AUDIT AND ASSURANCE

ARMGT 203

BSC HOHOURS AUDIT AND RISK MANAGEMENT (HARMGT)

BSC HONORS ACCOUNTING AND FINANCE (HACCN)
BSC HONOURS FINANCIAL AND ACCOUNTING SYSTEMS DEVELOPMENT AND
APPLICATIONS (HFCSDA)
BSC HONOURS FISCAL MANAGEMENT (HFISMGT)
BSC HONOURS FORENSIC ACCOUNTING (HFORACC)
 Historical background of Auditing
 Auditing is as old as accounting, and there are signs of its existence in all ancient civilizations such as Greece,
Egypt, Rome, and the UK where trade and commerce was practiced.
 The first mention of auditing was during the Roman Empire where the Emperor would send
TRUSTWORTHY young men referred to as “Quaestors” to check with the Governors on whether public
funds were being utilized correctly, assets bought by the funds protected and taxes collected effectively in their
areas of jurisdiction and surrendered to Rome.
 Moving on, it was Henry 1st of England (1068-1100AD) who first used the word Audit which was derived from
the Latin word “Audire” meaning to hear.
 Like the Roman Emperors he would send Auditors to the corners of England to confirm that the Barons who
ruled on his behalf in various provinces utilized public fund correctly, assets bought by the funds were
protected and taxes were collected and surrendered to England.
 However, auditing developed rapidly during the period of the Industrial Revolution of England (1760-1840) in
the 18th century, when the practice of large scale production developed.
 Historical background of Auditing
 The Industrial Revolution of England was a landmark in the history of trade and commerce as it led to a significant
expansion in the volume of trading transactions which compelled the use of more money.
 Ordinary traders began to combine their businesses to form big enterprises in form of partnerships and joint-stock
companies.
 Investors began to buy shares in various companies and wanted to ensure that their funds were safe and that the
information supplied by management represented a true and fair view of the business.
 Therefore they appointed their TRUSTWORTHY friends or associates to verify this information on their behalf.
 This growth of business enterprises during the revolution was accompanied an improved accounting system and an
independent review of business transactions to protect the interests of stockholders.
 Therefore, such developments had a direct effect on the evolution of the practice of auditing, but the audit of business
accounts could not be standard until the 19th century.
 A Royal Charter incorporated the Institute of Chartered Accountants in England and Wales on May 11, 1880. The key
purpose of this incorporation was to prepare Auditors.
 In January 1923, the British Association of Accountants and Auditors got established, and qualified people would now
register and practice as professional auditors after passing relevant examinations.
 Auditing Today
• The word TRUSTWORTHY has been central in the history of auditing.
• Investors continue to appoint someone trustworthy now referred to as “Auditor "to review financial information of
businesses as prepared by management to ensure that the information provided represents a true and fair view of the
business.
• Various regulations and legislations across the globe have been enacted to regulate the practice of auditing.
• Standards have been developed to standardize the practice of auditing.
• At first the auditing was done manually but now technology has been embraced and computer auditing is now the future.
 History of audit in Zimbabwe
 In the 1880s, the British South Africa Company (1890-1923) began its activities in the region, leading to the colonial era
in Southern Rhodesia (1923-1980).
 The first reference to the Audit of Public Moneys was contained in the Southern Rhodesia Order in Council of 1898 –
Article 46 – which stated “Provision shall be made for a full and sufficient audit once in every year of the accounts of the
Company (British South Africa) relating to all sums received and moneys expended by the company in connection with the
administration of Southern Rhodesia”.
 However at that point no indication was given as to who would do the audit and to whom he or she would report to.
 The Southern Rhodesia Order in Council of 1915 made provision for the appointment - by Secretary of State - of the First
Auditor-General of Southern Rhodesia.
 The order clearly established his independence and conferred on him full powers of examination of all administrative
revenue and expenditure, the disallowing of payments made without proper authority and of criticism after examination of
accounts. He did not, however, control issues from the Exchequer Account (Consolidated Revenue Fund).
 In 1924, to be exact on 22 August 1924, following the granting of self- governing status to the colony, the Audit and
Exchequer Act (6/24) was promulgated. The Act provided for the independence of the Auditor-General (his appointment
and dismissal by the Governor in Council) the annual examination of the Public Accounts, the duty to report to Parliament
within nine months of the end of the financial year, his power to search all records, call upon officers to provide
information, the power of surcharge and the control of issues from the Exchequer Account.
 History of auditing in Zimbabwe
 In 1948 a new Audit and Exchequer Act (Chapter 144) was promulgated without major changes of principle affecting the
audit function. It did, however, introduce discretionary powers as to the degree of audits to be performed. It also defined
that with effect from 1 April 1949 all references to Auditors-General would be read as Controller and Auditor-General.
 The year 1953 saw the inception of the Federation of Rhodesia and Nyasaland. The Audit Office assumed the role of state
auditor of the Federation. It was now overseeing the audit of 4 territorial legislatures, namely, the Federal audit, Southern
Rhodesia, Northern Rhodesia and Nyasaland legislative Council.
 On 1 January 1964, the audit office reverted to being the Supreme Audit Institution of Rhodesia. The unilateral declaration
of independence in 1965 did not effect any major structural changes.
 In 1979, for the first time, the appointment, functions and powers of the Comptroller and Auditor-General were
incorporated into the Zimbabwe-Rhodesia Constitution and remain in the Zimbabwe Constitution today.
 On April 20, 2011 the Comptroller and Auditor-General launched the coming into operation of the Audit Office Act
(Chapter 22:18).

