Class No. Date Topic(s) Reading Assignments to do Before Class Other Assignments to do Before Class 5 Tues., 9/5 Independence in the auditor-client relationship JGR, Ch. 1 – 17-20; Ch. 4 – 152-163 AS 1005 ET 101.01 Arel, et al., 2005 Greenstone, 2013 Herrick and Barrionuevo, 2002 Kowsman, et al., 2014 Love, 2015 Answer and be prepared to discuss homework problem (which will be handed out in previous class). 6 Thurs., 9/7 Professional judgment and skepticism in audit work JGR, Ch. 4 – 142-147 AS 1010, 1015.07-.09, 2301.07, 2401.13 BASIC FINANCIAL STATEMENT AUDITING CONCEPTS 7 Tues., 9/12 Framework for audit engagement; client acceptance; overview of audit risk, materiality, and misstatements JGR, Ch. 1 – 23-28; Ch. 5 – 185-187, 192-193; Ch. 7 – 286-288 AS 1101.02-.04, 2105.01-.06, QC 20.14-.16 Eilifsen and Messier, 2015 – excerpts (part 1) Levitt, 1998 Answer and be prepared to discuss the 3 questions related to the Laventhol & Horwath case (on Blackboard). 8 Thurs., 9/14 Audit risk model; material misstatements in financial statement assertions JGR, Ch. 5 – 188-190; Ch. 7 – 288-292, 308-313 AS 1101.05-.11; 1105.11, 2101, 2105.07-.12 Eilifsen and Messier, 2015 – excerpts (part 2) Answer and be prepared to discuss 2 problems on assertions (which will be handed out in previous class).
Class No. Date Topic(s) Reading Assignments to do Before Class Other Assignments to do Before Class ASSESSING RISKS 9 Tues., 9/19 General process of risk assessment; assessing inherent risk of errors JGR, Ch. 5 – 193-194; Ch. 6 – 257-258 AS 1101.05-.08; .41-.45, .59-.64, .70-.71, .74, Appendix A Read the Asher Farms case – pp. 51, 53-54 (on Blackboard). We will do an audit task with this case in class. 10 Thurs., 9/21 Assessing inherent risk of earnings management and fraud; fraud brainstorming JGR, Ch. 2 – 42-55; Ch. 9 – 396-403 AS 2110.49-.58, .65-.69, 2401.01-.13, Appendix Duncan, 2001 Elkind, 2013 Epstein and Ramamoorti, 2016 Read the Pleasant Pasta case (on Blackboard) and think about the indicated questions to discuss in class. 11 Tues., 9/26 Using analytical procedures to assess risks JGR, Ch. 7 – 304-309 AS 2110.46-.48 Hitzig, 2004 Read and do question 1 of the Laramie Wire case* (pp. 233-235, on Blackboard). We will do further audit tasks with this information in class. *Specifically, just calculate common ratios (e.g., Inventory Turnover) for 2014 and 2013, and also changes in account balances from last year to this year (these are standard analytical procedures for IR assessment). TBD 12 EXAM 1 – IN CLASS Thurs.
Class No. Date Topic(s) Reading Assignments to do Before Class Other Assignments to do Before Class 13 Tues., 10/3 Introduction to controls and integrated audits; assessing quality of controls JGR, Ch. 7 – 302-304 AS 2110.18 -.27, .35-.40, 2605 (SKIM) Ligthle, Baker, and Castellano, 2015 NOTE: I have posted COSO, 2013, but you do not have to read it as it could, quite possibly, be the most boring document known to humankind. This is for later purposes, like the CPA Exam. Read the Sarbox Scooter case – pp. 181-183, (on Blackboard). Note that pp. 186-188 also are included in the posted file; you do not have to read these pages. We will use them in class to do an audit task. 14 Thurs., 10/5 Assertion-level controls; general process of control risk assessment JGR, Ch. 3 – 94-95, AS 2110.28-.34, .37-.40 TBD Mon., 10/9 CASE 1 DUE BY 5:00 15 Tues., 10/10 More on assertion-level controls JGR, Ch. 3 – 95-98; Ch. 9 – 392-395, 403-406 Seipp and Lindberg, 2012 JGR, Problems 3-58, 9-44 (items 1-8 only), 9-56 (just the misstatement and assertions part, not the substantive tests part) – answer and be prepared to discuss. Also, evaluate the tips in the Seipp article and be prepared to discuss any judgment problems you could see being created by the procedures they recommend. 16 Thurs., 10/12 Tests of controls, including sampling JGR, Ch. 6 – 237-241, 252; Ch. 8 – 343-355; Ch. 9 – 412-414 AS 1105.13-.28, 2315.01-.14, .31-.43 Hall, et al., 2013 JGR, Problem 9-54 (part b. only) – answer and be prepared to discuss.
Class No. Date Topic(s) Reading Assignments to do Before Class Other Assignments to do Before Class 17 Tues., 10/17 Sampling, continued; Internal control reports JGR, Ch. 3 – 102-111; Ch. 8 – 355-359; Ch. 15 – 746-749 AS 2201.62-.69, .85-.92, Appendix A Reread the Sarbox Scooter case – pp. 181-183 (on Blackboard). Note pp. 185, 191-194 are also included; we will use these in class to do an audit task. 18 Thurs., 10/19 Basic principles of evidence and documentation JGR, Ch. 6 – 230-244 AS 1105 JGR, Problems 6-48 (items a.-h. only) and 9-56 (for the misstatement/ assertions affected parts, refer to your notes from class 15) – answer and be prepared to discuss 19 Tues., 10/24 Basic principles of evidence and documentation, continued; Intro. to substantive tests JGR, Ch. 6 – 250-255, AS 1210, 1215.1-.13 Tues., 10/24 CASE 2 DUE BY 5:00 RESPONDING TO RISKS AND REPORTING 20 Thurs., 10/26 Planning and performing substantive analytical procedures JGR, Ch. 6 – 244-250 AS 2305 Read the Majestic Hotels case’s 2 examples of analytical procedures (last 6 pages of the posted materials on Blackboard; the rest is background); be ready to discuss how well the auditors did on these and what you would do instead. 21 Tues., 10/31 Performing substantive analytical procedures; planning and performing tests of details JGR, Ch. 9 – 421-428; Ch. 10 – 488-496; Ch. 11 – 552-556 AS 2301.39-.46, 2310, 2510 McConnell, et al., 2014 Read the Bud’s Big Blue Mfg. case -- pp. 273-274 (on Blackboard). Note pp. 275-283 are also posted; we will use these in class to do an audit task. Read Wally’s Billboard and Sign Supply case -- p. 249 (on Blackboard). Note pp. 250-264 are also posted; we will use these in class to do an audit task.
29 Tues., 11/28 Finishing the audit; judgments; etc. JGR, Ch. 14—668--670, 677-689 AS 2415, 2820.1-.11 30 Thurs., 11/30 Auditor reports JGR, Ch. 15 KPMG, 2014 JGR, Problem 15-60 – answer and be prepared to discuss 12/7 CASE 4 DUE BY 5:00