ACNT 2331 Internal Controls and Auditing

AUSTIN COMMUNITY COLLEGE

ACCOUNTING DEPARTMENT

COURSE SYLLABUS

ACNT 2331- Internal Controls and Auditing

CIP CODE AREA:

COURSE LEVEL: Advanced

COURSE NUMBER: ACNT 2331

COURSE TITLE: Internal Controls and Auditing

CREDIT HOURS: 3 (Lecture)

PREREQUISITE: ACNT 2304

METHOD OF PRESENTATION: Lecture, Case Studies, Group Activities and Research activities

CATALOG DESCRIPTION:A study of internalcontrol and auditing standards and processes used by internal auditors, managers and independent public accountants.Includes responsibilities of auditors, developments of audit programs, accumulation of audit evidence and reporting.

TEXTBOOK: http://www.austincc.edu/accting

OTHER: Basic computer skills utilizing the internet, spreadsheets, word-processing and presentation software are required for this course.Generally all assignments are to be prepared on the computer and presented in a format that would be acceptable that is appropriate in a business environment.Access to computers is available at the college.

SCANS COMPETENCIES:

1. Manages Time: Selects relevant, goal-related activities, ranks them in order of importance, allocates time to activities, and understands, prepares and follows schedules.

2. Acquires and Evaluates Information: Identifies needs for data, obtains it from existing sources or creates it, and evaluates it relevance and accuracy.

3. Responsibility: Exerts a high level of effort towards goal attainment. Works hard to become excellent at doing tasks by setting high standards, paying attention to details, working well and displaying a high level of concentration even when assigned an unpleasant task.Displays high standards of attendance, punctuality, enthusiasm, vitality, and optimism in approaching and completing tasks.

CLASS CONDUCT AND METHOD:The text is the primary basis for lecture combined with discussion of current events in the business and accounting world that have an effect on investors and auditors alike.Students are expected to keep up with current events either via the library or the internet (preferable). Students write cases individually or in groups. Students will research audit and accounting issues in conjunction with caseworkShort cases are available in text and the Knapp book has more complex cases.Additional cases are available through the Educators Series of the AICPA.Students will consider ethics in casework study.Students are expected to perform analytic review to perform risk analysis in planning stages of audit.Students are expected to use XBRL to gather information about a company in performing analytic review.Student testing includes significant written component as well as multiple choice questions similar to those included in the CPA exam.

COURSE OBJECTIVES: Upon completion of ACNT 2331 the student shall:

1. Develop a thorough understanding of the attest function and the related roles of the independentpublic accountant, internal auditor and financial manager.

2. Understand Generally Accepted Auditing Standards and the professional and ethical

responsibilities of the independent public accountant.

3. Understand risk assessment and its importance in the audit function.

4..Demonstrate the ability to plan and document the planning of the audit including the initial risk

assessment, calculation of materiality and preparation of audit programs.

5. Understand the concepts, processes and assessment of internal control.

6. Demonstrate knowledge of the substantiation of balances and collection of audit evidence and

preparation of audit workpapers.

7. Understand the independent public accountant's role and responsibility to detect and report

fraud in the financial statements.

8. Understand and demonstrate the ability to report the results of the audit.

9. Have knowledge of other attestation and assurance services performed by CPAs as well as other types of services which independent auditors may or may not perform.

10.Demonstrate the ability to research auditing and accounting issues and respond to current

developments and changes in the accounting and auditingprofession due to legislation,new pronouncements by regulatory and standard-setting bodies and forces of current events in the business world.

11.Develop an understanding of the ethical decisions that an auditor must make in the conduct of

the audit from the client acceptance phase throughout the audit to the reporting process.

LEARNING OBJECTIVES(These are derived from the text and are edited for changes in the auditing and accounting profession through the publication of this syllabus.Learning Objectives in italics are deviations from or additions to the text, due to material updates and need for special emphasis)

Chapter 1

1.Differentiate between attestation and assurance.

2. Identify the various kinds of assurance services that may be performed by independent CPAs (within the scope of SOA)

3.Define auditing as it relates to financial statements and identify the assertions contained in thefinancialstatements.

4. Identify the attributes of a successful auditor and explain shy these skills are necessary.

5.Provide a broad overview of how audit evidence is collected and evaluated.

6. Describe the standard audit report, the types of departures from the standard audit report, and the reasons for the departures.

7. Describe the standard audit report, the types of departures from the standard audit report, and the reasons for those departures.

8.Enumerate and explain the steps in the audit process.

9. Understand the importance of the Audit Committee and the role that they play in the audit process.

10.Differentiate between internal auditing and independent auditing, as well as the types of audits conducted by government organizations.

Chapter 2

1. Understand how the following sources determine the quality of accounting services and impact the performance of CPAs

·Generally accepted auditing standards

·Statements on Auditing Standards

·Attestation Standards

·Statements on Standards for Accounting and Review Services

·Statements on Standards for Consulting Services

·Statements on Responsibilities in Tax Practice

·Ethics and the Code of Professional Conduct

·Standards established by the ASB, SEC, SOA and the PCAOB

Chapter 3

1. Recognize the means by which the profession regulates itself and maintains the necessary level

of quality in rendering auditing and accounting services.

2. Define the expectations gap and recognize the importance of self-regulation in any attempt to narrow the gap.

3. Understand the impact on quality maintenance flowing from external regulation and understand the impact of the SOA and the PCAOB on the impact of external regulation.

4. Identify and define the sources and types of auditor legal liability and relate them to one another.

5. Describe the key cases illustrating specific sources and types of auditor liability.

6. Develop a plan for preventing legal actions and dealing with liability that does arise.

Chapter 4

1. Develop a framework, in terms of objectives, evidence and procedures for conducting and

independentfinancial audit.