Mr A. E. Harid (1987-2004) Mrs M.Chiri (2004 to present)

First black Comptroller & Auditor-General First black female Comptroller & Auditor- General
 The Auditing and Accountancy Profession in Zimbabwe
 The auditing and accountancy profession in Zimbabwe is regulated by the Public Accountants and Auditors Board
(PAAB), in terms of the Public Accountants and Auditors Act Chapter 27:12.

Regulator

PAAB

Principal
Constituent
Body

ICAZ CIMA ACCA CPA CIS

Associate
Constituent
Body

Institute of The Institute of

Administration and The Southern
Certified Tax
Commerce of African Association
Accountants of
of Accountants
Zimbabwe Zimbabwe
 The Audit Profession
 Auditing is a rewarding and well-regarded career.
 An auditor works either as part of an organization’s internal auditing team or for an outside firm (Audit Firms such as
KPMG, EY, PWC,Deloitte etc).
 An auditing career requires many competencies, including keen analytical skills, strong communication skills and technical
proficiencies with the subject matter under audit.
 It’s important for an auditor to have a high ethical standard due to the nature of their work and conform to a code of ethics.
 Auditors play a key role in validating the integrity of an organization’s processes, systems and information, both financial
and non-financial. Professional auditors also provide advice and consultation to business leaders on how to better manage
and control risks within an organization.
 Auditors must be detail-oriented and enjoy problem-solving. They must also be able to think strategically and relate the
results of their work to the broader objectives of the organization subject to audit.
 The results of an audit are typically provided to an oversight body, such as an audit committee, a governing board or an
outside regulatory agency. For this reason, an auditor may also be known as an assurance provider.
 The assurance work provided by an auditor helps oversight groups fulfill their responsibilities, and the auditing profession
is often seen as a pillar of good governance.
 Types of Auditor Careers
 The careers listed below describe some of the most common types of auditors, but the auditing field is quite large.
Wherever there is a need for assurance, there can be a need for auditing.
 Careers in auditing can be quite diverse. The following slides highlights some of the different specialties you can pursue
within the auditing field.
 Internal Auditor
 An internal auditor is usually employed by the organization subject to auditing. Internal audit departments play a broad
role. They conduct risk assessments to understand the risks that could negatively impact the organization. They also
validate that appropriate risk management and internal control practices are in place.
 Due to the varying nature of potential risks faced by an organization, internal audit teams often comprise experts in a
variety of subjects, including business operations, accounting/finance, IT and regulatory compliance. The collective
competencies of the internal audit team should match the risk profile of the organization they work for.
 In addition to audits of financial information and controls, internal auditors often evaluate the company’s processes for
operational efficiency/effectiveness, proper safeguarding of assets from fraud and abuse and compliance to internal
company policies, among other things. Internal auditors may also support and provide input to the organization’s enterprise
risk management program and on the ethical culture of the organization.
 While internal auditors are often employed by the organization, they must meet certain standards regarding independence
and objectivity. According to these standards, internal auditors cannot be responsible for managing the activities they audit,
and they must maintain a functional reporting relationship with the governing body of the organization.
 Professional internal auditors should be proficient with the International Professional Practices Framework, which involves
authoritative standards and guidance for the professional practice of internal auditing. After obtaining the Certified Internal
Auditor (CIA) qualification, internal auditors can be employed by corporations, the government and not-for-profit
organizations.
 External Auditor
 The primary objective of an external audit is to confirm that the financial statements produced by an entity are reliable and
fairly presented in conformance with applicable accounting principles. External auditors may also review the adequacy of
financial reporting controls, which are the controls in place at the entity to ensure financial statements are accurately
