ORGANIZATION OF THE COURSE Changes to this course outline may occur closer to the date of commencement of classes. Session Description Assignments and Readings Session 1 Thursday, May 21 The Demand for Auditing, The Public Accounting Profession Learning Objectives: Identify the components of an audit and explain why there is a demand for audits Distinguish between accounting and auditing Explore the different types of auditors and what they do Understand the responsibilities of public accountants Explain generally accepted auditing standards (GAAS) Examine the characteristics of quality control for public accounting firms. Explain how quality control is managed. ASSIGNMENT AND CLASS WORK Discussion/practice questions: Textbook 1-13, 1-18, 2-20 REQUIRED READING: Chapter 1 – The Demand For An Auditing And Assurance Profession Chapter 2 - The Public Accounting Profession CPA Handbook: CSQC 1 CAS 200 CAS 220 Session 2 Thursday, May 28 Overview of the Audit Process and the Standard Independent Audit Report Learning Objectives: Review the objective of conducting an audit of financial statements Understand the purpose of the standard audit report Distinguish between management’s and the auditor’s responsibilities for the financial statements Assignment and Class Work Discussion/practice questions: Textbook 5-23, 5-29 (c), Kingston Company (web site) Form Groups REQUIRED READING:
internal control. Compare management’s concerns about internal control with those of the auditor. Describe the inherent limitations of internal control. Understand the fraud triangle and apply to analysis of risk of fraudulent financial reporting and misappropriation of assets. Describe the COSO components of internal control and provide examples of each component. Use the COSO model to assess internal control risk Understand the two audit strategies of (i) a substantive approach and (ii) a combined approach and using risk assessment to determine when each approach is approach is appropriate Understand auditor’s responsibility for reporting significant control weaknesses to management and those in charge of governance Assess controls and develop recommendations for the management letter (See Course Website) REQUIRED READING: Chapter 9-Internal Controls and Control Risk: CPA Handbook CAS 240 CAS 265 CAS 330 CAS 500 CAS 520 CAS 505 Session 6 Thursday, June 25 Audit Evidence, Documentation, Evidence Mix, and Audit Strategy Learning Objectives: Describe the nature of audit evidence and the five evidence decisions made during the audit process Describe the seven general methods of evidence collection and provide examples of each Evaluate the reliability of evidence in specific Assignment and Class Work Discussion/practice questions: 6-24, 8-17, 8-18, 10-17, 10-22, Epoch Jeans Part 2 REQUIRED READING: Chapter 8 – Audit Evidence (p. 213-232, 239-241) Chapter 6 – Nature of Audit Working Papers (p. 168- 172) Chapter 10 – Audit Strategy and Audit Program
Session 9 cont’d sales and collection cycle. Design tests of controls sales and collection cycle by assertion. Design substantive tests (analytical procedures and tests of detail) for sales and collection, by assertion, using a risk-based approach. Develop the process for confirming accounts receivable confirmations and for following up CAS 240 CAS 505 Break (no class) Thursday, July 23 Session 10 Thursday, July 30 Application of the Audit Process: The Acquisition and Payment Cycle; the Inventory and Distribution Cycle Learning Objectives: Describe major risks of error or fraud in the acquisition and payment cycle. Describe the major business functions, documents, records and internal controls in the acquisition and payment cycle. Understand and analyze acquisition and payment controls and provide recommendations (for management letter) Develop analytical procedures for planning for the acquisition and payment cycle. Develop tests of controls for the acquisition and payment cycle, by assertion, using a risk-based approach. Develop an audit program, by assertion, for a system conversion in accounts payable. Assignment and Class Work Discussion/practice question: 16-21, 16-24, 16-25, 17-20 Inventory Cases Posted to Course Website REQUIRED READING: Chapter 16 - Audit of the Acquisition and Payment Cycle Chapter 17 – Audit of the Inventory and Distribution Cycle CPA Handbook: CAS 550 CAS 501
Design substantive tests (analytical procedures and tests of detail) for accounts payable, by assertion, using a risk-based approach. Application of the audit process (as listed above) to the inventory and distribution cycle Session 11 Thursday, August 6 Professional Relationships and Legal Liability Learning Objectives: Describe ethics and their relevance Apply rules of professional conduct to case facts and identify violations. Explain the threats to independence and how the threats can be mitigated Distinguish between independence in fact and independence in appearance Compare the auditor’s responsibilities with respect to errors, fraud, and other irregularities Distinguish between a business failure and an audit failure Describe and analyze the accountant’s liability to third parties under common law and the related defenses Assignment and Class Work Discussion/practice questions: Textbook 3-20, 4-16, Lance Popper & Rules of Professional Conduct Cases REQUIRED READING Chapter 3 -- Professional Relationships: The role of ethics and independence (Omit Independence Section) Chapter 4 –Legal Liability – (Table 4-2, p. 77- 86, Section 4 – Prevention – Omit Section 5) Individual Hand In- Assignment #3 due (See Course Website) CPA Handbook Section 5020 CAS 220 CPA Ontario Handbook - Rules of Professional Conduct (available from Session 12 Thursday, August 13th Contingent Liabilities, Audit Completion and Modifications to the Auditor’s Standard Report Assignment and Class Work Discussion/practice questions: Textbook 19-17, 19-18, 20-20, Gabby Case Group Risk Assessment Assignment Due Today
Session 12 cont’d Learning Objectives: Describe final audit procedures for presentation and disclosure. Describe how the auditor searches for contingent liabilities, commitments, and contingent assets State the purpose of obtaining external confirmation from the client’s law firms and assess law firm responses Distinguish between subsequent events requiring adjustment and those requiring disclosure Provide examples of work completed as part of the evidence-gathering process Provide the purpose of and examples of auditor communications with the audit committee and management Review the requirements for a standard unqualified audit report and describe the variations that can occur in unqualified reports Apply professional judgment to determine when it is necessary to issue a qualified opinion, an adverse opinion, or a disclaimer of opinion (See Course Website) REQUIRED READING: Chapter 19 - Completing the Audit Chapter 22 - Audit Reporting CPA Handbook CAS 240 CAS 250 CAS 260 CAS 450 CAS 501 CAS 520 CAS 550 CAS 560 CAS 570 CAS 580 CAS 620 CAS 700 CAS 705 CAS 706 Session 13 Final Examination TBA During regularly scheduled final examination period, August 21- to August 28, 2015