THE COLLEGE OF THE BAHAMAS
Course Outline
Title: Auditing I
Abbreviation and Number: ACCA 414
AB Paper No.: 15-86
School: Business
Department: Accounting
Credits: 3
Course Sequence: ( X ) Fall
( ) Spring
( ) Fall and Spring
( 3 ) Lecture
( ) Seminar
( ) Laboratory
( ) Studio
(
Hours Per Week:
( ) Other (Specify)
Pre-requisite(s): Fourth Year Standing in Accounting or permission of Chair/Instructor
Co-requisite(s): None
) Kitchen
COURSE DESCRIPTION
This is the first of a two-course sequence. In this course students examine internal control, control risk, ethics, legal
liability, audit planning, documentation, materiality and risk, and audit programmes. Generally Accepted Auditing
Standards (GAAS), Statements on Auditing Standards (SAS) and International Standards on Auditing (ISA) are
employed.
SPECIFIC OBJECTIVES
Upon successful completion of this course, students will be able to
1. Examine the nature and functions of auditing;
2. Evaluate auditing, attestation and assurance services;
3. Apply the concepts of materiality and risk;
4. Examine factors used to determine a client’s business risk and the risk of material misstatement;
5. Analyse the relevance and reliability of types of audit evidence;
6. Apply the steps involved in planning an audit;
7. Examine the components and limitations of internal controls;
8. Develop an overall audit plan;
9. Prepare audit programmes;
10. Assess the impact of technology on the audit process; and
11. Compare GAAS, SAS and ISA as they apply to an audit.
COURSE CONTENT
I.
Demand for Audit and Assurance Services
A. Auditing versus accounting
B. Types of audits and auditors
C. Role of Certified Public Accountant (CPA)
D. Financial statements
i. Balance Sheet
ii. Income Statement
iii. Statement of Retained Earnings
iv. Statement of Cash Flows
II.
Professional Bodies and Standards
A. Certified Public Accounting Firms
i. Activities
ii. Structure
iii. E-Commerce
The College of The Bahamas
AB Paper No.: 15-86
Course Outline
Title: Auditing I
Abbreviation and Number: ACCA414
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
L.
M.
N.
American Institute of Certified Public Accountants (AICPA)
Generally Accepted Auditing Standards (GAAS)
Statements on Auditing Standards (SAS)
International Standards on Auditing (ISA)
Financial Accounting Standards Board (FASB)
State Board of Accountancy
Securities and Exchange Commission (SEC)
Governmental Accounting Standards Board (GASB)
Public Company Accounting Oversight Board (PCAOB)
Professional development
Quality control
Regulations
Peer Review Inspections
III.
Audit Reports
A. Standard Unqualified
B. Unqualified with explanatory paragraph or modified wording
C. Departures
D. Materiality
E. Conditions requiring departure
F. Auditor’s decision process
G. Impact of E-Commerce
IV.
Professional Ethics
A. Dilemmas
B. Framework for ethical decision-making
C. Need for ethical conduct in professions
D. Code of Professional Conduct
E. Independence Rule of Conduct and Interpretations
F. Other Rules of Conduct
G. Enforcement
V.
Legal Liability
A. Environment
B. Business failure, audit failure and audit risk
C. Clients and third parties under Common Law
D. Civil Liability under the Federal Securities Laws
E. Criminal Liability
F. Profession, firms and individuals
VI.
Responsibilities and Objectives
A. Audit of financial statements
B. Management and auditor
C. Financial statement cycles
D. Transaction-related
E. Balance-related
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The College of The Bahamas
AB Paper No.: 15-86
Course Outline
Title: Auditing I
Abbreviation and Number: ACCA414
VII.
Audit Evidence
A. Nature
B. Decisions
C. Persuasiveness
D. Types
E. Documentation
F. Substantive procedures
G. Information Technology (IT)
i. Impact
ii. Environments
iii. Controls
iv. Audit testing
v. Risks
vi. Issues
VIII.
Audit Planning and Analytical Procedures
A. Client acceptance
B. Initial audit planning
C. Client’s business and industry
D. Client business risk
E. Preliminary analytical procedures
F. Purposes of audit planning
G. Types
H. Financial ratios
IX.
Materiality
A. Preliminary judgement
i. Setting
ii. Allocating about segments
B. Types of risks
i. Inherent
ii. Control
iii. Acceptable audit
iv. Fraud
v. Planned detection risk
C. Relationship of risks to evidence
D. Factors influencing risks
E. Assessment
F. Evaluating results
X.
Internal Control
A. Client and auditor concerns
B. Components
C. Procedures to obtain an understanding
D. Assessment
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The College of The Bahamas
AB Paper No.: 15-86
Course Outline
Title: Auditing I
Abbreviation and Number: ACCA414
E. Limitations
F. Corporate Governance
XI.
Overall Audit Plan and Programme
A. Tests to perform
B. Evidence mix
C. Design and preparation
D. Accounts balances
i. Assets
ii. Rights
iii. Completeness
iv. Cut off
v. Valuation
vi. Financial statement presentation and disclosure
ASSESSMENT
Assignments…………………….…... 10%
Case Studies…………………………10%
In-Class Tests……………………..... 40%
Project…………………………..…….10%
Final Examination…………….…….. 30%
Total…………………………………100%
REQUIRED TEXT
Arens, A.A., Elder, R.J., & Beasley, M.S. (2014). Auditing and assurance services: An integrated approach (15th ed.).
Upper Saddle River, New Jersey: Prentice Hall.
SUPPLEMENTARY READINGS/MATERIALS
Afterman, A. B. (1995). SEC regulations of public companies. Upper Saddle River, New Jersey: Prentice Hall.
Auditing Standards Board, (SASs). (2015). Statement on auditing standards (SAS). Jersey City, New Jersey:
American Institute of Certified Public Accountant AICPA.
Beasley, M.S., Buckless, F.A., Glover, S.M., & Prawitt, D.F. (2003). Auditing cases: An active learning approach.
Upper Saddle River, New Jersey: Prentice Hall.
Buckless, F.A., Ingraham, L.R., & Jenkins, J.G. (2004). Comprehensive assurance & systems tool and integrated
practice set. Upper Saddle River, New Jersey: Prentice Hall.
Elder, J.R., Beasley, M. S., & Arens, A. A. (2003). Sarbanes-Oxley case study. Upper Saddle River, New Jersey:
Prentice Hall.
International Federation of Accountants (IFAC). (2004). International standards on auditing (ISA). New York: IFAC.
Knechel, W.R. (2001). Auditing assurance and risk (2nd ed.). Cincinnati, Ohio: South-Western College Publishing,
Thomson Learning.
Trussel, J., & Hoyle, J.B. (2003). The lakeside company, cases in auditing (9th ed.). Upper Saddle River, New Jersey:
Prentice Hall.
JOURNALS
Accounting and Business Research
Journal of Accountancy
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The College of The Bahamas
AB Paper No.: 15-86
Course Outline
Title: Auditing I
Abbreviation and Number: ACCA414
Journal of Internal Auditors
WEBSITES
www.aicpa.org
www.ifac.org
www.gao.gov
aahotline@aicpa.org
www.sec.gov/rules/propridx.htm
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