Financial Systems And Auditing

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Financial Systems And Auditing

Unit 11:

Unit code: QCF level: Credit value: Financial Systems and Auditing J/601/0901 5 15 credits

Aim

The aim of this unit is to enable learners to develop understanding and skills in the management of business accounting systems and the conduct and reporting of audits.

Unit Abstract

In this unit learners will develop skills to evaluate the accounting systems of a business, using both computerised and manual records, and apply fundamental concepts. Learners will also analyse the management control systems of a business and evaluate their effectiveness, particularly in terms of controls and safeguards against error and fraud. This unit will also enable learners to develop audit skills by contributing to the planning and performance of an audit and the preparation of an audit report.

Learning Outcomes

Understand the importance of keeping effective accounting systems within a business Be able to analyse the management control systems of a business Be able to contribute to the planning and conduct of an audit assignment Be able to prepare audit reports.

Unit Content

1 Understand the importance of keeping effective accounting systems within a business Accounting records: books of prime entry (daybooks); accounts and ledgers (sales, purchases, nominal/general); trial balance; final accounts Fundamental accounting concepts: accruals; prudence; consistency; going concern; materiality; business entity Accounting systems: manual and computerised; effect of business size and structure

2 Be able to analyse the management control systems of a business Business risk: types eg operational, financial, compliance; identification of risk and responsibility for risk management; influences on corporate governance eg Cadbury Code Control: control systems and procedures within the business eg segregation of duties, authorisation Fraud: types; implications; detection

3 Be able to contribute to the planning and conduct of an audit assignment Regulatory environment: legal duties and status of auditors; liability of auditors; auditing standards and guidelines Role of the auditor: internal and external audit and the relationship between the two; responsibilities of management as opposed to auditors Audit planning: scope; materiality; risk Audit testing: systems based (compliance) and substantive testing; sampling methods eg random, stratified, systematic; confidence intervals Records: audit files and working papers; checklists and programmes; flow charts and questionnaires

4 Be able to prepare audit reports Statutory reports: purpose; content (opinion of auditor), qualified and unqualified, types of qualification Management letters: purpose and content

Learning Outcomes And Assessment Criteria

Learning Outcomes

LO1 Understand the importance of keeping effective accounting systems within a business

• 1.1 explain the purpose and use of the different accounting records
• 1.2 assess the importance and meaning of the fundamental accounting concepts
• 1.3 evaluate the factors which influence the nature and structure of accounting systems

LO2 Be able to analyse the management control systems of a business

• 2.1 identify the different components of business risk
• 2.2 analyse the control systems in place in a business
• 2.3 evaluate the risk of fraud within a business suggesting methods for detection

LO3 Be able to contribute to the planning and conduct of an audit assignment

• 3.1 plan an audit with reference to scope, materiality and risk
• 3.2 identify and use appropriate audit tests
• 3.3 record the audit process in an appropriate manner

LO4 Be able to prepare audit reports

• 4.1 prepare a draft audit report
• 4.2 draft suitable management letters in relation to a statutory audit.

Guidance

Links

The unit links with the following units in the programme: Unit 2: Managing Financial Resources and Decisions, Unit 6: Business Decision Making, Unit 9: Management Accounting: Costing and Budgeting, Unit 10: Financial Accounting and Reporting and Unit 12: Taxation. Learners should complete Unit 10: Financial Accounting and Reporting before starting this unit. Additionally the unit covers some of the underpinning knowledge and understanding for the NVQ in Accounting as mapped in Annexe B. The unit covers topics essential for learners aiming to make a career within finance and who would like to become members of professional accounting bodies.

Essential Requirements

There are no essential or unique resources required for the delivery of this unit.

Employer Engagement And Vocational Contexts

Centres should develop links with local businesses. Many businesses and chambers of commerce want to promote local business and are often willing to provide work placements, visit opportunities, information about businesses and the local business context and guest speakers. www.businessbritainuk.co.uk www.fsb.org.uk provides information about business in Britain and has extensive links to other business and business news sites. The Federation of Small Businesses provides information, support and guidance about small businesses in the UK.

Risk Management

Risk Management

Risk Management

	Aims			To raise business risk awareness and develop skills
				to assess, monitor and control business risks.  To
				develop an appreciation of the implications of
				business risks
		Unit Level		6
	Unit Code			H/503/5097
		Guided Learning Hours		40
	Credit Value			10
		Unit Grading Structure		Pass
	Assessment Guidance			Assignments in accordance with awarding
				organisation guidance
		Learning Outcomes.		Assessment Criteria.
		The learner will:		The learner can:
	1. Understand the risk			1.1	Examine the role of the risk management
		management function in			function in business
		business		1.2	Assess the role of business functions in the
					management of risk
		2. Understand how business		2.1	Analyse the risk assessment process
		risk is assessed and		2.2	Evaluate approaches to managing risk
		managed		2.3	Examine the risk management process.
	3. Understand the effects of			3.1	Analyse the main drivers of business risk
		business risks and how they		3.2	Appraise the impact of different types of risk
		can be managed			for a business organisation
				3.3	Assess which business areas are high risk
				3.4	Analyse risk management strategies
		4. Understand approaches to		4.1	Analyse the vulnerability of businesses to
		crisis management and			breaks in continuity
				4.2	Critically evaluate approaches to crisis
		business continuity planning
					management and business continuity
					planning

Indicative Content

Understand the risk management function in business

 Role of risk management

 Purpose of risk management – why risks need to be managed, identifying risks, review of activities and internal environment, setting objectives, risk assessment (impact and likelihood), risk response plans, control and monitoring

 Functions that have a role in managing risk

 Strategic planning, marketing, compliance, operations, legal and accounting, insurance, treasury/accounting, management and quality assurance, internal audit, health and safety, environmental 

Understand how business risk is assessed and managed

 Risk assessment

 Analysis, identification, description, estimation control measures, evaluation and review

 Risk management frameworks

 ERM programmes, COSO, ISO 3001, corporate governance/compliance, actuarial approaches, insurance, legal issues

 Risk management process

 Risk assessment, risk reporting, decisions, risk treatment, residual risk reporting, monitoring – ongoing and formal audit, modification

 Understand the effects of business risks and how they can be managed

 Drivers

 Strategic risks (eg. competition, changes in society or markets), financial risks (eg. liquidity, foreign exchange, credit risk), operational risks (eg. product failure), hazard risks (eg. natural disasters), information risks (eg. computer hacking)

 Operations: Identifying risks in business operations (as above)

 High risk areas

Data, systems integrity, reputation, financial theft

 Risk management strategies

 Employment practices, fraud prevention measures, health and safety policy protection of physical assets and business continuity, process and product management, bench marking, disaster management

Understand approaches to crisis management and business continuity planning 

Vulnerability

 Factors – size of business, operating environment, physical environment etc. Impacts – loss of profits, loss of assets, inability to trade

 Approaches

 Business continuity planning, impact assessment, threat assessment scenario definition, recovery solution design (including customer / stakeholder management), implementation and communication, testing, maintenance and update, crisis assessment, incident resolution – roles and actions

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