Table of Contents
Section Title Page
Foreword v
Preface xiv
Acknowledgement xviii
Chapter 1 The Auditing Profession 1
1.1 Introduction 2
1.2 Classification of audits 3
1.3 The auditing profession 4
1.4 Assurance services 4
1.5 Related services 6
1.6 Change of engagement from assurance to related service 7
1.7 Other Professional services provided by audit firms 8
1.8 Summary of services 11
1.9 Legislations regulating the conduct of auditing in Tanzania 12
1.10 Professional qualifications and ethical standards 19
1.11 Professional Ethics 22
1.12 Code of Professional Ethics for Professional accountants 24
1.13 Ethical standards when providing Tax Practice 27
1.14 Chapter summary 29
1.15 Exercises and problems 29
Chapter 2 International Developments in Auditing 31
2.1 Brief history of auditing profession in Tanzania 32
2.2 Role of NBAA in the development of the profession 33
2.3 International developments in Auditing 33
2.4 IAASB Standards and their areas of application 34
2.5 Overview of the International Standards on Auditing 34
2.6 Auditors' duty of care and professional liability 44
2.7 Case studies to illustrate third party liability 47
2.8 Auditors Liability under the Acts 51
2.9 Avoiding or minimizing potential claim/litigation against an auditor 55
2.10 Audit practices in selected countries 57
2.11 Recent developments in auditing 57
2.12 Chapter summary 60
2.13 Exercises and problems 61
Chapter 3 Auditing in ICT Environment 64
3.1 Introduction 65
3.2 Nature and types of computerized accounting systems 65
3.3 Internal controls in ICT environments 65
3.4 Information technology and the audit challenges 67
3.5 Use of ICT in auditing 67
3.6 Computer Assisted Audit Techniques (CAATs) - IAPS 1009 70
3.7 Special features of a small computer system 71
3.8 Software Bureaus houses 72
3.9 Example: CAAP for Tax assessment 73
3.10 Audit evidence in a computerized system 74
3.11 E-commerce, e-procurement, e-tax 76
3.12 Auditing E-commerce activities 79
3.13 Chapter summary 81
3.14 Exercises, problems, and case studies 82
Chapter 4 Audit of Specialized Entities 87
4.1 Introduction 88
4.2 Audit of Group and Joint venture accounts 88
4.3 Audit of banks, insurance companies, and Social Security Funds 91
4.4 Audit of Stock Markets 94
4.5 Corporate Governance Rules and Regulations at DSE 101
4.6 Audit of Hotels and Tourist organizations 104
4.7 Audit of mining companies 104
4.8 Audit of Publishing Houses 106
4.9 Audit of Shipping companies 107
4.10 Audit of Small businesses 108
4.11 Chapter summary 109
4.12 Exercises, problems, and case study 110
Chapter 5 Audit of Not-for-Profit Organizations 116
5.1 Introduction 117
5.2 Audit of Charities 117
5.3 Audit of Civil Society Organizations 128
5.4 Audit of Clubs and Associations 128
5.5 Audit of NGOs (e.g., REPOA, Haki-Elimu) 129
5.6 Audit of Academic and Research organizations 131
5.7 Chapter summary 132
5.8 Exercises and problems 133
Chapter 6 Management Audit 135
6.1 Introduction 136
6.2 Comparison with other (compliance or statutory) audits 136
6.3 Management audit as a consultancy 138
6.4 Objectives and scope of management auditing 139
6.5 Audit and advisory services 140
6.6 Appraisal of Client's Operational Plans and Objectives 141
6.7 Appraisal of Client's Organizational Structure and skills 141
6.8 Evaluation and Assessment of Client's Performance 143
6.9 Appraisal of Client's Control of Operations 146
6.10 Operational Audit 146
6.11 Steps in Operational auditing 147
6.12 Corporate Management Audit 149
6.13 Steps in a Corporate Management Audit assignment 156
6.14 Client Service Reports 158
6.15 Qualities of management auditors 160
6.16 Limitations of management audits 162
6.17 Chapter summary 162
6.18 Exercises and problems 163
Chapter 7 Business Investigations 166
7.1 Meaning of the term "Investigation" 167
7.2 Audit as compared to Investigation 167
7.3 Classes of Investigation 169
7.4 Investigation for Proposed Purchaser, Partner or Promoter 170
7.5 Investigation for Company Reports in a Prospectus 176
7.6 Investigation for Take-over or Merger 178
7.7 Investigation on behalf of a Creditor or bank credit 179
7.8 Investigation for valuation of Shares in a Company 180
7.9 The Corporate Business Plan 181
7.10 Exercises and Questions 184
Chapter 8 Public Sector Audits 186
8.1 Introduction 187
8.2 The ISSAI Framework 187
8.3 The Fundamental auditing principles 188
8.4 Basic Postulates (principles) 189
8.5 The General Standards 191
8.6 Field Standards 195
