Acct 473-Financial Statement Auditing

UNIVERSITY OF SOUTHERN CALIFORNIA

ACCT 473-FINANCIAL STATEMENT AUDITING

SPRING 2012

PROFESSOR ROSE LAYTON

GENERAL INFORMATION

Faculty: Professor Rose Layton

Office Location: ACC 112

Office Phone: 213/740-5022

E-mail Address:

Office Hours: T TH 2:00-4:00pm; IA M 4- 5:50 pm and by appointment.

USC Emergencies: 213/740-4321

USC Emergency Information

Line: 213/740-9233

USC Information: 213/740-2311 and 91.5 KUSC FM Radio

Course Section: 14136D

Course Prerequisites: ACCT 371b, 373,

Co-Requisites: None

Required Materials: Select Readings – referenced in syllabus;

AICPA. Codification of Statements on Auditing Standards; PCAOB standards, (Available on line through the AICPA or PCAOB website).

Read a business periodical

COURSE OBJECTIVES AND DESCRIPTION

Audit issues will be discussed from the perspectives of management and other users of the financial statements, as well as, the external auditor. The objectives of this course are for you:

1. To comprehend our role as audit professionals through understanding the value our audit services have on our global economy and the importance integrity and ethical behavior have on our performance of this role.

2. To develop the ability to question and apply critical thinking skills to real world situations involving risk.

3. To gain an understanding of the business environment that you will be working in by presenting you with some of the types of conditions, events, and situations that you will encounter. This will assist you in planning and executing the audit.

4. To further develop your communications skills. These skills are essential to your professional development.

5. Finally, I hope to share my enthusiasm and excitement for our profession. Our profession is continually evolving and developing. Our training allows us to make career choices that we may never have dreamed. The learning never stops, nor does the opportunities.

PERFORMANCE EVALUATION

Your overall grade in this class will be determined by your performance in the following:

Component / Points
Preparation – in-class assignments/
mini- project
Midterm
Evaluation of Team
ACL project /
50
125
20
75
Examination / 250
Total / 520

The grade of W is allowed only if a student withdraws by approved date. The grade of IN is reserved for highly unusual cases where the student is unable to complete a single item of the course requirements. All of the sections of ACC 473 will be curved together. Historically, accounting electives’ mean GPA target is a 3.3. See the attached policies for further information.

After each exam or project grade is returned, you will have one week to challenge your grade in writing. After this time, the grades on the exam or project become final.

Exams:

There are two examinations. The format will be multiple choice, fill-in the blank and short answers. Please see the “Individual Class Topics and Assignment” sheet for specific dates.

No make-up exams. Each exam must be taken at the time it is given. Once an exam starts, you will not be permitted to leave the room until the exam is completed.

Class Preparation

I will be giving an in-class group assignment/mini-project on 5 Thursdays. It is your responsibility to attend class on that day and participate in the project. There are readings due each class and related preparation in order to perform well on the project.

All members of the group will receive the same grade, unless a group member does not participate in the preparation of the projects. If you have a non-participating group member, please see me to discuss how to remedy the situation. No late in-class assignments will be accepted.

ACL Project:

Each group will work on the ACL project. It will be turned in on the final date related to your section. Please see the “Individual Class Topics and Assignment” for specific times. You will receive more information on this project as the semester

Evaluation of Team

You will have an opportunity to evaluate your team members. This evaluation will be due on the same date as the ACL Project.

ACADEMIC INTEGRITY

Ethics and values are very important in accounting and the world of business, nonprofit and government organizations. We will consider ethical issues throughout this semester.

Throughout the syllabus, the student's ethical standards are listed. It is expected that each student follow these expectations. If there is a situation that results in an academic integrity violation, the Leventhal School of Accounting Student Honor Code will be followed.

LEVENTHAL SCHOOL OF ACCOUNTING GRADING AND ACADEMIC STANDARDS

See the attached summary of the most important grading and academic standards of the Leventhal School of Accounting.

RETENTION OF GRADED PAPERS

I will retain all graded material that has not been returned to the student for one semester. After that time, I will discard all materials. E-mails will be viewed on-line and deleted at the end of the semester. No hard copy will be given to the student.

DSP

Any student requesting academic accommodations based on a disability is required to register with Disability Services and Programs (DSP) each semester. A letter of verification for approved accommodations can be obtained from DSP. Please be sure the letter is delivered to me as early in the semester as possible. DSP is located in STU 301 and is open 8:30 a.m. – 5:00 p.m., Monday through Friday. The phone number for DSP is (213) 740-0776.

