Carroll University
Department of Accounting
Auditing 407 - Fall 2011/12
Accounting 407: Auditing Class Hour: Wednesday 6:00-9:35 p.m.
Instructor: Gary L. OlsenOffice Hours: M. Th 9:00-9:45 a.m.
W, Th 5:00-5:45 p.m.
And by Appointment
Office: Voorhees 313 Telephone: 262-524-7171
Web Address: E-Mail
Course Objectives:This course emphasizes the manner in which the assurance function is performed, with an emphasis on the auditing of financial statement information. It continues with the content and learning methods introduced in your earlier accounting courses and with emphasis on understanding relevant professional standards (primarily in 2 areas—attest and audit) and applying those standards. The specific learning outcome objectives are as follows:
- Overall auditor responsibilities: Understand the nature of audit risk and an auditor’s responsibility to detect financial statements misstatements and noncompliance with laws and regulations.
- The audit process:Understand the nature of the audit process, including the nature of and relationships among financial statement assertions, audit objectives, audit procedures and audit evidence.
- Reporting requirements:Apply appropriate audit reporting standards to various reporting situations.
- Ethical responsibilities: Apply ethical standards to situations encountered by accountants.
Learning Goals Upon successful completion of this course, students should:
1. Understand the basic steps necessary to plan and complete the audit of a set of a financial statements
2. Understand the basic auditing reports given on financial statements and internal controls
3. Be able to recognize and relate management assertions and audit objectives to evidence accumulation for financial statements audits. (the purpose of audit objectives is to accumulate evidence to test management assertions about the financial statements
4. Be able to link audit responsibilities and actions with appropriate management assertions and audit objectives. (an auditor needs to know what they have to do and actions to take in order to meet the objectives of an audit.)
5. Understand how to evaluate evidence to determine the appropriate type of report to issue
6. Be able to test transactions and balances. (an auditor must understand how to substantively test the transaction cycles and how to test the controls of these same cycles to provide assurance in both the audit of financial statements and the audit of internal controls over financial reporting
7. Understand the basics of the legal and regulatory environment affecting auditing
8. The ability to construct a set of audit work papers.
Assignments
Class of TopicRead VPC
September 7The Role of the Public Accountant 1 ------
Start Valley Publishing Co. Audit Case
September 14Audit Evidence & Documentation 5 Preliminary
Cash and Financial Investments 10 (Part 1)
September 21Professional Standards 2 Cash
September28Internal Control 7 ------
October 5Internal Control 7 Preliminary
Accounts Receivable, Notes Receivable & Revenue 11 (Part 2)
Test of Controls
October12 OPPORTUNITY FOR EXCELLENCE #1 --- NO CELL PHONES
October 19Audit Planning, Understanding the Client 6 Acc Rec Assessing Risks, and Responding Adv Rev
October 26Inventories and Cost of Goods Sold 12 ------
November 2Audit Sampling 9 Inventories Prepaids
November 9Accounts Payable & Other Liabilities 14 PP & E
November 16OPPORTUNITY FOR EXCELLENCE #2 --- NO CELL PHONES
November 23NO CLASS -- THANKSGIVING
November30Auditing Operations & Completing the Audit 16 L/T Debt Auditor’s Reports 17 Equity
December 7Catch-up and Review Operations
Valley Publishing Co. Audit Case Due Complete Audit
December 14 FINAL (Comprehensive) --- NO CELL PHONES
REQUIRED: Principles of Auditing (18th Ed)by Whittington and Pany, (McGraw-Hill Irwin, 2012)
Valley Publishing Company Audit Caseby Morris and Jones (Armond Dalton, 2009)
OPITIONAL: Study Guide for Auditing by Whittington (Mc-Graw Hill Irwin, 2012)
C.P.A. Review: Auditing by Gleim and Hillison (Gleim Publications)
NOTES:
1. This course has two overall objectives. First, is to give you the necessary theoretical basis in auditing to enable you to successfullypass the CPA exam in Auditing on the first sitting. Second is to develop the auditing tools to not only survive, but to prosper as a CPA in the “business world".
The AICPA has recently developed a framework of core competencies for those entering the accounting profession. These competencies are grouped into Personal, Broad Business, and Functional categories. Whereas the first two categories apply to all business courses (for example, the personal competency of communication skills), functional competencies are more course-specific. Listed below are the AICPA’s functional competencies and how this course will help you to acquire and develop them:
Functional Competencies / Technical skill / Competency DevelopmentDecision modeling / Consider issues, identify alternatives, choose and implement solutions / Some emphasis: Audit risk model.
Risk analysis / Understand audit and business risks / Major Emphasis: Analysis of client business risk, audit risk.
