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 22 Thurs., 11/2 Performing tests of details, including sampling JGR, Ch. 8 – 346, 359-372 AS 2315.15-.30 23 Tues., 11/7 EXAM 2 24 Thurs., 11/9 Auditing estimates JGR, Ch. 6 – 253-255; Ch. 9 – 428-429 AS 2501 Read Wildcat Sporting Goods case, pp.1-3 (on Blackboard). There are several more pages and an Excel file posted that we will use in class. Read RedPack Beer case, pp. 301, 306-308 (on Blackboard). We will use the other pages in class to audit the estimate. 25 Tues., 11/14 End-of-year testing; Substantive testing related to fraud JGR, Ch. 9 – 430-431; Ch. 10 – 496; Ch. 11 - 562 AS 2110.49-.58, .65-.69; 2301.12-.15 Carmichael, 2010 Clikeman, 2013 Morhweis, 2003 26 Thurs., 11/16 Aggregating results and materiality JGR, Ch. 14 – 664-668; Ch. 16 – 775-778 AS 2810.10-.26 JRG, Problem 16-37 – answer and be prepared to discuss Read Precision Vision case and be prepared to do in class (on Blackboard) 27 Fri., 11/17 Panel discussion Tues., 11/21 CASE 3 DUE BY 5:00; NO CLASS BECAUSE OF PREVIOUS FRIDAY CLASS 28 USC CLOSED/ HAPPY THANKSGIVING!
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
Clikeman, P.M., Introduction and Chapter 1, Called to Account: Financial Frauds that Shaped the Accounting Profession. New York, NY: Routledge, 2013. Mohrweis, L.C., “Lessons from the Baptist Foundation Fraud,” The CPA Journal (July 2003), Class 30 KPMG (UK), Audit Committees’ and Auditors’ Reports: A Survey of December Year-Ends under the New Reporting, May 2014.