Audit of Financial Institutions

A. INTRODUCTION TO AUDIT

1. Concept and objectives of audit, types of audit, the normative framework for financial statement audit in the Republic of Croatia and the EU, International Standards on Auditing (ISAs), International Standard on Quality Control 1 (ISQC 1), and International Auditing Practice Statements (IAPSs) – conception and structure
2. Overall objectives of the independent auditor and conducting an audit in accordance with International Standards on Auditing (ISA 200)
3. Professional ethics for auditors – ethical principles and rules, IFAC's Code of Professional Ethics
4. Croatian Chamber of Auditors, Committee for Public Oversight of Auditing, audit firm, sole auditor, certified auditor

B. METHODOLOGICAL FRAMEWORK FOR THE AUDIT OF FINANCIAL STATEMENTS
I. PRELIMINARY PROCEDURE

1. Understanding the client's business and planning the financial statement audit
   1. Agreeing the terms of audit engagements (ISA 210) and Planning an audit of financial statements (ISA 300)
   2. Identifying and assessing the risks of material misstatement through understanding the entity and its environment (ISA 315 and Revised ISA 315)
   3. Materiality in an audit (ISA 320) and Risks (ISA 330)
2. Testing, audit evidence, and audit documentation
   1. Audit evidence (ISA 500, ISA 501)
   2. Audit documentation (ISA 230)
   3. External confirmations (ISA 505)
   4. Audit considerations relating to an entity using a service organisation (ISA 402)
   5. Analytical procedures (ISA 520)
   6. Audit sampling (ISA 530)

II. FINAL PROCEDURE

1. Examining account balances and transactions in the balance sheet and income statement, opening balances (ISA 510)
2. Auditing accounting estimates, fair value and related disclosures (ISA 540)
3. Evaluating misstatements identified during the audit (ISA 450)
4. Auditing consolidated financial statements
5. Communicating with those charged with governance (ISA 260), communicating deficiencies in internal control to those charged with governance and management (ISA 265)
6. Related parties (ISA 550)
7. Subsequent events and going concern (ISA 560 and ISA 570), Written representations (ISA 580)
8. Using the work of others - Group Audits - consideration of the work of component auditors (ISA 600), using the work of internal auditors (ISA 610 and Revised ISA 610), using the work of an auditor's expert (ISA 620)
9. The auditor's responsibilities relating to fraud in an audit of financial statements (ISA 240) and consideration of laws and regulations in an audit of financial statements (ISA 250)
10. Quality control (ISQC 1, ISA 220)

III. AUDIT CONCLUSIONS AND REPORTING

1. The independent auditor's report on general purpose financial statements (ISA 700)
2. Modifications to the independent auditor's report (ISA 705)
3. Emphasis of matter paragraphs and other additions in the independent auditor's report (ISA 706)
4. Comparative information – corresponding figures and comparative financial statements (ISA 710)
5. The auditor's responsibilities relating to other information in documents containing audited financial statements (ISA 720)

C. SPECIAL PURPOSE AUDIT ENGAGEMENTS

1. Engagements to review financial statements (International Standard on Review Engagements 2400)
2. Special audits according to the Companies Act (e.g., audit of incorporation, increase of share capital)

Other special purpose audits (e.g., pre-bankruptcy settlements, profit reinvestment)

After completing the course, the student will be able to:

1. Explain and understand the fundamental concepts, principles, and phenomena in audit and audit reporting.
2. Develop the ability for a critical and analytical approach to literature, interpret collected data, organise collected data in accordance with assigned tasks, and use the collected data for further research and/or discussion.
3. Develop research and organisational skills at the level of preparing professional and scientific work, particularly through a team approach to planning, formulating, and analysing the meaning of audit and audit reporting, which also enables the application and connection of theory with practical examples.
4. Understand and apply the methodological framework of financial statement audit through all phases of the audit procedure.
5. Understand and apply the methodological framework of special purpose audits.