8.7 Reporting Standards 198
8.8 Financial or regularity audits 199
8.9 Financial audit reports 199
8.10 Procurement audit 202
8.11 Performance audit 206
8.12 Comparison: Management audit vs Performance audit 206
8.13 Examination of Clients' Performance 207
8.14 Performance budgeting and measurement 210
8.15 Performance audit reports 213
8.16 Comparison: Public vs Commercial sector audits 213
8.17 Objectives of government auditing 214
8.18 Tanzania public sector entities and legislations 215
8.19 The Public Audit Act 2008 215
8.20 The Controller function 215
8.21 The audit function 216
8.22 Reporting obligations in Public sector audits 217
8.23 Dissemination of public audit reports 223
8.24 Chapter summary 224
8.25 Exercises and problems 225
Chapter 9 Corporate Governance Audits 226
9.1 Introduction 227
9.2 Audit regulation 227
9.3 Corporate governance 228
9.4 Good corporate governance 229
9.5 Corporate governance framework 230
9.6 Audits and the role of the governance auditor 233
9.7 The need for a corporate governance auditor 234
9.8 Role of stakeholders in corporate governance 236
9.9 Role of Board of Directors, MAB, and LGA Council 237
9.10 Communicating with those charged with governance 238
9.11 Role of External Auditor (CPA-PP) in governance audit 239
9.11.1 Relationships with accounting officer, MAB, Council, Board 240
9.11.2 Relationships of CPA-PP with the Audit Committee 241
9.11.3 Relationships between Regulators and the CPA-PP 241
9.12 Laws, codes, and statues relevant to corporate governance 242
9.13 Effect of laws and codes to governance audits 248
9.14 Actions to be taken by (private) companies 250
9.15 Audit matters of governance interest 251
9.16 Transparency, Integrity and Accountability examinations 252
9.17 Corporate Social Responsibility and Rating System 257
9.18 International aspects of governance audits 257
9.19 Rotation of Governance auditors 260
9.20 Chapter summary 261
9.21 Exercises, problems and cases 262
Chapter 10 Environmental Audits 267
10.1 Meaning of Environmental Audits 268
10.2 Scope of Environmental audit 268
10.3 Benefits of environmental audit 269
10.4 Relevance to Financial audit 270
10.5 Components/Projects of an Environmental audit Program 272
10.6 Environmental auditors and the use of experts 272
10.7 Professional standards in Environmental audits 274
10.8 Substantive procedures in Environmental auditing 277
10.9 Environmental Audit Report 278
10.10 Management representations on Environmental audits 279
10.11 Long-term Projects of Environmental audit 279
10.12 Relations between Performance and Environmental audits 280
10.13 Limitations of Environmental audit 281
10.14 Social Auditing 281
10.15 Components of Social audit process 282
10.16 Usefulness of Social audits 282
10.17 Purpose of Social audit in a public entity 283
10.18 Operational audits 286
10.19 Operational audit in the public sector 287
10.20 Steps in Operational auditing 288
10.21 Limitations of Operational audits 290
10.22 Environmental (Internal and External) Risk Audit 290
10.23 Chapter summary 293
10.24 Exercises and problems 294
Chapter 11 Assurance Engagements & Prospective Information 297
11.1 Introduction 298
11.2 Assurance engagements 298
11.3 International Framework for assurance engagements 299
11.4 ISA 120: Framework of International Standards on Auditing 301
11.5 Auditing and Assurance services 302
11.6 Management assertions and levels of assurance 303
11.7 Related services and Limited (Moderate) assurances 305
11.8 Planning an assurance engagement 306
11.9 Risk assessments and internal controls 307
11.10 Execution of assurance engagement 309
11.11 Audit documentation 311
11.12 Form and content of assurance reports 312
11.13 Quality control and Quality Review 312
11.14 Procedures for a review engagement 313
11.15 Final Review of Financial Statements 315
11.16 Structure and components of Independent Audit Reports 317
11.17 Accountability and Transparency: Client Service Reports 320
11.18 Modifications in Audit Reports 321
11.19 Small entities 323
11.20 Client Service Reports 324
11.21 Relations: Audit Reports and Client Service Reports 325
11.22 Tanzania public sector perspective 326
11.23 Reporting obligations by the auditor 331
11.24 Chapter summary 332
11.25 Exercises, problems, and case studies 333
Chapter 12 Follow-up and Oversight on Audit Reports 336
12.1 Discharge of the audit 337
12.2 Disposal of audit reports in private sector audits 339
12.3 Disposal of audit reports in public sector audits 339
