School of Administrative Studies
Faculty of Liberal Arts and Professional Studies
YORK UNIVERSITY
AP/ADMS 4515.03 A Internal Audit
Fall 2011
COURSE OUTLINE
REQUIRED COURSE TEXT / READINGS:
Reding. Kurt F, Internal Auditing: Assurance & Consulting Services, 2nd ed.
The Institute of Internal Auditors Research Foundation (IIARF)
WARNING
Photocopying more that 10% of a textbook is illegal and may involve penalties. Do not duplicate textbooks or obtain photocopies.
WEIGHTING OF COURSE:
Component / Percentage / Important DatesIndividual Participation / 10 / Throughout the course
Hand in Assignments ( 4) / 10 / Session 4 ( Sept 28), Session 5 ( Oct 5), Session 9 (Nov 9), Session 11 ( Nov 20)
Midterm Exam / 25 / Wed. Oct 26 -Session 7
Group Term Paper / 15 / Wed. Nov 23 – Session 11
Final Examination / 40 / TBA – held during regular exam week Thurs. Dec 8 – Thurs. Dec 22 , 2011
Total / 100
Class Preparation/Individual Participation
This course is designed to encourage active participation. In each session we will discuss specific cases and questions to help understand the material. Participation marks of up to 10% will be assigned for participation in discussions and attendance. Every student is expected to contribute by actively engaging in both group and class discussions.
Students are expected to have read and attempted to answer each assigned case and all questions prior to coming to class. Participation grade will also include individual participation – students are expected to prepare for each session, attend classes regularly, and actively participate in class discussions
Group Term Paper
Details of the Group Term Paper due in session 11 will be included in the course website. The groups you form in session 2 (see above) are the groups to work on the weekly session take-up cases as well as the term paper.
Examinations
The midterm examination will consist of a number of questions testing student’s understanding and application of material covering sessions 1-6. The primary focus of the final will be on the 2nd half of the courses. The final, which covers Sessions 1 to 12 will be held during regular examination schedule.
WARNINGS -- Academic Honesty.
The instructor enforces all University rules, especially those regarding
Academic honesty. There is zero tolerance in this area. Plagiarism is a violation of
academic honesty. The use of another’s material without permission and without
recognition is plagiarism. This applies to textbooks, study guides, solution manuals, a
friend’s assignment, past assignments, Internet resources or any other material
irrespective of the source. Any students handing in or providing material with plagiarism
will be prosecuted. Students must be aware of York University’s Academic Honesty
standards, Section D Serious Offenses Against the Standards of Academic Honesty.
Reallocation of Marks if a Midterm Examination is Missed for a Valid Reason
If a midterm examination is missed due to a valid reason such as illness or other reason approved by the Course Director, the midterm mark allocation of 25% will be added to the final examination percentage.
The documentation required to support this reallocation are as follows:
1. For illness, a completed medical form (physician's statement) provided by the Registrar’s Office, OR for another valid reason, the documentation requested by the Course Director, AND
2. A signed statement stating that you are aware that your final examination will be worth 65%. This signed statement is to be attached to the documentation provided in (1) above.
Deferred Examination Policy
Deferred standing may be granted to students who are unable to write their final examination at the scheduled time or to submit their outstanding course work on the last day of classes. In order to apply for deferred standing, students must complete a Deferred Standing Agreement (DSA) form and submit their request no later than five (5) business days from the date of the exam. The request must be properly submitted with supporting documentation directly to the main office of the School of Administrative Studies (282 Atkinson), NOT to the Course Director. These requests will be considered on their merit and decisions will be communicated to the students by the main office.
Students with approved DSA will be able to write their deferred examination between January 20-22, 2012. No further extensions of deferred exams shall be granted. The format and covered content of the deferred examination may be different from that of the originally scheduled examination. The deferred exam may be closed book, cumulative and comprehensive and may include all subjects/topics of the textbook whether they have been covered in class or not. Any request for deferred standing on medical grounds must include an Attending Physician's Statement form; a “Doctor’s Note” will not be accepted.