SKILL ENHANCEMENT ACTIVITIES

Throughout this course students will be challenged to develop skills that are critical to professional success. The principal skills and related activities that will be employed in pursuit of your development during this semester include:

Communication Skills:

Oral communication skills will be enhanced through active class participation and presentation of group projects and cases.

Written- Group project and written examinations.

Research Skills:

Cases and the project will require Internet and database research.

Critical Thinking and Reasoning:

Cases and the project will challenge the student’s critical thinking and reasoning skills through the use of thought provoking questions to actual cases.

Analytical Skills:

Cases and examinations will analyze and evaluate financial information. Some answers will be subjective.

Ethics:

Class discussions will discuss ethical issues faced by today’s auditors.

Information Technology

Cases and the project will be prepared using word-processing and/or spreadsheet programs. Research of databases and the Internet will be utilized.

INDIVIDUAL CLASS TOPICS AND ASSIGNMENTS

Class

/ T /

TH

/ Discussion / Readings/Assignments / In- Class
Graded Assignments/
Other Assignments
1 / 3/6 / Audit introduction and review / Review information from Assurance Services
Video:
http://www.journalofaccountancy.com/Multimedia/
go to Integrated Reporting
http://pcaobus.org/Rules/Rulemaking/Docket034/Concept_Release.pdf / Research participants
2 / 3/8 / Integrated Reporting/ Ethical Considerations
Planning the Audit / http://www.environmentalleader.com/2011/09/12/integrated-reporting-framework-proposed/
http://theiirc.org/wp-content/uploads/2011/09/IR-Discussion-Paper-2011_spreads.pdf
Southwest One Report
http://www.southwestonereport.com/index.php
AU 150.01-.02; AU 311.01-.28, Appendix; AS 9; AU 315.01-.10 QC 10.27-.33 / In-class graded Assignment
March 12 -16 / Spring Break -Enjoy!!
3 / 3/20 / Planning the Audit, continued
Audit Risk and Materiality in Conducting an Audit / AU 312.01-.30; AU 334.02-.07; AS8
http://www.journalofaccountancy.com/Issues/2007/Jan/AssessingAndRespondingToRisksInAFinancialStatementAuditPartIi.htm
4 / 3/22 / Audit Risk and Materiality in Conducting an Audit, continued / In-class graded Assignment
Research
Participants
5 / 3/27 / Understanding the Client’s Entity and Its Environment and Assessing the Risks of Material Misstatement / AU 314.01-.33, .102-.116 Appendix A; AS 11; AS 12
http://www.journalofaccountancy.com/Issues/2009/Dec/20091789
http://www.quickmba.com/strategy/porter.shtml
http://www.quickmba.com/strategy/pest/
6 / 3/29 / Consideration of Fraud in a Financial Statement Audit/ Ethical Considerations / AU 316.05-.18,.35-.42, .46-.54
AU 317.02, .07-.10
http://www.journalofaccountancy.com/Issues/2003/Dec/APrimerForBrainstormingFraudRisks / In-class graded Assignment
7 / 3/30 – Friday
2-4 pm / Midterm / Materials covered through 3/29
8 / 4/3 / Evaluating Internal Control over Financial Reporting / AU 314.40-.101; AS5
http://www.journalofaccountancy.com/Issues/2001/Dec/ARoadMapToRiskManagement
Video:
http://www.journalofaccountancy.com/Multimedia/
changes to COSO
9 / 4/5 / Evaluating Internal Control over Financial Reporting (continued)
Interpreting Sample-Based Audit Evidence / AU 314.40-.101; AS5
http://www.journalofaccountancy.com/Issues/2001/Dec/ARoadMapToRiskManagement
AU 350 / In-class graded Assignment
10 / 4/10 / ACL Presentation
Interpreting Sample-Based Audit Evidence (continued)
11 / 4/12 / Analytical Procedures/
Evidence about Management Assertions: Linking Risks to Substantive
Tests / AU 329; AU 326, AU 339.03-.17
http://www.journalofaccountancy.com/Issues/2006/Jul/AssessingAndRespondingToRisksInAFinancialStatementAudit.htm / In-class graded Assignment
4/17 / Audit testing for the Sales and Customer Service Process / AU 331
12 / 4/19 / Completing the Integrated Audit / AU 312.50-.68, AU 337, AU 341, AU 333
13 / 4/24 / Examination / Material through 4/19 / Examination in HOH 415
14 / 4/26 / CPA / CPA Simulation
15 / Final - ACL / 11 am – 1 pm / 8 am - 5/9 - 8 am
10 am – 5/8 -11 am
12 pm – 5/9 – 2 pm

The Leventhal School of Accounting adheres strictly to the grading standards of the University and the Marshall School of Business. Additionally, the Leventhal School of Accounting has supplemented those standards with certain others. For students' convenience, and to prevent misunderstanding, these additional standards are summarized below.