Measurement / Knowledge of appropriate measures of performance and applicable standards / Major emphasis: Evaluation of management estimates, client application of GAAP.
Reporting / Preparation of meaningful reports on work performed and conclusions / Major emphasis: Review and compilation reports, as well as Valley Publishing Case.
Research / Ability to obtain, understand and apply relevant information / Major emphasis: Valley Publishing Case, presentations require solutions to open-ended questions.
Use of technology / Ability to use technology for furthering functional competencies / Major emphasis: Use of CAATs to gather evidence and detect fraud.
2. Expectation of Student Performance in this Capstone Course is High!! Auditing is different from other accounting course that you have taken at Carroll University because in auditing there are few “hard and fast rules”. There is very little discussion of debits and credits, nor are there many problems to work. This course will take a lot of time and effort, both inside and outside of the classroom. An essential component to your successful completion of this class is to keep up with the material. Do not let yourself fall behind!
Each audit engagement is unique. Therefore, auditors must rely on professional judgment to assess the risk of fraud, evaluate the reliability of evidence, determine the materiality of misstatements and issue an opinion on the financial statements taken as a whole. This reliance on professional judgment makes auditing both fascinating and frustrating.
You will be responsible for all material covered in class, in the textbook, and the Valley Publishing Co. Case. Since in class we will not cover every topic in depth, you may find it necessary, at times, to do your own research in order to find the answer to the particular situation you are facing.
3. Professionalism:Accounting is a well-respected profession that provides a service to a client. This is true if you are an auditor or a tax accountant hired by a client; or you are a controller, internal audit manager, or managerial accountant where your client is the company for which you work. Regardless of your position, the only product you offer, is quality professional service.
When you have a job it is your responsibility to fulfill all the requirements of the job. It should be the same in the classroom. It is your responsibility to meet the course requirements. It is not the responsibility of the instructor.
Common courtesy to your co-workers is essential. I have seen top performers dismissed from companies or passed over for promotion because they could not get along with their co-workers. I expect the same respect for your fellow students and for the instructor.
4. Teaching/Learning Approach, Assessment and Grading: The teaching approach in this class will be a combination of lectures on selected topics, an analysis/discussion using an audit simulation, class participation, and the working of selected exercises and problems. Student’s performance will be assessed through a combination of memos, case performance, tests, and class participation. Guest speakers and videos will be used to bring real-life issues to the class. Students will be expected to have read the material assigned prior to the date that it is to be discussed in class.
5.Grades will be calculated based upon the following:
Participation (Class) 50 Points
Web Assignment 50
:Valley Publishing Co. Case 350
Tests 300
Final (Comprehensive) 150
Please understand: That you will be graded on your work/accomplishments in the course. There is no way to factor into calculating your grade: (1) Graduation Status, (2) Job situation - including travel schedules andreimbursements, (3) Family situation - including child care problems, (4) Interviewing schedules, or (5) Company reimbursement procedures.
6.Participation: A very important part of auditing is communication. If you can’t convey the information you have obtained in an audit to your superiors and/or your client, your work is of little value. While you cannot participate if you are not in class, at the same time coming to class and not engaging in classroom discussion will NOT provide you a satisfactory participation grade.
Your participation grade is your work in class. In class we will discuss auditing concepts and you are expected to participate in class discussions on a regular basis. Participation is a function of your willingness to share your ideas with others in both the form of questions and answers.
YOU SHOULD NOT BE AFRAID TO SPEAK UP OR ASK QUESTIONS IN CLASS. (An old Chinese Proverb says “those afraid to ask questions are afraid of learning”). You may be called upon to answer questions rather than my asking for volunteers. This practice is not intended to be embarrassing; rather, verbal communication skills and the ability to ‘think on one’s feet are important skills for an auditor to master.
7.Web assignments: At the beginning of each class, we will have a short five to ten minute presentation by a member of the class on an assigned web site. The objective of the presentation is to share with the other members of the class (1) the features of the web site, (2) how you might use the information on the web site during the rest of your studies at Carroll University, and (3) how web site might be useful as a professional after graduation.
8. Audit Case: The typical work environment in professional organizations, including public accounting firms, requires people to apply what they have learned to real life problems, to critically analyze difficult issues and arrive at a common resolution. We will accomplish this as you analyze and resolve issues while doing an audit of the Valley Publishing Co. The case is a realistic simulation of an audit. The case will provide you with an opportunity for an invaluable experience in applying the material you learn in this course.
