School of Administrative Studies
Faculty of Liberal Arts and Professional Studies
YORK UNIVERSITY
AP/ADMS 4553.03 A Auditing: Advanced Topics
Fall 2011
COURSE OUTLINE
Course Director and Contact Information:
Section
A
Course Director
Larry Yarmolinsky
E-mail
yarmo@rogers.com
Class Times and Locations:
Section
A
Time
Mondays 7:00-10:00 pm
Location
HNE 035
Course Description:
The course examines current and advanced issues affecting the auditing profession. Coverage
will include: audit risk, corporate governance, standards for assurance engagements, various
types of engagements such as special reports, prospectuses, future-oriented financial
information, public sector audits, internal audit, comprehensive audits, forensic audits, and issues
related to not-for-profit organizations and small business audits.
Prerequisites:
1) Students in an Honours Programme -78 credits including AK/ADMS 3595, AK/ADMS 4551
2) Other Students – These above listed courses and an average grade of “B” or better in
AK/ADMS 3585 and AK/ADMS 3595.
Nature of the Course and its Objectives:
This course aims to develop knowledge of the assurance concepts and practices relevant to
selected special topics. The course is designed to enhance students’ analytical and critical
thinking skills. Therefore, the course will use a variety of cases to help understand the various
concepts. Assignments and classes are structured so that students can develop their oral and
written communication skills as well as their research skills.
Required Texts:
1. C.I.C.A. Handbook, Canadian Institute of Chartered Accountants (Assurance Sections) –
the electronic version is available from York Library
2. Course Kit - Purchase at the Bookstore (do not purchase course kits from previous terms
– they do not contain the relevant cases or material)
3. Any current introductory auditing text. You will need to refer back to the text to help you
analyze the cases.
WARNING
Photocopying more that 10% of a textbook is illegal and may involve penalties. Do not duplicate
textbooks or obtain photocopies.
Weighting of Course:
Component
Two Pair Case Analyses
Case preparation, group and
individual participation
Group Case Assignment/
Presentation of Integrated Case
Term Paper
Midterm Examination
Final Examination
Total
Percentage
10
10
5
15
20
40
Important Dates
Due Session 5
Due Session 9
N/A
N/A
Due Session 11
Session 7
TBA – held during regular exam week Thursday
December 8- Thursday December 22 , 2011
100
Pair Case Analyses
Students are expected to work in groups of two and prepare a response to two audit simulations
which will be posted to the course website. Your analysis will be evaluated on the quality of: (1)
your analysis, (2) your research, and (3) professionalism of presentation.
NOTE:
The pairs assignment, group integrated case assignment and group research
project are to be posted to Turnitin – details will be given at the second session.
Class Preparation, Group and Individual Participation
This course is designed to encourage active participation. In each session we will discuss specific
auditing cases. Participation marks of up to 10% will be assigned for participation in discussions
and attendance. Every student is expected to contribute by actively engaging in both group and
class discussions.
Students are expected to have read each assigned case and to be prepared to discuss the key
concepts and issues raised by those cases. For the directive cases, students are expected to
have prepared responses to the assigned questions and then discuss with their groups. While in
class, the groups are expected to prepare a group response (GR) to an assigned question. While
in class, they will work with their group members to prepare a one-page Issue Analysis Paper
(IAP).
Participation grade will also include individual participation – students are expected to prepare for
each session, attend classes regularly, and actively participate in class discussions (this includes
discussion of the Handbook Sections, Readings, and Cases).
NOTE: Students must bring the relevant Handbook sections and CASs (access through library
eResouces) as well as the Course Kit to class in order to facilitate their group discussions.
Group Integrated Case Assignment/Presentation of Integrated Case
Each person will be responsible for presenting one case to the class in a group. The groups will
be formed and the integrated case will be assigned in session 2.
Group Term Paper
Details of the Group Term Paper will be included on the course website. The groups you form in
session 2 (see above) are the groups to work on the weekly session take-up cases as well as the
term paper.