DSA Form: http://www.registrar.yorku.ca/pdf/deferred_standing_agreement.pdf
Attending Physician's Statement form: http://www.yorku.ca/laps/council/students/documents/APS.pdf
COURSE INSTRUCTOR / CONTACT:
Tom Chatzidimos
Office Hours: By appointment
EXPANDED COURSE DESCRIPTION:
This course introduces students to the objectives, concepts, principles and techniques of internal and management auditing, as applied to profit-pursuing, non-profit and government organizations. Topics include Professional Practices Framework, Governance & Risk Management, Internal Control, Information Technology Risks & Controls, Fraud Risks & Controls, Managing the Internal Audit Function, Documenting Audit Evidence, Consulting & Assurance Engagements
ORGANIZATION OF THE COURSE:
TOPIC SCHEDULE
Session 1Wed. Sept 7 / Course Overview and the Introduction to Internal Auditing
Learning Objectives:
· Definition of Internal Auditing.
· Scope of Internal Auditing/Functions of the Internal Auditor.
· Types of Modern Internal Auditing Services.
· Key Attributes of an Internal Auditor.
· Differences between External and Internal Auditor.
REQUIRED READING
Textbook: Chapter 1
Course Website:
§ Session 1 Slides
Session 2
Wed. Sept 14 / Internal Audit Standards and Professional Ethics
Learning Objectives:
· To review the professional framework.
· To review the ethical principles and behavioural norms-Code of Ethics.
· To understand the differences between assurance and consulting services.
REQUIRED READING:
Textbook: Chapter 2
Course Website:
§ Session 2 Slides
Take up questions:
Case 2- Pages 2-37-2-39 ( Text)
Session 3
Wed. Sept 21 / Governance & Risk
Learning Objectives:
· Define governance and contrast the different roles and responsibilities within governance.
· Describe the role of the internal audit function in the governance process.
· Define risk & enterprise risk management (ERM).
· Relationships between ERM and governance & COSO.
· Roles of internal audit in ERM.
REQUIRED READING:
Textbook Chapters 3 and 4
Course Website:
§ Session 3 Slides
Take up Question:
§ Case 1- Page 3-29 ( Text)
Session 4
Wed. Sept 28 / Business Processes & Business Risks
Learning Objectives:
· Understand how organizations structure their activities to achieve their objectives.
· Identify key business processes in an organization.
· Obtain an understanding of a given business process and be able to document it.
· Understand basic types of business risks organizations face.
· Identify and assess the key risks to an organization’s objectives and how they are linked to business processes.
· Develop an audit universe for an organization and determine an annual internal audit plan based on key business risks.
· Understand how to use risk assessment techniques within assurance engagements.
· Obtain an awareness of the new risks that arise when an organization outsources some of its key processes.
REQUIRED READING
§ Textbook: Chapter 5.
Course Website:
· Session 4 Slides
Hand In Assignment #1:
· Niagara University – see Course Website
Session 5
Wed. Oct 5 / Internal Controls
Learning Objectives:
· Understand what is meant by internal control in a variety of frameworks.
· Identify the components of an effective internal control framework.
· Know the roles and responsibilities each group in an organization has regarding internal control.
· Identify the different types of controls and the appropriate application for each of them.
REQUIRED READING:
Textbook: Chapter 6
Course Website:
§ Session 5 Slides
Take-up Questions:
· A2B Company: Case Study- Identifying Key Controls- See Course Website
Hand Assignment #2
· See Local Church Question on Internal Controls over Collection- see Course website
Session 6
Wed. Oct 19 / Information Technology Risks & Controls
Learning Objectives:
· Understand how information technology (IT) is intertwined with business objectives, strategies, and operations.
· Describe the key components of modern information systems.
· Explain the nature of IT opportunities and risks.
· Understand fundamental IT governance, risk management, and control concepts.
· Understand the implications of IT for internal auditors.
· Understanding how it affects internal auditing and management objectives.
· Using CAATs.
· Auditing e-Commerce & Internet.
