AUDITING 561 & 461z
Jagdish Gangolly Ph.D.
Nicholas J. Mastracchio, Jr. Ph.D. CPA
Spring 2004
AICPA
This document will be the primary reference for the course.
Auditing and Assurance Services Third Edition
Messier
This text will be used where the code does not address the topics. The accounting profession, ethics, legal liability and other services are examples.
Course Objectives
This course is different than the rest of the accounting curriculum. It is non-quantitative and involves the application of auditing principles to practical problems. By its nature, the course requires a level of knowledge beyond an intermediate accounting course. You will be expected to assess situations and apply auditing principles, as you perceive a problem. By the end of the course, you should understand and be able to apply auditing standards, write an audit report, and be knowledgeable in ethical standards and legal liability of an auditor. Not only will knowledge of the principles be required but also their application to new situations will need to be demonstrated. You will also be familiar with other attest functions and the emergence of assurance services in public accounting.
The course is also designed to test your writing, presentation and class participation skills. Two writing assignments and a presentation will be included. The first writing assignment will be a group assignment designed to get to know your group, participate in a class discussion and write a paper. The paper will be returned to you for grammatical revisions and an opportunity to improve your grade by correcting the grammar. The second assignment is a group paper that will discuss the topic of your presentation. You will not be allowed to revise the second assignment for credit.
Tests and Examinations
There will be two
examinations. The exams will run from
8:00 AM to 9:35 AM the date of the exam in a location to be announced. If you have a class conflict please see us
as soon as possible so other arrangements can be made. The exams will be structured similar to the
CPA exam and will include multiple choice questions, short answers, and essays
that will require research. The exam
will be structured in a manner that will not only test your ability to recall
auditing principles but also to apply those principles to new situations. You may bring any material you like into the
exams. The exams are rigorous and will
cover all the groups’ presentations along with our lectures. Exams like the one in this course are
difficult to prepare, grade and schedule.
Therefore, the makeup policy requires an excuse that is for a severe
reason only. Sickness must be
documented by a statement that you were unfit to take the exam, not that you
simply went to the infirmary. Other
valid reasons, such as a serious illness or death in the immediate family will
also require documentation. Excuses
such as vacation plans, oversleeping, car failure, interviews or other
non-critical reasons will not be accepted.
Plan a back up source for your alarm clock and your transportation
beforehand. If you have a valid excuse,
you will be required to take a makeup scheduled by us either during or at the
end of the semester.
Papers and Presentations
You will have two writing assignments. The first assignment is a group project and will be able to be resubmitted. You will be able to get half the grammar and style points back if they are corrected and resubmitted. You are encouraged to seek help at the writing center or from other sources. Reading your paper out loud to each other can be helpful in detecting poor sentence structure. Significant point reductions will be made for improper grammar and poor presentation. Your individual ability to discuss the issues in the class on your first topic will be considered in your individual grade along with input from the group on your participation.
You will also be required, as part of a group, to make a class presentation in addition to a paper. You and your group will be required to make a 20-25 minute class presentation on your topic. A power point or similar presentation is expected and emailed to Prof. Gangolly by 5 PM two days before the presentation. Your group will loose one point for each 6 hour delay in receiving the email with the final version of the slides.
The papers are due at the beginning of class on the designated date of the presentation. Assignments handed in late will have their grade reduced by one letter grade (10%) for each week or fraction of a week they are late.
Attendance
There is no required attendance for this course other than the presentation sessions. However, it is highly recommended that you attend. You will also be responsible for any changes announced in class. When in class, disruptive behavior will not be tolerated. Please be on time. If you arrive late or have to leave early please use the rear door and sit near the door. We reserve the right to bar you from class once it starts, if you come in late frequently. For the benefit of your fellow classmates, action will be taken if you are distracting the class. This action may include a grade reduction.
Homework Assignments
Homework assignments will not be graded and are meant to be a study aid for you. These assignments or similar problems will be discussed during class. Solutions will be available on WEBCT.
Dishonesty
Any determination of dishonesty, in any respect, regarding the test or papers will result in a zero for that grade. In addition, the matter will be referred to the University for disciplinary action. Unfortunately this has resulted in students flunking the course, suspensions and probation in prior years. Do not ruin your career with an incident this year.
