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EAC 4411 Auditing


Course Description

Covers the principles and procedures of internal and public auditing. Includes the ethics, responsibilities, standards, and reports of professional auditors.

Course Objectives

To introduce the student to the history, practices, responsibilities, and techniques of the auditing profession.

After completing this course, students will be able to:

  • Describe the professional standards of the auditing profession
  • Explain the auditor’s responsibility for ethical behavior and judgment
  • Explain the auditor’s legal liability
  • Explain the audit process
  • Describe the auditor’s consideration of risk and internal control
  • Describe the usage of computers in the audit process
  • Describe the role of sampling in the audit process and basic sampling techniques
  • Explain the audit tests of controls and substantive and other audit tests used in contemporary audit practice
  • Explain the role of the internal auditor
  • Describe the other assurance services

Week 1


Lecture: Introduction to the Course
Lecture: The Role of the Auditor

Outcomes

After completing this lecture, students will be able to:

  • Describe the nature of assurance services
  • Identify assurance services that involve attestation
  • Describe the nature of financial statement audits
  • Contrast the various types of audits and auditors
  • Explain how auditors are regulated
  • Describe how CPA firms are typically organized
Lecture: Professional Standards

Outcomes

After completing this lecture, students will be able to:

  • Distinguish between the two types of auditing standards, PCAOB standards, and AICPA standards
  • Describe the authoritative status of the Statements on Auditing Standards
  • Discuss the auditor's responsibility for detecting errors, fraud, and illegal acts
  • Explain the key elements of the auditor's standard report
  • Discuss the other types of reports that are issued by auditors
  • Describe the attestation standards
  • Describe the quality control standards and their purposes
Lecture: Professional Ethics

Outcomes

After completing this lecture students will be able to:

  • Describe the nature of ethics and ethical dilemmas
  • Describe the reasons that professions establish professional ethics
  • Discuss the principles section of the AICPA Code of Professional Conduct
  • Describe each of the rules contained in the AICPA Code of Professional Conduct
  • Identify circumstances in which independence is impaired

Week 2


Lecture: The CPA's Legal Liability

Outcomes

After completing this lecture, students will be able to:

  • Define the major legal concepts related to CPAs' liability
  • Distinguish between CPAs' liability under common and statutory law
  • Explain the factors that must be proven by plaintiffs to be successful in actions against CPAs under common and statutory law and the CPAs' defenses
  • Contrast liability under the Securities Act of 1933 and the Securities Exchange Act of 1934
  • Describe CPAs' legal liability for accounting and review services
Lecture: Audit Evidence and Documentation

Outcomes

After completing this lecture, students will be able to:

  • Explain the relationship between audit evidence, audit risk, and financial statement assertions
  • Identify and explain the components of audit risk
  • Distinguish between the concepts ofsufficientandappropriateas they apply to audit evidence
  • List and describe types of audit evidence
  • Explain substantive audit procedures
  • Describe the purposes of audit documentation
  • Explain the factors affecting the nature and extent of audit documentation
  • Identify items that must be included in audit workpapers
  • Describe workpaper types and workpaper organization

Week 3


Lecture: Audit Planning

Outcomes

After completing this lecture, students will be able to:

  • Explain the audit process
  • Explain the auditors’ client-acceptance process
  • Describe the auditors’ audit planning responsibilities
  • Identify audit risk assessment procedures used to gain an understanding of a client and its environment
  • Explain the audit effect of the auditors’ risk and materiality assessments
  • Describe how auditors address fraud risk
  • Distinguish between the systems and the substantive procedures portions of the audit program
Lecture: Internal Control: General

Outcomes

After completing this lecture, students will be able to:

  • Define what is meant by internal control
  • Distinguish the major components of internal control
  • Describe the auditor's consideration of internal control
  • Discuss techniques auditors use to obtain an understanding of internal control
  • Describe major tests of controls
  • Describe the auditors' internal control-related communication responsibility
  • Describe the nature of SOX 404(b) audits

Week 4


Lecture: Internal Control in an IT-based Environment 

Outcomes

After completing this lecture, students will be able to:

  • Contrast the natures of manual and IT-based systems
  • Describe the characteristics of various types of IT-based systems
  • Identify the appropriate organizational structure in an IT environment
  • Distinguish between general, application, and user control activities
  • Explain how auditors obtain an understanding of internal control in an IT environment
  • Discuss the ways in which an auditor may test controls in an IT environment
  • Discuss the nature of generalized audit software and the ways it is used by auditors
Lecture: Audit Sampling

Outcomes

After completing this lecture, students will be able to:

  • Describe the basic sampling concepts as they apply to audit sampling
  • Distinguish between statistical and nonstatistical sampling
  • Describe sample selection methods
  • Explain the effects of changes in various population characteristics and changes in sampling risk on required sample size
  • Explain how to plan, perform, and evaluate samples for tests of controls
  • Explain how to plan, perform, and evaluate samples for substantive tests
Lecture: Cash and Financial Investments

Outcomes

After completing this lecture, students will be able to:

