute, level of assurance.
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Engagements … different services
• Assurance encompasses other types of
engagements … auditing and review
engagements
• AFM 208
Auditing
• Review engagements near the end of the
school term
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Assurance provided…
– Auditing is the highest level of assurance
that auditors can provide in their report
• Say 95% or higher
• But can not have 100% assurance
– Review engagements provide less
assurance than audits
• Say 50-70%
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Level of Assurance %
Level of Assurance
120
100
80
60
40
20
0
Audit
Review
Compilation
Type of Engagement
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Why do we need auditing?
• Economic demand by users
• Who are the users of financial information?
• Users: government, lenders, management,
investors, board of directors….many more!
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Why do we need auditing?
• STOP and think …
1. Pick one user
2. Consider why they
need financial
information
3. Why users want an
external auditor to report
on financial information
they plan to use
This Photo by Unknown Author is licensed under CC BY-SA
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End of Video 2
Thank you!
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VIDEO 3
• SLIDES 30 – 44 CAN BE
REFERENCED AS YOU
WATCH VIDEO 3 –
• OBJECTIVES OF VIDEO 3 –
CONSIDER USERS AND
THEIR NEEDS,
ACCOUNTABILITY,
ENABLING COMPETENCIES
• ANSWER QUESTIONS ON
SLIDE 37
• IDENTIFY YOUR OWN TAKE
AWAYS
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Why do we need auditing?
• STOP and think …
1. Pick one user
2. Consider why they
need financial
information
3. Why users want an
external auditor to report
financial information they
plan to use
This Photo by Unknown Author is licensed under CC BY-SA
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Why do we need auditing?
• Economic demand by users
• Who are the users of financial information?
• Users: government, lenders, management,
investors, board of directors….many more!
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CANADIAN AUDITING STANDARDS
CAS 200
overall objectives of the independent auditor
and the conduct of an audit in accordance
with Canadian Auditing Standards
Title copied from the CPA Handbook
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Audit Objectives
“See CAS 200 – paragraph 3.
“The purpose of an audit is to enhance the
degree of confidence of intended users in the
financial statements. This is achieved by the
expression of an opinion by the auditor on
whether the financial statements are prepared,
in all material respects, in accordance with an
applicable financial reporting framework.”
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Demand for Reliable Information
• Accounting attempts to record and
summarize a company’s transactions into
F/S for the benefit of users.
Accounting is a function of the organization’s
management.
Users are removed from accounting due to
complexity, remoteness or consequences.
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Why do users need an audit?
• Conflict of interest between users of financial
information and management.
• Competing incentives such as:
– Minimize tax (low net income) vs. high net
income
– Users want fair reporting
– So they need an external auditor to provide the
fair reporting
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Three-Party Accountability
User(s)
Conclusion
Subject
Matter
Auditor
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Accountability
Accountable Party
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Are you ready to audit … today?
Yes?
No? …. I don’t know anything about auditing … I don’t know
what to do?
So …you are concerned about learning the technical
But first let’s consider …
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Why is Auditing so Difficult?
 New language
Definitions and need to recall your accounting,
management and finance knowledge base
WHY?
 Can’t memorize rules as auditing requires problem
solving for clients and clients differ
 Need to be able to communicate conclusions
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Enabling Competencies –
(Non-technical skills)
•
•
•
•
•
Professional & ethical behaviour
Problem solving & decision making
Communication (oral & written)
Self-management
Teamwork & leadership
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Enabling Competencies
• CPA Competency Map for more details
• Homework: Search: www.cpaontario.ca >
Become a CPA > Complete Your
Designation > CPA PEP/CFE > CFE
Resources > Competency Map
• Download the Map
• Read the Enabling Competencies – Section
3 – page 11
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End Goal
Understand key audit
concepts
After
12
classes
…my
end
goal is
to:
Apply key concepts to an
audit client/engagement
Perform audit work efficiently,
effectively, confidently and
professionally
Know when to ask questions
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Can you answer these questions
after week 1 videos and slides?
1. What do we mean by auditing?
2. Why are audits needed?
3. Who are some common users of FS and what
decisions do they make using the FS … in other
words, why are they using the financial
statements?
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Can you answer these questions
after week 1 videos and slides?
4. What professional standards will a Canadian
auditor commonly apply during an audit?
5. How much assurance does an audit provide?
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Week 1 - Take Aways
01
02
03
I am responsible to
complete all tasks to
prepare myself for my
first work term
I should be able to
navigate through the
CPA Handbook –
Assurance Standards
Auditors provide
reasonable assurance
for financial
statements prepared
by management but
relied on by many!
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End of Video 3/End of Week 1
Videos
Thank you!
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