Both papers will require all group members to sign a statement that you have complied with citation and reference requirements as prescribed by the Modern Language Association. Failure to properly cite text, Internet, or any other sources will be deemed to be plagiarism and dishonesty. You may refer to HTTP://Webster.commnet.edu/mla.htm for assistance or come to Prof. Mastracchio’s office during his or our graduate assistant’s office hours and use the MLA guidebook.
The required statement for the papers is:
Names
Date submitted
We are familiar with the requirements of this paper in respect to citations and are familiar with Modern Language Association style requirements. This paper has properly cited all sources and has parenthetical references where sources were used.
_______________________
Signatures
_______________________
Signatures
_______________________
Signatures
_______________________
Signatures
Grading
A plus minus system will be used. The undergraduate grades will be as follows:
93
and above A
90-92.9 A-
87-89.9 B+
83-86.9 B
80-82.9 B-
77-79.9 C+
73-76.9 C
70-72.9 C-
67-69.9 D+
63-66.9 D
60-62.9 D-
below
60 E
The graduate grades will be as follows:
Points earned Letter grade
93
and above A
90-92.9 A-
87-89.9 B+
83-86.9 B
80-82.9 B-
70-79.9 C
60-69.9 D
below
60 E
No curving is anticipated.
Points
will be assigned as follows:
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|
Points |
|
Report I & Discussion |
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Report II |
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Test I |
25 |
|
Test II |
25 |
|
Presentation |
20 |
|
Total |
100 |
3. The
content of the presentation (8 points group)
4. The
content and quality of the handout (2 points group)
Students within the group will receive identical grades for group portions unless there is prompt notification to us of problems within the group. Efforts to meet and schedule times should be done by email and documentation kept in case problems arise. We reserve the right to adjust grades within a group if we feel it is warranted.
Professors Gangolly and Mastracchio will be available on the days they teach from 7:30 AM – 8:00 AM and 1:30PM – 2:30PM. Other hours by appointment.
Graduate assistants hours will also be posted.
Telephone
You may call Prof Mastracchio and leave a message 24 hours a day on his voice mail 469-0838. He checks his messages frequently. If you decide to use this option it would be a good idea to suggest a time for him to return your call. You may also email him at Mast@albany.edu.
You may call Prof. Gangolly at 442-4949 or email him at j.gangolly@albany.edu.
Auditing
Fall 2003
Learning Objectives
The course is
structured to cover the new Uniform CPA Examination Content
Specifications. The topics as presented
in the course outline have the following learning objectives to be able to do
the following:
I. Ethics and
professional and legal responsibilities
A. Be able to
explain the Code of Professional Conduct
B. Explain the
concepts of proficiency, independence, and due care
C. Explain licensing and disciplinary systems imposed by the profession and state regulatory bodies
E. Be able to
identify legal concepts and key liability cases
I.
Plan the
engagement, evaluate the prospective client and engagement, decide whether to
accept or continue the client and the engagement, and enter into an agreement
with the client.
A. Determine
nature and scope of engagement
1. Auditing standards generally accepted in the US (GAAS)
2. Standards for
accounting and review services
3. Other assurance
services
4. Appropriateness
of engagement to meet client’s needs
B. Assess engagement risk and the CPA firm’s ability to perform the engagement
1. Engagement
responsibilities
2. Staffing and
supervision requirements
3. Quality control
considerations
4. Management
integrity
5.
Researching information sources for planning and performing the engagement
C. Communicate
with the predecessor accountant or auditor
D. Decide whether
to accept or continue the client and engagement
E. Enter into
an agreement with the client about the terms of the engagement
F. Obtain an
understanding of the client’s operations, business, and industry
G. Perform
analytical procedures
H. Consider
preliminary engagement materiality
I. Assess inherent risk and risk of misstatements from errors, fraud, and illegal acts by clients
J. Consider other
planning matters
1. Using the work
of other independent auditors
2. Using the work
of a specialist
3. Internal audit
function
4. Related parties
and related party transactions
K. Identify
financial statement assertions and formulate audit objectives
1. Significant financial statement balances, classes of transactions, and disclosures
2. Accounting
estimates
L. Determine and prepare the work program defining the nature, timing, and extent of the procedures to be applied
II.