In many of your previous courses, you were often provided all the information required to perform an assignment. However in the Valley Publishing Co. Audit there may be assignments where you will be required to seek out information and make decisions regarding the best approach to a problem. This type of problem solving is commensurate with real-world professional decision-making and is viewed by the professor as an integral part of the learning process.
There are two components to the grade on the audit: a group grade and an individual “professionalism” grade. The group grade will be your completed audit, taken as a whole. The individual grade will be based on an evaluation of the work that you completed on the case, as well as a peer evaluation. At the end of the semester, you will be asked to evaluate each of the other members of your audit team. This evaluation is incorporated in the determination of the grade for the case, and serves to motivate all team members to participate actively in team assignments. Basing part of the course grade on a peer evaluation provides information on how much each member contributes to the team and largely alleviates students' fears that others will fail to do their fair share of the work. The evaluation empowers team members to penalize any member of the team who is not making a fair contribution to the team effort.
9. Examinations There will be two exams plus a final given during the course. These exams will be verydetailed in nature and will include material from the textbook, case book, the case, and lectures. The exam times are indicated on the course schedule. Any student excused from an exam will take a makeup exam at theinstructor’s convenience. It is the obligation of the student to make arrangements to take the makeup exam before the originally scheduled exam has been given.
Exams will consist of multiple choice, short answers and problems. Spelling and grammar will be graded on all exams and written work.
10. Grading Scale for this class will be:
A900-1000 Points
AB870-890
B800-860
BC770-790
C600-760
D500-590
F Unthinkable
10. Attendance will be taken. However, since you are an adult, it is your decision whether to attend class or not. If you should miss class, it is your responsibility to find out what happened in class from your classmates and to take the appropriate action. If you should fail to take the appropriate action, your final grade will reflect it.
11. Academic DishonestyIn Any Form Will Not Tolerated. In today’s environment an extremely important topic is ethics. An accountant’s only product is his or her work whose quality is measured by his or her integrity and professionalism. These characteristics are not bestowed upon you at graduation, but are developed over time.
You are expected to adhere to a high level of ethical performance in all academic and college activities. The Carroll College Academic Integrity Policy is located in your student handbook (pages 17-21). I encourage you to familiarize yourself with it. If a student violates this policy in any way, I reserve the right to impose a sanction of failure on the assignment and/or failure in the course
Specific items that relate directly to this course are:
Cheating:is defined as any attempt to turn in work done by other people as your own work. This includes: (1) copying another’s homework, (2) intentionally using or attempting to use unauthorized materials, information, notes, study aids or other devices in any academic setting; (3) unauthorized communication of information during an academic exercise (No cell phones will be allowed during an exam for any reason); and (4) plagiarizing material from other students or published sources.
Complicity in Academic Dishonesty: is defined as intentional or knowingly helping or attempting to help another to commit an act of academic dishonesty; for example, turning in someone else's work as your own.
Plagiarism is a serious crime. Work of other individuals should be indicated as such with proper notation. The use of other people’s (including other student’s)work submitted as your work is unethical. This includes students within the class; students in other classes; fraternity/sorority files; or any other individuals. The reading of your material by others for editorial purposes is permissible.
12. Accommodation for Disabilities – Any requests for accommodation must be made through Disability Services Coordinator at Carroll University. I will make appropriate accommodations once I receive notification from the Disability Services Coordinator.
13. Hints To Help you Be Successful in This Class:
1. Review Questions: Review questions are shown throughout the chapters and you should be able to answer all review questions as you read the chapters. If you cannot answer a review question, this indicates that you did not understand or retain the important concepts from your reading of the previous section. Answers to the review questions will be available on my website.. Review questions are also helpful in determining whether you have a comprehensive understanding in studying for exams.
2. Key Terms: You are responsible for an understanding of all the Key Terms listed at the end of the chapters. The Key Terms are highlighted in bold the first time you encounter them throughout the chapter and defined again at the end.
14. Overall: You will probably find this course to be one of the most demanding and frustrating courses you have taken at Carroll University. However, hopefully, it will be one of the most useful in your career as a CPA.
There will be times at which you will be called upon to make a"judgment" call because there is no one "correct answer. At other times there will be a lack of synchronization between the Valley Publishing Co. Case and the organization of the text. This situation may require you to consult the index of the text or other authoritative sources at for guidance regarding a specific aspect of the project that has not yet been covered in class. Lastly, there will be occasions you will be asked to work at the level of a professional during the "busy season,” this is done to give you a feel for what it is like to be on a “fast track”. Therefore it is to your advantage not to get behind in your assignments and reading!!!!!!!
This class will be technical in nature and will focus on details at a level comparable to the CPA exam.
15. The above syllabus may be subject to changed since there are times when change is necessary since each class is unique.
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