12.4 Role of the Auditor General 340
12.5 Reporting obligations by the Auditor General 341
12.6 Role of Parliamentary Committees on Public accounts 342
12.7 Scope of Parliamentary Committees' examination 343
12.8 Independent report of the Committee to Parliament 346
12.9 Follow-up of Committee's recommendations 350
12.10 Supremacy of the Parliament 350
12.11 Supremacy over public finances and stewardship 352
12.12 Chapter summary 354
12.13 Exercises, problems, and case study 354
Chapter 13 Fraud and Corruption Audits 356
13.1 Introduction 357
13.2 Fraud and its ramifications 357
13.3 Types of fraud 358
13.4 Some reasons for the growth of fraud 361
13.5 Common theft scams 361
13.6 Management (or Corporate) Fraud 362
13.7 Symptoms (indicators) of management fraud 365
13.8 Controlling management frauds 366
13.9 Employee (or Transaction) Fraud 367
13.10 Accounting fraud 367
13.11 Procurement fraud 370
13.12 Actions to prevent procurement fraud 372
13.13 Corporate crimes 373
13.14 Crimes for and against the entity 374
13.15 Duty to detect Fraud, Theft and Embezzlement 375
13.16 Techniques of detection 378
13.17 Understanding the symptoms of fraud 378
13.18 Being alert to symptoms of fraud 379
13.19 Investigating and Reporting on Fraud 380
13.20 Internal Control for Fraud Detection 380
13.21 Fraud mitigation 381
13.22 Fraud deterrence 381
13.23 Prevention of fraud 385
13.24 Computerized fraud 387
13.25 Fraud 387
13.26 E-fraud and E-corruption 387
13.27 Corruption 392
13.28 Dealing with Corruption 393
13.29 Forensic Auditing by a CPA-PP 395
13.30 Types of Fraud investigation assignments 396
13.31 Application of Forensic auditing 397
13.32 Execution of an Investigation 399
13.33 Reporting on Forensic investigations 402
13.34 Technical recommendations on controlling fraud 404
13.35 Challenges and issues for consideration 409
13.36 Public interest and/or Conflict of interest 411
13.37 Corporate integrity 412
13.38 Promoting public and personal integrity 413
13.39 Auditor's relationships with watchdog institutions 414
13.40 Chapter summary 414
13.41 Exercises, problems and case studies 415
Chapter 14 Money Laundering Audit 419
14.1 Meaning of Money Laundering 420
14.2 Developments on Money Laundering 420
14.3 The process of Money Laundering 421
14.4 Fighting Money Laundering 423
14.5 The Anti-Money Laundering Act No. 12 of 2006 423
14.6 Asset theft, Money Laundering, and audit process 424
14.7 Money Laundering audit 424
14.8 Chapter summary 434
14.9 Exercises and case studies 434
Chapter 15 Contemporary Issues and the Future 438
15.1 Introduction 439
15.2 The IAASB 439
15.3 Professional pronouncements and exposure drafts 439
15.4 Current issues and pronouncements in auditing 441
15.5 The future of the Audit Profession 441
15.6 Auditing technology 442
15.7 Implications of Electronic Evidence 442
15.8 Standards for Interactions with Technology 443
15.9 Information Credibility (Assurance) Services 443
15.10 The Expectations Gap 444
15.11 Chapter summary 449
15.12 Problems 449
List of Abbreviations and audit terms used 452
Bibliography 457

This textbook, published by the National Board of Accountants and Auditors (NBAA) in Tanzania, serves as a definitive guide to the auditing profession, blending theoretical frameworks with practical application. It covers the entire lifecycle of an audit, starting from the legal and ethical foundations of the profession in Tanzania to complex international developments and the application of International Standards on Auditing (ISAs). The content spans a vast array of specialized fields, including auditing in ICT environments, environmental and social auditing, and the nuances of auditing specialized entities like banks, mining companies, and not-for-profit organizations.
Beyond standard financial audits, the book provides deep insights into Business Investigations, Public Sector Audits, and the critical role of Corporate Governance. It addresses contemporary challenges facing modern auditors, such as the detection and prevention of fraud, corruption, and money laundering under the Anti-Money Laundering Act of 2006. The final sections explore the future of the profession, highlighting the impact of electronic evidence and the "expectations gap" in information credibility services. Each chapter is structured to facilitate learning through summaries, exercises, and case studies, making it a vital resource for both students and practicing professionals.

eng.