Examinations
The midterm examination will consist of a non-directive case analysis question. The midterm will
be held in Session 7 (it will cover sessions 1-6). The primary focus of the final will be case
analysis. The final, which covers Sessions 1 to 12 will be held during regular examination
schedule.
WARNINGS -- Academic Honesty.
The instructor enforces all University rules, especially those regarding
Academic honesty. There is zero tolerance in this area. Plagiarism is a violation of
academic honesty. The use of another’s material without permission and without
recognition is plagiarism. This applies to textbooks, study guides, solution manuals, a
friend’s assignment, past assignments, Internet resources or any other material
irrespective of the source. Any students handing in or providing material with plagiarism
will be prosecuted. Students must be aware of York University’s Academic Honesty
standards, Section D Serious Offenses Against the Standards of Academic Honesty.
Reallocation of Marks if a Midterm Examination is Missed for a Valid Reason
If a midterm examination is missed due to a valid reason such as illness or other reason approved
by the Course Director, the midterm mark allocation of 20% will be added to the final examination
percentage.
The documentation required to support this reallocation are as follows:
1. For illness, a completed medical form (physician's statement) provided by the Registrar’s
Office, OR for another valid reason, the documentation requested by the Course Director, AND
2. A signed statement stating that you are aware that your final examination will be worth 60%.
This signed statement is to be attached to the documentation provided in (1) above.
Deferred Examination Policy
Deferred standing may be granted to students who are unable to write their final examination at
the scheduled time or to submit their outstanding course work on the last day of classes. In order
to apply for deferred standing, students must complete a Deferred Standing Agreement (DSA)
form and submit their request no later than five (5) business days from the date of the exam. The
request must be properly submitted with supporting documentation directly to the main office of
the School of Administrative Studies (282 Atkinson), NOT to the Course Director.
These requests will be considered on their merit and decisions will be communicated to the
students by the main office.
Students with approved DSA will be able to write their deferred examination during the School's
deferred examination period, which for Winter term courses will be administered during the period
Jan. 20-22, 2012. No further extensions of deferred exams shall be granted. The format and
covered content of the deferred examination may be different from that of the originally scheduled
examination. The deferred exam may be closed book, cumulative and comprehensive and may
include all subjects/topics of the textbook whether they have been covered in class or not. Any
request for deferred standing on medical grounds must include an Attending Physician's
Statement form; a “Doctor’s Note” will not be accepted.
DSA Form: http://www.registrar.yorku.ca/pdf/deferred_standing_agreement.pdf
Attending Physician's Statement form:
http://www.yorku.ca/laps/council/students/documents/APS.pdf
Notes: (1) The readings include current CICA auditing standards. Canada has adopted a new set
of generally accepted auditing standards for financial statement audits. These new standards are
called Canadian Auditing Standards (CASs), and are based upon International Auditing
Standards (ISAs). CASs will come into effect for audits of financial statements for periods starting
December 15, 2009 or later. This course will cover the new CASs.
TOPIC SCHEDULE
Session 1
Monday Sept. 12
Competence and Independence
Learning Objectives:
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To review course expectations and evaluation
To review some key audit concepts
To update the status of adoption of international auditing standards
To understand the factors that impact auditor judgment
To understand the current climate for external auditors
To understand the debate surrounding auditor independence and
competence
REQUIRED READING
Course Kit:
 Summary of the Financial Audit Process
 Professional Judgment; Auditors’ Contribution to the Quality and Integrity
of Financial Reporting”
 Is it the Auditor or is it the Process?
 What Does it Take to be an Auditor?
