1St Semester Term (111): Academic Year 2011-2021
Prince Sultan University
College of Business Administration
Dept. of Finance and Accounting / /
مؤسسة الرياض الخيرية للعلوم
جامعة الأمير سلطان
كلية ادارة الأعمال
قسم العلوم المالية و المحاسبة
Vision
Our vision is to be a hallmark of excellence and innovation in business education in the Kingdom of Saudi Arabia.
Mission
Our mission is to promote excellence and innovation in business education, research, and service in the Kingdom of Saudi Arabia in line with international standards.
ACC 461 – Auditing
/ Credit: 3(3,0,0)1st Semester – Term (111): Academic Year 2011-2021
Instructor : Dr Abdullah Saghaier M. Al-Hussaini
Office # A 244
Phone # 4948538
E-mail :
Office Hours : Please see the Working Schedule affixed on my office door.
Course Description and Objectives:
This is a sppecialized course thataddresses issues related to external reporting and internal control. The course is designed to familiaeize students with the audit environment, auditor’s study and evaluation ot internal control structure and the steps involved in audit planning and execution. This course is designed to achieve the following objectives:
- To introduce the students to the conceptual foundation of the audit process, the audit environment and audit techniques.
- To provide the students with training in solving practical accounting and auditing problems.
- To enhance the syudent’s oral and communication skills.
Text Required:
Alvin A. Arens, Randal J. Elder and Mark S. Beasley.Auditing and Assurance Services: An Integrated Approach; (13th edition), Prentice-Hall, Inc., 2009.
Prentice-Hall Inc.
Recommended References:
- Donal H. Taylor and G. William Gleemen, Auditing: Integrated Concepts and Procedures, John Wiley & Sons, Inc; 1999.
- Ministry of Commerce, KSA, Auditing Standards, 1406H.
- Saudi Organization for Certified Public Accountants (SOCPA), Code of Professional Ethics.
- SOCPA, Quality Control Standars for the Accounting Firm.
Grading:
Your grade will be based on the following:
First Major Exam 20%
Second Major Exam 20%
Final Exam (Comprehensive) 40%
Assignments and Cases 10%
Class Participation & attendence 10%
Class participation means regular attendance, punctuality, making meaningful contributions and showing evidence of preparation during the discussion of the issues. Considering the very nature of the course, the instructor will solve demonstration problems in the class. Then, you will be given a number of assignments which along with class participation will together count for 20% of your final grade. The assignments will be straightforward cases where you play the role of a cost accountant. Make sure that you understand each assignment completely before you work on it. You are encouraged to ask questions inside and outside the classroom regarding your assignment.
Assignments must be completed by the due date. You should and make the required effort to answer every question, as well as to develop a good understanding of the issues involved. Preparing yourself for the coming lectures and active class participation are essential to your learning process. Case Studies given to you would be of the companies functioning in the real marketplace. Solving them would require you to obtain information from various sources including the internet and would help you to follow a research oriented approach to your learning. You are encouraged to seek guidance from your course incharge regarding the cases.
Exams will be structured to allow you to apply what you have learned to realistic settings. Since accounting by its nature is cumulative learning, each topic builds on all previously acquired knowledge of the subject. Therefore, absence from class can be extremely costly and it would not let you develop good understanding of the issues.
DN and attendance regulations
DN wil be given to the students who are absent for 16 hours or more (whether excused or unexcused) during the semester.Attendence will be taken 5 minutes after the start time of the class .Any student who joins the class later will be allowed to attend the lecture but no attendence will be granted to him.
Students are required to bring text book in each class.
Please note the following instructions:
- Read the assigned material before class meetings.
- Do not miss any class.
- Pay attention to details.
- Ask questions and participate in discussions.
- Be regular in doing home-works and assignments because all your course is interrelated.
Course Calendar
WEEK 1 The Demand for Auditing and other Assurance Services
Read Chapter 1
- Describe auditing and distinguish between auditing and accounting.
- Explain the importance of auditing in reducing information risk.
- List the causes of information risk, and explain how this risk can be reduced.
WEEK 2 The Demand for Auditing and other Assurance Services (Continued)
Read Chapter 1
- Describe assurance services and distinguish audit services from other assurance and nonassurance services provided by CPAs.
- Differentiate the three main types of audits and identify the primary types of auditors.