produced.
 It is also common for external auditors to provide assurance and consultation on other financial topics, including tax and
statutory reporting.
 The external audit profession is more highly regulated than other forms of auditing, and strict independence requirements
prohibit external auditors from being employed by the company they are auditing.
 Investors and other users of the entity’s financial statements place great reliance on the work and opinion issued by an
external auditor. External auditors must be proficient in relevant accounting principles, such as IFRS, as well as any
applicable external auditing standards.
 Becoming a Chartered Accountant(CA) or Certified Public Accountant (CPA) can demonstrate proficiency in these
principles.
 External auditors are commonly employed by public accounting firms.
 Information Technology Auditor
 IT auditing is a specialized form of auditing that focuses on assessing an organization’s IT infrastructure and business
applications.
 In modern times, it can be said that all forms of auditing require competency in IT topics due to the ever-increasing reliance
on technology to manage business operations and information.
 IT auditors typically receive more extensive training on IT topics and often focus their audits on IT systems and
applications.
 IT auditors may work alongside other internal or external auditors who are reviewing other aspects of an activity subject to
auditing.
 IT audits may entail assessments of financial reporting applications, cybersecurity, information security, systems
development processes and broader assessments of overall IT governance.
 Prospective IT auditors may pursue the Certified Information Systems Auditor (CISA) qualification, which demonstrates
proficiency in IT auditing.
 IT auditors can be employed by public accounting firms, consulting firms, corporations, government bodies or not-for-
profit organizations.
 Forensic Auditor
 A forensic auditor is a specialized auditor who focuses on fraud and financial crimes.
 Forensic auditors commonly work with topics such as financial statement fraud, embezzlement, bribery, money laundering, insider
trading and other forms of fraud.
 A forensic auditor may assist with investigations conducted in response to an allegation of fraud or red flags or concerns reported
by employees in a company.
 Since the work of forensic auditors may be used in a trial, these professionals must have a strong knowledge of relevant laws, legal
procedures and the rules of evidence.
 Forensic auditors commonly testify in court and work alongside law enforcement.
 In addition to serving in an investigative capacity, forensic auditors may provide assurance and consultation regarding fraud risk
management strategies, including assessments of the internal controls that prevent or detect fraud.
 Individuals interested in careers in forensic auditing can pursue the Certified Fraud Examiner (CFE) qualification, which
demonstrates proficiency in conducting fraud examinations.
 Forensic auditors can work for large organizations, government entities or insurance companies.
 Auditor Certifications and Licenses
 An auditor certification is a great way to set yourself apart as an expert in the field. Earning certification or licensure can
increase earning potential as well.
 Check out a few common auditor certifications below.
 CIA Certification- If your goal is to become a Chief Audit Executive, consider adding a CIA certification to your
certifications. This certification is administered by the Institute of Internal Auditors to demonstrate that recipients are
proficient in mandatory internal audit professional standards. CIAs have the technical competencies necessary to
successfully conduct or lead internal audit engagements.
 CISA Certification- Before becoming a CISA, you need experience working as an information technology auditor or in a
related field. CISAs must have extensive knowledge in computer systems, security and, of course, auditing.
 CFE Certification- If you are interested in forensic auditing or would like to pursue a career in fraud examinations, then
the CFE may be a good fit for you. To be eligible for the CFE certification, you must be a member of the Association of
Certified Fraud Examiners, have two years of fraud-related work experience and meet other eligibility requirements based
on a point system.
 CA/CPA License- CA/CPA licensure is the accounting profession’s highest standard of competence, denoting achievement
and assurance of quality. Each body sets separate requirements for licensing including stipulations around citizenship,
education and work experience.