GRADING STANDARDS

The following grades are used: A - excellent; B - good; C - fair; D - minimum passing; Ffailure. The grade of F is awarded for failing work at the end of the semester. The assignment of minuses and pluses when earned is required.

The grade of W (Withdraw) is assigned if the student officially withdraws after the third week but before the end of the twelfth week of the semester. No withdrawals will be permitted after the end of the twelfth week except by student petition to the University's Committee on Academic Policies and Procedures.

Students may elect to audit courses during the first three weeks of the semester. A course taken for audit (V) will be assessed at the current tuition rate. A course taken for audit (V) will not receive credit and will not appear on the USC transcript or grade report. Under no circumstances will the University allow a change in the registration status of a course from letter grade or credit to audit (V) or vice versa after the third week of a given semester.

The grade of IN (Incomplete, i.e., work not completed because of documented illness or some other emergency occurring after the twelfth week of the semester) is reserved for those highly unusual cases where, due to circumstances judged fit by the Dean of the Leventhal School of Accounting, the student is unable to complete a specified single item of the course requirements by the time final grades are submitted.

IN grades can be removed only by the student completing the missing requirements of the course to the satisfaction of the instructor.

Marks of IN in courses numbered below 500 must be removed by the end of the semester following the one in which the mark of IN was assigned. If not removed within the specified time limit, marks of IN automatically become marks of IX (expired incomplete), with the exception of thesis and dissertation, and compute in the GPA as an F. A student may remove the IN only by completing the work not finished as a result of illness or emergency. It is not possible to remove an incomplete by re-registering for the course. Previously graded work may not be repeated for credit.

G.P.A. PREREQUISITES FOR UNDERGRADUATE ACCOUNTING COURSES

The following are grade point average prerequisites for any undergraduate student enrolled in any accounting course. Individual instructors may not waive these standards: (1) an average grade of B (3.0) or better in BUAD 250a and BUAD 250b, with no grade lower than a B-; or (1a) if applicable, transfer students are required to meet an average grade of B in the two transferred accounting courses and BUAD 305x, with no grade lower than a B-; and (2) a minimum 2.5 grade point average (based on a scale where the grade of A=4.0) for all accounting courses completed prior to the semester in which the course(s) is (are) to be taken.

In computing grade point average prerequisites, BUAD 250ab, BUAD 280/281, BUAD 305 and 302T will be considered accounting courses.

Grades in accounting courses taken at other institutions will not be included in the computation of the cumulative accounting grade point average.

When a student's cumulative accounting grade point average falls below 2.5, the student is placed on probation. If a student on probation does not regain a minimum accounting cumulative GPA of 2.5 after completing the next 12 semester hours in all courses (including accounting courses) attempted within the University, that student will not be permitted to continue as an accounting major in the Leventhal School of Accounting. Exceptions to this policy may be granted only in unusual circumstances by the Academic Standards Committee of the Leventhal School of Accounting. Decisions of the Academic Standards Committee are final.

To be removed from probationary status, a student may elect either to take another accounting course or courses for which prerequisites are met or to repeat an accounting course or courses in an attempt to earn a higher grade. Regardless of the course of action taken, all courses completed will be counted in computing the cumulative accounting grade point average.

The grade of "W" in an accounting course taken while a student is on probation will not extend probation. The probation period ends at the end of that semester during which the student completes a cumulative total of 12 semester hours of courses in any subject(s) at the university. Under no conditions will the student be permitted more than two successive semesters, including the summer semester, to complete the 12 semester hours of courses.

Students must attain a minimum 2.5 cumulative accounting grade point average to graduate with a Bachelor of Science in Accounting degree.

See the USC Catalogue for further restrictions on including grades in repeated classes in the overall grade point average computation.

OTHER ACADEMIC STANDARDS

1. Students enrolled in any class offered by the Leventhal School of Accounting are expected to uphold and adhere to the standards of academic integrity established by the Leventhal School of Accounting Student Honor Code. Students are responsible for obtaining, reading, and understanding the Honor Code System handbook. Students who are found to have violated the Code will be subject to disciplinary action as described in the handbook. For more specific information, please refer to the Student Honor Code System handbook, available in class or from the receptionist in ACC 101.