- Describe the requirements to becoming a CPA.
WEEK 3 The Public Accounting Profession
Read Chapter 2
- Describe the nature of CPA firms, what they do, and their structure.
- Discuss the nature of US and International auditing standards.
- Identify quality control standards and practices within the accounting profession.
WEEK 4 Audit Reports
Read Chapter 3
- Describe the parts of the standard unqualified audit report, and specify the conditions required to issue this report.
- Describe the five circumstances when an unqualified report with an explanatory paragraph or modified wording is appropriate.
- Identify the types of audit reports that can be issued when an unqulified opinion is not justified.
WEEK 5 Legal Liability
Read Chapter 4
- Understand the littigious environment in which CPAs practice.
- Differentiate among business failure, audit failure, and audit risk.
- Describe accountants’ liability to clients and third parties, and describe their civil liability.
WEEK 6 Professional Ethics
Read Chapter 5
- Distinguish ethical from unethical behavior, and describe the impotance of ethical conduct.
- The AICPA Code of Professional Conduct. Apply its rules on independence.
- Describe the enforcement ment mechanisms for the rules of conduct.
- Understand Sarbanes-Oxley-Act and other SEC and PCAOB requirements and additional factors that influence auditor independence.
WEEK 7 Audit Responsibilities and Objectives
Read Chapter 6
- Objective of conducting an audit. Distinguish management’s from auditor’s responsibilities.
- Responsibility for discovering material misstaements.
- Link the eight general balance-related audit objectives to management assertions for account balances.
- Explain the relationship between audit objectives and the accumulation of audit evidence.
WEEK 8 Audit Evidence
Read Chapter 7
- Contrast audit evidence with evidence used by other professions.
- The four audit evidence decisions that are needed to create an audit program. Identify and apply the eight type of evidence used in auditing.
- The purposes of audit documentation and prepare organizes audit documentation.
- Describe how technology affects audit evidence and audit documentation.
WEEK 9 Audit Planning and Analytical Procedures
Read Chapter 8
- Adequate and initial audit planning, and preliminary analytical procedures. The purposes of analytical procedures and the timing of each purpose.
- The five major types of analytical procedures and selecting the most appropriate one.
- Compute common financial ratios.
WEEK 10 Materiality and Risk
Read Chapter 9
- What amounts to consider material?, allocate materiality to segments of the audit during planning, and define risk in auditing. Audit risk model and its components.
- Describe the audit risk model and its components and the impact of engagement risk on acceptable audit risk.
- Discuss the relationship of risks to audit evidence.
- Discuss how materiality and risk are related and integrated into the audit process.
WEEK 11 Section 404 Audits of Internal Control and control Risk Read Chapter 10
- Explain the five components of the COSO internal control framework, obtain and document on understanding of internal control.
- Assess control risk by linking key controls and control deficiencies to transaction-related audit objectives.
- Describe the differences in evaluating, reporting, and testing interal control for nonpublic companies.
WEEK 12 The Impact of Information Technology On the Audit Process
Read Chapter 12
- How IT improves internal control? Risks that arise from using an IT-based accounting system. How general and application controls reduce IT risks.
- Use test data, parallel simulation, and embeded audit module approaches when auditing through the computer.
- Identify issues for e-commerce systems and other specialized IT systems.
WEEK 13 Overall Audit Plan and Audit Program
Read Chapter 13
- Use the five types of audit tests to determine whether financial statements are fairly stated.
- Design an audit program.
- Compare and contrast transaction-related audit objectives with balance-related and presentation and disclosure-related audit objectives.
- Integrate the four phrases of the audit process.
WEEK 14 Audit Of the Inventory and Warehousing Cycle
Read Chapter 21
- Describe the business functions and the related documents and records in the inventory and warehousing cycle.
- Explain the five parts of the audit of the inventory and warehousing cycle.
- Design and perform audit tests of cost accounting.
- Apply analytical procedures to the accounts in the inventory and warehousing cycle.
WEEK 15 Audit Of the Inventory and Warehousing Cycle (Continued)
Read Chapter 21
- Design and perform physical observation audit tests for inventory.
- Design and perform audit tests of pricing and compilation for inventory.
- Itegrate the various parts of the audit of the inventory and warehousing cycle.
Week 16
Final Examination