 Why Good Accountants do Bad Audits
 Enron as a Symptom of Audit Process Breakdown
 Background on the Canadian Regulatory Environment”
 Research on Rotation-Studies Show that Audit-Firm or Audit Partner
Rotation Doesn’t Necessarily Improve Audit Quality
 A principles-based approach
 Case 2:3: WorldCom: Professional Responsibility (refer to Canadian
References to answer questions)
 Case 2.4: Enron: Quality Assurance (refer to Canadian References to
answer questions)

Course Website:
Session 1 Slides
CICA Handbook Sections:
 CAS 200 – Overall Objectives of the Independent Auditor and the
Conduct of an Audit in Accordance with Canadian Standards
 CAS 220 – Quality Control for An Audit of Financial Statements
Session 2
Engagement Risk and Fraud Risk Assessment
Learning Objectives:
Monday Sept. 19
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To review the factors underlying engagement risk assessment
To understand the link between the client’s strategic direction and
identification of significant audit risk
To understand the motivations behind and the methods related to
earnings management
To understand the use of audit procedures for detecting financial
statement fraud
To understand auditor’s responsibility to consider fraud in an audit of the
financial statements
To apply this knowledge when developing audit strategies and
determining the appropriate audit evidence
REQUIRED READING:
Course Kit
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Evaluating Engagement Risk
KRisk: A Computerized Decision Aid for Client Acceptance and
Continuance Risk Assessments
The Hidden Risk in Analytical Procedures: What WorldCom Revealed
ZZZZ Best
ZZZZ Best Audit Work on Restoration Projects
Areospace Lighting
How to Analyze an Integrated Assurance Case
How to Prepare an Audit Planning Memo
Auditing for Fraud (Pages 409-411, 413-444)
Techniques for Detecting Shenanigans
Group Activity – Brainstorming and Planning the Audit
Course Website:
 Session 2 Slides
CICA Handbook Section:
 CAS 240-The Auditor’s Responsibilities Relating to Fraud in an Audit of
Financial Statements
 CAS 250 The Auditor’s Responsibilities to Laws and Regulations in an
Audit of Financial Statements
 CAS 260 – Communications with Those Charged with Governance
 CAS 315 – Identifying and Assessing the Risks of Material Misstatement
through Understanding the Entity and its Environment
 CAS 320 Materiality in Planning and Performing an Audit
 CAS 330 – The Auditor’s Responses to Assessed Risks
 CAS 450 Evaluation of Misstatements Identified During the Audit
 CAS 500 –Audit Evidence
 S5750: Communication with Management of Matters Identified During
the F/S Audit
Session 3
REVIEW the following:
CICA Handbook Sections:
 CAS 200 Overall Objectives of the Independent Auditor, and the Conduct
of an Audit
Internal Control Assessment and Corporate Governance
Learning Objectives:
Monday Sept. 26
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
To review the auditors’, management’s, and the audit committees
responsibilities for internal control
To understand how to conduct an audit of the effectiveness of internal
controls
To learn how to determine what is a material versus significant control
deficiency
To understand the accountability relationships among the external
auditor, internal auditor, management, and the audit committee
To understand how to assess the corporate governance function in the
context of the external audit
REQUIRED READING:
Course Kit:
 Notes on Audits of Internal Controls and Reporting on Audits of Internal
Controls
 Evaluate the Control Environment
 Notes on Corporate Governance
 The Front Line: Audit Committees
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Quality Auto Products
World Com: The Internal Audit Function
Group Activity – Internal Controls
Course Website:
 Session 3 Slides
CICA Handbook:
 Section 5925-An audit of internal control over financing reporting that is
integrated with an audit of financial statements
 CAS 265 – Communicating Deficiencies in Internal Control to Those
Charged with Governance and Management
 CAS 610 –Using the Work of the Internal Auditors
Optional Reading
Arens et al (2010), Auditing: The Art and Science of Assurance
Engagements, Canadian Eleventh Edition Chapter 10- Pages 311-323
(Available in the Peter Bronfman Business Library)
Auditing Going Concern and Related Parties
Session 4
Monday Oct. 3
Learning Objectives:
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To understand the risks related to Going Concern
To understand how to address and evaluate the Going Concern
assumption
To understand the risks related to Related Party Transactions
To understand how to audit Related Party Transactions
REQUIRED READING:
Course Kit:
 Notes on Making a Going Concern Assessment
 Zoom Snowboards Inc.
