BISHOP’S UNIVERSITY
WILLIAMS SCHOOL OF BUSINESS
Course:
Professor:
Office:
Email:
Office hours:
BAC 341- AUDITING / WINTER 2006
Camille Lessard, CA, M. fisc.
H-217 (822-9600/ extension 2479)
clessard@ubishops.ca
M/W: 15:00 17:00
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COURSE OBJECTIVES:
This course will introduce students to the concept of internal control and fundamentals of
auditing. Topics include: legal and moral responsibilities of the auditor, controls required in
principal accounting systems, selection of appropriate audit techniques and preparation of audit
reports.
GRADING SCHEME:
Tests (2)
Cases and class participation
Final examination
30 %
30 %
40 %
100 %
NOTE:
• Tests and examinations will cover all work completed to date;
• Assignments are due at the start of the class indicated. Late assignments will not be accepted; all
papers should be typed;
• You need at least 50 % in total in the final examination to pass the course;
• No supplemental (tests or examination).
TEXT:
• Arens, Alvin J., Loebbecke, James, Lemon, Morely and Splettstoesser, Ingrid, Auditing and
Other Assurance Services, Canadian 9th Edition, Toronto: Prentice Hall.
• CICA Handbook.
• Course material on the R-drive
• Hand-outs.
CONTENTS
I.
INTRODUCTION
• Auditing: a definition
• Practice standards for public accountants
• Quality control
References: Chapter 1; chapter 23 (p. 669 to 686)
CICA Handbook sections 5020, 5025, 5090, 5100
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II.
CA Magazine, December 2003
GSF-QC/ CICA 5030 on Quality Standards
THE AUDITOR’S REPORT
• The format of the report and GAAS
• Types of audit reports
• Special circumstances
References:
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III.
Chapter 2
CICA Handbook, sections 1300, 3290, 5400, 5405, 5510,
5600, 5701, 5049, 5365, 6930, 7500
PROFESSIONAL ETHICS
• What are ethics?
• Rules of Professional Conduct
References:
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Chapter 3
CICA Handbook 5751,5135
“A Principles-based Approach” CA Magazine (November 2003)
CICA, Guide to New Independence Standard, October 2003
Rules of Professional Conduct 204.1 and following
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IV.
AUDIT RESPONSIBILITIES AND OBJECTIVES
• Audit responsibilities (error, illegal acts, fraud)
• Audit objectives (the cycle approach; the strategic systems approach)
References:
V.
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Chapter 5
CICA Handbook sections 5135, 5136, 5305, 5750, 5751
AUDIT EVIDENCE
• Evidence accumulation: basic concepts
• Types of audit evidence
• Analytical procedures
References:
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VI.
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Chapter 6
CICA Handbook sections 5145, 5300, 5301, 5303, 5305, 5306
AUDIT PLANNING AND DOCUMENTATION
• Preplan
• Obtaining background information
• Obtaining information about legal obligations
• Performing preliminary analytical procedures
• Documentation
References:
VII.
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Chapter 7
CICA Handbook sections 5100, 5150, 5141, and 5145
MATERIALITY AND RISK
• The Concept of materiality
• The Audit Risk Model
References:
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Chapter 8
CICA Handbook, section 5095, 5141, 5142, 5143, 5305
AuG-41- Applying the concept of materiality
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VIII.
THE STUDY OF INTERNAL CONTROL
(MANUAL AND COMPUTER-BASED SYSTEMS)
• Internal control: definition and elements
• Obtaining an understanding of internal control
• Assessing control risk and planning the audit strategy
• Auditing in a computer environment
References:
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IX.
Chapters 9 and 22
CICA Handbook sections 5220, 5050
AuG32
THE AUDIT PROGRAM AND AUDIT SAMPLING CONCEPTS
• The Audit Program
• Audit sampling concepts
References:
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X.
Chapter 10 (p. 285 to 288; 293 to 297)
Chapter 11
AUDIT OF THE SALES AND COLLECTION CYCLE: TESTS OF CONTROL
• Overview of the cycle
• Flowcharts : manual and computer-based systems
• Lapping
• I.C. procedures, control risk and tests of controls
• Controls in a computerized environment
References: Chapter 12
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XI.
COMPLETING THE TESTS IN THE SALES AND COLLECTION CYCLE
• Using analytical procedures
• Tests of details of balances: A/R and AFDA
• Confirmation of Accounts Receivable
References:
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Chapters 14 (p. 427 to 447)
XII.
COMPLETING THE AUDIT
• Contingent Liabilities
• Commitments
• Review for Subsequent Events
• Accumulating Final Evidence
References:
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XIII.
Chapter 21
CICA 6550, 6560, 5370
CASES (Audit of other cycles: payroll and personnel, acquisition and payment, inventory
and warehouse cycle)
References: Chapters 15, 16 and 18
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XIV.
ATTEST ENGAGEMENTS
• Review and Compilation Services
• Selected Attest Reports
References:
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Chapter 23
CICA Handbook sections 5805, 5815, 8100, 8200, 8500,
8600, 9100, 9200
SELECTED WEB SITE REFERENCES
CA Magazine- http://www.camapazine.com/cica/camagazine.nsf/public/index
CGA Magazine- http ://www.cga-canada.org/eng/magazine/
CMA Magazine- http://www.managementmag.com
CICA- http://www.cica.ca
CASES AND TESTS
Cases
Due date
Work required from all students
Croyden Factory, Inc.
(payroll)
April 3, 2006
Read chapter 15
Case:
• Description of 2 weaknesses
• Description of I enquiry
procedure
Giant Stores Corporation
(accounts payable)
April 5, 2006
Read chapter 16
Case:
• Description of 2 A.P.
other than Table 6-4
Doughtie’s Foods, Inc.
(inventory)
April 10, 2006
Tests
Test 1
Test 2
February 15, 2006
March 22, 2006
Read chapter 18
Case:
• Answer question I