  • Describe the nature of cash
  • Identify the audit objectives for cash
  • Explain the cash receipts and disbursements cycles
  • Identify and explain the fundamental controls over cash-related business processes
  • Explain how an auditor considers the risks related to cash and financial investments
  • Obtain an understanding of cash and financial investment controls
  • Assess the risks of material misstatement of cash and financial investments
  • Design risk-responsive audit tests

Week 5


Lecture: Accounts Receivable, Notes Receivable, and Sales Transactions

Outcomes

After completing this lecture, students will be able to:

  • Describe the nature of receivables and revenue
  • Identify the audit objectives for receivables and revenues
  • Explain the sales (revenue) cycle
  • Identify and explain the fundamental controls over receivables and sales transactions
  • Explain how an auditor considers the risks related to revenue and receivables
  • Obtain an understanding of internal control over receivables and revenue
  • Assess the risks of material misstatement of receivables and revenue
  • Design risk-responsive audit tests
Lecture: Inventories and Cost of Goods Sold

Outcomes

After completing this lecture, students will be able to:

  • Describe the nature of inventories and cost of goods sold
  • Identify the audit objectives for inventories and cost of goods sold
  • Explain the nature of the purchases and production cycle
  • Identify and explain the fundamental controls over inventories, purchasing, and production
  • Explain how the auditor considers the risks related to inventories and cost of goods sold
  • Obtain an understanding of inventories and cost of goods sold controls
  • Assess the risks of material misstatement of inventories and cost of goods sold
  • Design risk-responsive audit tests

Week 6


Lecture: Property, Plant, Equipment, and Depreciation

Outcomes

 After completing this lecture, students will be able to:

  • Describe the nature of property, plant, and equipment
  • Identify the audit objectives for property, plant, and equipment
  • Identify and explain the fundamental controls over property, plant, and equipment
  • Explain how the auditor considers the risks related to property, plant, and equipment
  • Obtain an understanding of property, plant, and equipment controls
  • Assess the risks of material misstatement of property, plant, and equipment
  • Design risk-responsive audit tests
Lecture: Accounts Payable and Other Liabilities

Outcomes

After completing this lecture, students will be able to:

  • Describe the nature of accounts payable
  • Identify the audit objective for accounts payable
  • Identify and explain the fundamental controls over accounts payable
  • Explain how an auditor considers the risks related to accounts payable
  • Obtain an understanding of accounts payable controls
  • Assess the risks of material misstatement of accounts payable
  • Design risk-responsive audit tests
Lecture: Debt and Equity Capital

Outcomes

After completing this lecture, students will be able to:

  • Describe the nature of debt and equity
  • Identify the audit objectives for debt and equity
  • Identify and explain the fundamental controls over debt and equity
  • Explain how an auditor considers the risks related to debt and equity
  • Obtain an understanding of debt and equity controls
  • Assess the risks of material misstatement of debt and equity
  • Design risk-responsive audit tests

Week 7


Lecture: Auditing Operations and Completing the Audit

Outcomes

After completing this lecture, students will be able to:

  • Identify the audit objectives for revenue and expense accounts
  • Describe the nature of appropriate substantive audit procedures to accomplish the objectives for the audit of revenue and expense accounts
  • Explain the types of procedures that are necessary to complete the audit
  • Discuss the nature of the auditors' responsibilities for loss contingencies
  • Describe the auditors' responsibilities for the detection and evaluation of various types of subsequent events
  • Explain the steps involved in evaluating audit findings
  • Discuss the auditors' post-audit responsibilities
Lecture: Reporting

Outcomes

After completing this lecture, students will be able to:

  • Describe the standard audit report for nonpublic company audits
  • Describe the standard audit report for public company audits
  • Explain the circumstances that result in the addition of explanatory language to the auditor's standard report
  • Identify the circumstances that may result in a qualified, adverse, or disclaimer of opinion
  • Describe the auditor's responsibilities for reporting on comparative financial statements
Lecture: Integrated Audits of Public Companies

Outcomes

After completing this lecture, students will be able to:

  • Describe the nature of an integrated audit
  • Describe management’s reporting responsibility under SOX
  • Discuss the auditor's responsibility for reporting under PCAOB integrated audits
  • Present the auditor's integrated audit approach to analyzing internal control
  • Identify circumstances that require internal control report modification

Week 8


Lecture: Other Assurance Services

Outcomes

After completing this lecture, students will be able to:

  • Identify and describe the types of special reports that auditors issue
  • Describe the nature of a financial statement review
  • Explain the accountant's responsibility when performing accounting services
  • Describe the differences among assurance services, attestation services, and audits
  • Explain the applicability of attestation standards
  • Describe the nature of attestation engagements
Lecture: Internal Auditing, Operational Auditing, and Compliance Auditing

After completing this lecture, students will be able to:

  • Distinguish among internal, operational, and compliance auditing
  • Describe the internal auditor's role under SOX
  • Identify the standards for the professional practice of internal auditing
  • Explain the nature and the purpose of an operational audit
  • Distinguish among the various types of compliance audits
  • Describe the auditing and reporting requirements of Government Auditing Standards and the Single Audit Act

 

The course description, objectives and learning outcomes are subject to change without notice based on enhancements made to the course. November 2013