 Notes on Auditing Related Party Transactions
 Controls over Related Party Transactions at Scotiabank
 Windsor Radio
 Group Activity – Related Party Transactions at Tyco
Course Website:
 Session 4 Slides
CICA Handbook:
 CAS 550 – Related Parties
 CAS 570 - Going Concern
 CAS 706 - Emphasis of Matter Paragraphs and Other Matter
Paragraphs in the Independent Auditor’s Report
Monday Oct. 10
No Class- Fall Term Reading week/Co-curricular week
Session 5
Auditing Complex Revenue Transactions
Monday Oct. 17
Learning Objectives:
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To be able to identify the risks related to capitalization and deferral
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To understand how to audit deferred costs
To be able to identify the risks related to Revenue Recognition
To understand how to audit unique revenue situations
To understand the professional judgment involved in evaluating high risk
audit areas
REQUIRED READING
Course Kit:
 Notes on Auditing Revenue
 Overlook Video
Course Website:
Session 5 Slides
CICA Handbook:
 CAS 240 – The Auditors’ Responsibilities Relating to Fraud in an Audit of
Financial Statements (Appendices 1,2, and 3)
 CAS 520 – Analytical Procedures
Your 1st pair case assignment – See Course Website
Session 6
Auditing Management Estimates, Fair Value, and Capitalization
Monday Oct. 24
Learning Objectives:
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To understand the audit risk related to management estimates
To learn how to apply professional judgment in evaluating management
estimates
To be able to identify when there is a need to rely upon others who have
a particular expertise
To understand the audit risk related to auditing Fair Values
REQUIRED READING:
Course Kit:
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Notes on Auditing Accounting Estimates and Fair Value
Notes on the Impact of the Credit Crisis on Estimates and Fair Value
The Gray Area of Bias
Warmth Home Comfort Ltd.
Q Dots Incorporated
Great Lakes Cruise Inc.
Course Website:
 Session 6 Slides
CICA Handbook:
 CAS 540 – Auditing Accounting Estimates, Including Fair Value
Accounting Estimates, and Related Disclosures
 CAS 580 –Written Representations
 CAS 620 – Using the Work of an Auditor’s Expert
REVIEW the following:
CICA Handbook Sections:
 S3461: Employee Future Benefits

Session 7
S3870: Stock-based Compensation and Other Stock-Based Payments
Midterm Exam (Covers Material from Sessions 1-6)
Monday Oct. 31
Session 8
Monday November 7
Internal and Comprehensive Auditing
Learning Objectives:
 To review the difference between internal audits, public sector audits and
independent financial statement audits
 To outline the independence problems of internal, external, and public
sector auditors
 To understand the umbrella standards (S 5025) for assurance
engagements
 To understand the difference between direct reporting and attest
engagements
 To understand how to design comprehensive audits
 To understand how to design internal audits
REQUIRED READING:
Course Kit:
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Assurance Services: Internal Auditing and Government Auditing
Other Public Accounting Services and Reports (Pages 651-656 and
Pages 660-663)
The importance of Internal Audit Opinions
Human Rights Commission- Operational audit question
Bloomington University
Report of Auditor General of Canada: Management and Control
Practices in Three Small Entities
Course Website:
 Session 8 Slides
CICA Handbook:
 S5025: Standards for Assurance Engagements
Session 9
Monday November 14
Fraud Awareness Auditing
Learning Objectives:
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To understand the use of extended audit procedures for detecting
misappropriation of assets
To understand the various categories of fraud
To understand the difference between a financial audit and a
forensic audit
REQUIRED READING:
Course Kit:
 Notes on the Forensic, Fraud and Regular Auditors
 A Practical approach to Fraud Risk
 4 steps to a Successful Fraud Risk assessment
 One Fraud Leads to Another
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Elementary Fraud