REQUIRED READING:
Textbook: Chapter 7:
Course Website:
· Session 6 Slides
Take-up question:
· Case -Pages 7-28-7-29 ( Text) Parts A / B “Telekom Case”
Session 7
Wed. Oct 26 / Midterm Exam (Covers Material from Sessions 1-6)
Session 8
Wed. Nov 2 / Learning Objectives:
· Understand the importance of proper positioning of the internal audit function within the organization.
· Identify the roles and responsibilities of the key positions in an internal audit function.
· Understand coordination with independent outside auditors.
· Understand the policies and procedures of internal auditing and how they guide the internal audit function.
· Understand various risk management models and reflect on what role the internal audit function should have in the organization’s risk management processes.
· Understand quality assurance, how it operates, and why it is important to the internal audit function.
REQUIRED READING:
Textbook: Chapter 9
Course Website:
· Session 8 Slides
Take-up Question
· Case Pages 9-32-9-33 ( Text) Parts A and B
Session 9
Wed. Nov 9 / Fraud Risks & Controls
Learning Objectives:
· Understand the prevalence of fraud in today’s world.
· Compare and contrast various fraud definitions.
· Describe the fraud triangle and why all three elements must exist for fraud to occur.
· Define the types of fraud and fraud risk factors.
· Define governance, risk management, and control in the context of fraud.
· Describe fraud prevention, deterrence, and detection techniques.
· Understand the behavioral aspects of fraudsters.
· Describe internal auditors’ fraud-related responsibilities.
REQUIRED READING:
Textbook: Chapter 8
Course Website:
· Session 9 Slides
Take up Question/Case
· Student Health Services Case
Hand In Assignment #3
· Cheap Construction Limited Case – see Course Website
Session 10
Wed. Nov 16 / Documenting Audit Evidence & Working Papers & Audit Sampling
Learning Objectives:
· Understand what it means to gather and appropriately evaluate sufficient appropriate audit evidence.
· Know the manual procedures used by internal auditors to gather audit evidence.
· Be familiar with selected computer-assisted audit techniques, including generalized audit software.
· Understand the importance of well-prepared audit working papers.
· Understand audit sampling.
· Advantages and disadvantages of statistical & non-statistical sampling
· Attribute sampling illustrated
· Know how to apply statistical sampling and non-statistical sampling in tests of controls.
REQUIRED READING:
Textbook: Chapters 10 and 11
Course Website:
§ Session 10 Slides
Take-up questions:
§ Case 1 Page 11-25 ( Text)
Hand In Assignment #4
§ Auto Car- See Course website
Session 11
Wed. Nov 23 / Conducting the Assurance Engagement
Learning Objectives:
· Understand the key activities involved in planning and performing an assurance engagement and reporting the engagement outcomes.
· Describe how the purpose of an assurance engagement impacts the audit objectives.
· Describe different types and sources of information that will help the internal auditor understand the process of conducting an assurance engagement.
· Perform a process-level risk assessment.
· Describe how to evaluate the design adequacy of process-level controls.
· Develop a general work program to guide the engagement process.
· .Conduct and document certain types of tests to gather evidence.
· Develop observations and formulate recommendations
REQUIRED READING:
Textbook: Chapters 12 and 13
Course Website:
· Session 11 Slides
Take-up Questions:
· Case 1- Pages 12-19 ( Parts A and B only)
· College Business Services Case-See Course Website
Group Term Paper Due: See Course Website
Session 12
Wed. Nov 30 / Communicating Assurance Engagement Outcome and the Consulting Engagement
· Understand why it is appropriate and necessary to communicate assurance engagement outcomes.
· Identify the different forms of assurance engagement communications.
· Identify the steps involved in creating an effective assurance engagement communication.
· Understand the distribution process for effectively communicating assurance engagement outcomes.
· Understand what is involved in effective monitoring of, and follow-up on, assurance engagement outcomes.
· Articulate the difference between assurance and consulting engagements.
· Discuss the various types of consulting services provided by internal auditors.
REQUIRED READING:
Textbook: Chapters 14 and 15
Course Website:
· Session 12 Slides
Take-up Questions:
· Case 2- Page 14-37 (Text)
· Case 2- Page 15-23-15-24 ( Text)