Internal
control
A. Obtain an
understanding of business processes and information flows
B. Identify controls that might be effective in preventing or detecting misstatements
C. Document an
understanding of internal control
D. Consider computer controls in an audit
E. Consider
limitations of internal control
F. Perform tests
of controls
G. Assess control
risk
III.
Evidence
A. Understand
directional testing
B. Perform planned
procedures
1. Applications of
audit sampling
2. Analytical
procedures
3. Confirmation of
balances and/or transactions with third parties
4. Physical
examination of inventories and other assets
5. Other tests of
details
6. Substantive
tests before the balance sheet date
7. Tests of
unusual year-end transactions
C. Evaluate
contingencies
D. Obtain and
evaluate lawyers’ letters
E. Review
subsequent events
F. Obtain
representations from management
G. Identify
matters for communication with audit committees
H. Perform
procedures for accounting and review services engagements
IV. Review the
engagement
A. Perform
analytical procedures
B. Evaluate the sufficiency and competence of audit evidence and document engagement conclusions
C. Evaluate
whether financial statements are free of material misstatements
D. Consider whether substantial doubt about an entity’s ability to continue as a going concern exists
E. Consider other information in documents containing audited financial statements
V. Reports
A. Reports on
audited financial statements
B Reports on
reviewed and compiled financial statements
C. Reports on
agreed-upon procedures
D. Special reports
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Assignments all multiple choice |
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Mth |
Date |
Topic |
Code |
Ch |
Quest |
Prob |
Pts |
Inst |
|
|
Th |
Jan |
22 |
Intro the accounting
profession |
|
|
|
|
|
NM |
|
Tu |
|
27 |
Legal Liability |
|
19 |
3 |
26 |
|
JG |
|
Th |
|
29 |
Legal Liability |
|
|
|
|
|
JG |
|
Tu |
Feb |
3 |
Other assurance services |
|
20 |
9-12 |
28 |
|
NM |
|
Th |
|
5 |
Other assurance services |
|
|
|
|
|
NM |
|
Tu |
|
10 |
Ethics |
400-623 |
18 |
1, 2,6,9 |
23,29 |
|
JG |
|
Th |
|
12 |
Ethics |
|
|
|
|
|
JG |
|
Tu |
|
17* |
No class |
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|
|
|
|
|
|
Th |
|
19 |
Reports |
|
|
|
|
|
NM |
|
Tu |
|
24 |
Reports |
|
|
|
|
20 |
NM |
|
Th |
|
26 |
Reports |
|
|
|
|
|
NM |
|
Tu |
Mar |
2 |
Report letter paper due |
|
21 |
11,12 |
21 |
|
NM |
|
Th |
|
4 |
Test I |
|
18-20 |
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|
25 |
NM |
|
Tu |
|
9 |
Materiality and risk |
|
3 |
2, 3, 6, 7,10,11 |
24 |
|
NM |
|
Th |
|
11 |
Materiality and risk |
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|
|
|
|
NM |
|
Tu |
|
16 |
Planning |
|
5 |
2, 5, 6, 9, 10 |
31 |
|
JG |
|
Th |
|
18 |
Evidence |
|
4 |
3, 6 |
22, 23 |
|
JG |
|
Tu |
|
23 |
Evidence |
|
|
|
|
|
JG |
|
Th |
|
25 |
Internal control computer
auditing overview |
|
6&7 |
|
|
|
JG |
|
Tu |
|
30 |
Statistical sampling |
|
8 |
4, 5 |
|
|
JG |
|
Th |
Apr |
1 |
Statistical sampling |
|
9 |
1, 4 |
|
|
JG |
|
Tu |
|
6* |
No class |
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|
|
|
|
|
|
Th |
|
8* |
No class |
|
|
|
|
|
|
|
Tu |
|
13 |
Completing the audit |
|
17 |
4, 7 |
|
|
JG |
|
Th |
|
15 |
Test II |
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|
|
|
25 |
JG |
|
Tu |
|
20 |
Presentations: cycles Papers due |
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|
|
|
20 10 |
JG |
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Th |
|
22 |
Presentations: cycles Papers due |
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|
|
|
|
JG |
|
Tu |
|
27 |
Presentations: cycles Papers due |
|
|
|
|
|
JG |
|
Th |
29 |
Presentations: cycles Papers due |
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|
|
|
|
JG |
|
|
Tu |
4 |
Presentations: cycles Papers due |
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|
JG |
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