If You Need Love, Get a Puppy: A Case Study on Professional
Skepticism and Auditor Independence
Auditing: A Business Approach- Chapter 9- Auditing for Fraud
( Pages 411-413)
Course Website:
 Session 9 Slides
2nd Pairs Case Assignment (See Course Website)
Session 10
Reviews, Compilations, Small Business Audits, Other Assurance Services:
Forecasts, Other Auditor Responsibilities
Monday November 21
Learning Objectives:
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To understand the risks associated with conducting compilations and
reviews
To review the standards associated with reviews and compilations
To understand the audit issues and risks unique to Small Entities
To understand the control issues unique to Small Entities
To understand the audit issues and risks related with future oriented
information
To understand the auditor’s role and responsibilities in connection
with the annual report, interim reviews and offering documents of
public and private entities
REQUIRED READING:
Course Kit:
 Notes on Auditing A Small Business
 Colourful World
 Other Public Accounting Services and Reports ( see pages 630-632)
Course Website:
 Session 10 Slides
CICA Handbook:
 S8100: General Review Standards
 S8200: Public Accountant’s Review of Financial Statements
 S9200 – Compilation Engagements
 CAS 800 Special Considerations; Audits of Financial Statements
Prepared in Accordance with Special Purpose Frameworks
 AuG-5 Compilation engagements- Financial Statement Disclosures
 AuG-6: Examination of Financial Forecast or Projection Included in a
Prospectus or Other Offering Document
 AuG-16: Compilation of Financial Forecast or Projection
 CAS 720 The Auditor’s Responsibilities Relating to Other Information in
Documents Containing Audited Financial Statements
 S4250: Future Oriented Financial Information
Session 11
Other Assurance Services: Special Reports
Monday November 28
Learning Objectives:
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To understand the issues related with conducting non-traditional
assurance engagements
To understand the differences among the various types of special reports
To be able to identify which type of report best suits stakeholders’
economic and information needs
To understand the differences between an audit and a review
engagement
REQUIRED READING:
Course Kit:
 Financial Times Business School Rankings: A Non-traditional Assurance
Case
 Additional Information for Financial Times Business School Ranking
Case
 24X7 Incorporated
 Other Public Accounting Services and Reports ( see pages 627-629 and
pages 632-640))
Course Website:
 Session 11 Slides
CICA Handbook:
 S5800 – Special Reports: An Introduction
 S5815 – Special Reports on Compliance with Agreements
 S8500 – Reviews of Financial Information Other Than F/ S
 S8600 – Review of Compliance with Agreements and Regulations
 S9100 – Specified Audit Procedures
 CAS 805 Special Considerations-Audits of Special Purpose
 Financial Statements and Specific Elements, accounts or Items of a
 Financial Statement
 CAS 810 Engagements to Report on Summary Financial Statements
Group Term Paper is Due - See Course Website
Session 12
Monday December 5
Non-Profit Audits, and Review of material covered in this course
Learning Objectives:
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To review definitions and disclosures related to not-for-profit
organizations
To understand the control issues unique to NFPs
To understand the audit issues and risks that are unique to NFPs
REQUIRED READING:
Course Kit:
 Notes on Auditing Not-for Profit
 Yorktown Art Gallery
 Canadian Links Limited (CLL)
Course Website:
 Session 12 Slides
CICA Handbook:
 S4400: Financial Statement Presentation by Not-For-Profit Organizations
 S4410: Contributions: Revenue Recognition
 S4420: Contributions Receivable
 S4430: Capital Assets Held by Not-for Profit Organizations
 S4440: Collections Held by Not-For-Profit Organizations
 S4450: Reporting Controlled and Related Entities by Not-For-Profit
Organizations
 S4460: Disclosure of Related Party transactions by Not-For-Profit
Organizations