2.Identify and describe the various forms of audit evidence, the procedures for gathering evidence, and how to relate the evidence and procedures to the audit objectives.

3. Define audit programs and understand the need for them, how they are prepared, and how they are classified.

4. Understand the nature and purpose of audit workpapers and know the difference between the current file and permanent file.

5.Recognize the attributes of a complete audit workpaper, and know why each is important documentation of the audit.

6. Differentiate, in terms of the nature, timing and extent of audit procedures , between and initial audit and a recurring audit.

Chapter 5

1.Define audit risk.

2. Identify and describe the three components of audit risk.

3.Quantify audit risk as a joint probability of the components.

4. Discuss the quantitative and qualitative aspects of materiality as the affect financial statement

audits.

5. Describe inherent risk assessment in terms of audit planning, study of the business and

industry, analytical procedures and fraud assessment.

6. Describe the thought processes leading to the client acceptance decision.

7. Identify the sources of information available to the auditor in analyzing inherent risk.

8.Identify the warning signs providing evidence of inherent risk.

9. Understand the relationships among risk, materiality and evidence and how these relationships are reflected in the development of audit programs.

10. Understand how audit risk analysis affects the development of audit programs.

11.Develop and approach to identifying and responding to the risk of fraud in a financial

statement audit.

Chapter 6

1.Define internal control and describe its five components.

2.Relate the components to management's assertions regarding the financial statements presentation.

3. Understand the need for a minimum audit, given the limitations inherent in any control system.

4. Identify the ingredients comprising effective internal control for a small business and understand how they differ from the control systems found in larger entities.

5.Understand the limitations inherent in any internal control system.

Chapter 7

1. Explain the reason for the auditors assessment ofcontrol risk.

2.Describe and approach to assessing control risk.

3. Differentiate between an initial understanding of the design and implementation of internal control and test of controls for operating effectiveness.

4.Determine the need for testing internal controls.

5. Develop the methodology for testing controls.

6.Develop the necessary documentation of the auditors understanding of a client's internal control.

7. Develop the necessary documentation supporting an assessed level of control risk below the maximum.

8. Describe a quantitative and qualitative approach to the design of substantive audit procedures, after assessment of inherent and control risk.

9.Understand how to identify and communicate "reportable conditions" to the appropriate level of management.

Chapter 8(Note: This chapter can be covered briefly in one class period.Students will have

significant exposure during the Advanced Auditingcoursework.)

1. Differentiate between auditing around and auditing through the computer.

2. Classify and describe the different types of CBIS.

3. Classify and define general, application and user controls.

4. Develop and approach to assessing control risk through review of internal control policies and procedures, given significant CBIS accounting applications.

5. Evaluate and manage audit risk factors uniquely associated with CBIS accounting applications.

Chapter 9

1.Identify audit areas in which sampling is appropriate.

2.Differentiate between statistical and nonstatistical sampling.

3. Apply attribute sampling to control testing.

4.Relate attribute sampling to audit risk.

5. Quantify audit risk as an input to variables sampling for substantive testing purposes.

Chapter 10

1. Determine the appropriate sampling method to apply under varying circumstances.

2. Apply any of three sampling methods - mean per unit, difference estimation and probability-proportionate-to -size.(Note- Mean per unit and PPS sampling will be stressed)

3. Evaluate sample results and draw conclusions.

Chapter 11

1.Define substantive testing.

2.Identify specific audit objectives related to the revenue cycle.

3. Develop for the revenue cycle audit programs that relate audit procedures to audit objectives for each component of the cycle.

4. Modify audit programs, as necessary, in light of warning signs that surface during a study of the business and industry, the application of analytical procedures, or a study of internal control policies and procedures.

Chapter 12

1.Identify specific audit objectives related to the expenditure cycle.

2.Develop for the expenditure cycle audit programs that relate audit procedures to audit objectives for each component of the cycle.

3.Modify audit programs, as necessary, in light of warning signs that surface during a study of the business and industry, the application of analytical procedures, or a study of internal control policies and procedures.

Chapter 13

1.Identify specific audit objectives related to the financing and investing cycle.

2.Develop for the financing and investing cycle audit programs that relate audit procedures to audit objectives for each component of the cycle, and that include procedures for

a.identifying related parties and auditing related-party transactions; and

blocating Type I and Type II subsequent events

4.Complete audit field work by searching for subsequent events, performing analytical procedures as part of the overall audit review, clearing open items, obtaining a client representation letter, drafting a reportable conditions letter outlining significant internal control weaknesses, and communicating with the client's audit committee. (and other communications as directed by SAS, SOA, PCAOB and other pronouncements.)

Chapter 14

1.Describe the standard audit report and the conditions under which it is issued.

2. Differentiate among unqualified opinions, qualified opinions, adverse opinions and disclaimers of opinion.

3.Distinguish between and explanatory paragraph and a qualified opinion.

4. Describe situations in which an explanatory paragraph might be included in the audit report.

5. Define and give examples of material scope limitations.

6. Define and give examples of departures from GAAP.

7.Define continuing auditor and describe the updating of audit reports.

Chapter 15

1. Define assurance services and differentiate among assurance, auditing and attestation.

2. Differentiate among audits, compilations, and reviews in terms of procedures applied and assurance provided.

3. Identify the eleven attestation standards and contrast with ten GAAS.

4. Give examples of other assurance services covered by the SSARS, GAAS, SSAES.

5.Identify services that auditors will continue to provide that will not impair independence.

Chapter 16 - As time allows (Covered briefly in Chapter 1)