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Fundamentals of Financial Auditing

Course Description

Print-friendly Course Description and Outline

​Scrutiny of financials has been an ongoing discussion for decades and still there are regular enforcement actions against high-level executives accused of participating in multi-year accounting fraud involving inflating the company’s revenue, the misappropriation of millions of dollars of company funds for personal use, and concealing required details from regulatory agencies and stockholders.

When these events surface, it is common to hear questions like:

  • Where were the auditors?
  • What controls failed and why?
  • How did this go unreported for so long?

This introductory course provides a comprehensive overview of key financial auditing concepts that are fundamental for all internal auditors. It will introduce participants to important financial auditing terminology, examine financial reporting-related controls, and how to apply each within the internal audit process. Finally, the course will explore common accounting standards (GAAP, IFRS, BASEL III, and OCBAO) and how to perform internal audit activities against critical financial reporting processes including: reconciliation of accounts payable, accounts receivable, escheat, tax (1099, 5498, and B1), and suspense, and trial balance.

Who will benefit from this course?

This course is designed for internal auditors who are looking for a fundamental understanding of conducting financial audits. This course is recommended for internal auditors that are involved internal audit activities related to financial reporting and need to know how to assess the accuracy, completeness, and currency of existing financial reporting reconciliation processes and the impact of inaccurate and/or incomplete financial reporting on organizational risks. This course also benefits any internal auditors currently focused on operational, compliance or technology audits who would like to expand their skill set to include financial audit knowledge and understanding.

Course Objectives

  • Define common accounting terms, standards, principles, and rules applicable to an internal auditor.
  • Explore regulatory reporting requirements, proposals, and recent changes.
  • Recognize journal entries associated to key financial statements.
  • Describe the difference between management-level and consolidated financial statement-level reporting and how key financial ratios are commonly calculated.
  • Express the importance of preforming horizontal and vertical data analysis.
  • Apply common techniques for performing reconciliation for various accounting functions including: accounts payable, accounts receivable, escheat, tax, suspense, and period-end trial balances.
  • Identify common indicators of financial fraud and how to identify, validate, and report such fraud.
Course Duration: 2 day(s)
CPEs Available: 16
Knowledge Level: Intermediate
Field of Study: Auditing
Prerequisites: 
Tools for the New Auditor and/or previous internal audit experience.
Advance Preparation: 
​None
Delivery Method: eLearning (Group-Internet-Based); On-site Training (Group-Live); Seminar (Group-Live); Live Stream

​Financial Auditing Review

  • Compare and contrast financial auditing with operational and compliance auditing.
  • Common accounting terminology.
  • Accounting standards (IFRS).
  • Accounting principles (GAAP, OCBAO).
  • Accounting rules.
  • Evaluating the organizations compliance with the accounting standards, principles, and rules.

General Ledger, Journal Entries, and Financial Statements

  • General Ledger, including:
    • Chart of Accounts.
  • Journal entries, including:
    • Accounts payable.
    • Accounts receivable.
    • Escheat.
    • Suspense.
    • Journal entry risks and controls.
    • How GL entries populate financial statements.
  • Common financial statements and their components:
    • Balance sheet.
    • Trial balance.
    • Income statement.
    • Cash flow statement.
    • Statement of shareholders’ equity.
    • Footnote good practices and regulatory requirements.
    • Financial statement risks and controls.

Financial Reporting

  • Management-level reporting.
  • Consolidated financial statement-level reporting.
  • Calculating key financial ratios.
  • Management estimates and considerations for evaluating reasonableness.
  • Financial reporting risks and controls.

Regulatory Changes in Financial Reporting

  • Sarbanes-Oxley Act of 2002.
  • Cryptocurrency.
  • 2021 1099-INT form change “aggregate inflows and outflows.”
  • ESG reporting.
  • AICPA – Consideration of Laws and Regulations on an Audit of Financial Statements.
  • Evaluating the adequacy of the metrics and controls to ensure that regulations are followed and associated controls are tested.

Reconciliation Auditing Practices

  • Documenting data flow including IT-controlled and end-user (shadow-IT) controlled input sources.
  • Horizontal and virtual data analysis.
  • Documenting reconciliation validation audit procedures (user stories) and expected results (acceptance criteria).
  • Performing the reconciliation validation audit test.
  • Completing the reconciliation validation work paper.
  • Developing the reconciliation validation observation.
  • Presenting the reconciliation validation observation.
  • Understanding the difference between accidental invalid entries, management overrides with unintentional negative consequences, vs. fraudulent entries.
  • Identifying, investigating, and communicating suspected financial audit fraud including embezzlement, kitting, theft, and common forms of corruption.

​Most courses can be delivered through on-site training. You might be surprised that the organization leading the profession is just as committed to the delivery of affordable training.

Contact us by calling +1-407-937-1388 or send an e-mail to GetTraining@theiia.org.

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