Riyadh Philanthropic Society for Science
‫مؤسسة الرياض الخيرية للعلوم‬
Prince Sultan University
College of Business Administration
‫جامعة األمير سلطان‬
Dept. of Finance and Accounting
‫كلية ادارة األعمال‬
‫قسم العلوم المالية و المحاسبة‬
Vision
Our vision is to be a hallmark of excellence and innovation in business education in the
Kingdom of Saudi Arabia.
Mission
Our mission is to promote excellence and innovation in business education, research, and
service in the Kingdom of Saudi Arabia in line with international standards.
ACC 461 – Auditing
Credit: 3(3,0,0)
1st Semester – Term (111): Academic Year 2011-2021
Instructor
Office
Phone
E-mail
: Dr Abdullah Saghaier M. Al-Hussaini
# A 244
# 4948538
: ahussaini@psu.edu.sa
Office Hours : Please see the Working Schedule affixed on my office door.
Course Description and Objectives:
This is a sppecialized course that addresses issues related to external reporting and internal
control. The course is designed to familiaeize students with the audit environment, auditor’s
study and evaluation ot internal control structure and the steps involved in audit planning and
execution. This course is designed to achieve the following objectives:



To introduce the students to the conceptual foundation of the audit process, the audit
environment and audit techniques.
To provide the students with training in solving practical accounting and auditing
problems.
To enhance the syudent’s oral and communication skills.
Text Required:
Alvin A. Arens, Randal J. Elder and Mark S. Beasley. Auditing and Assurance Services: An
Integrated Approach; (13th edition), Prentice-Hall, Inc., 2009.
Prentice-Hall Inc.
‫ الرايض‬66833 .‫ب‬.‫ ص‬- 4548317 : ‫ فاكس‬- 319 ‫ حتويلة‬4548489 / 4548011 : ‫هاتف‬
11586
P.O. Box No. 66833, Riyadh - 11586, Tel. No. 454-8011, 454-8489 - Fax No. 4548317
Riyadh Philanthropic Society for Science
‫مؤسسة الرياض الخيرية للعلوم‬
Prince Sultan University
College of Business Administration
‫جامعة األمير سلطان‬
Dept. of Finance and Accounting
‫كلية ادارة األعمال‬
‫قسم العلوم المالية و المحاسبة‬
Recommended References:




Donal H. Taylor and G. William Gleemen, Auditing: Integrated Concepts and
Procedures, John Wiley & Sons, Inc; 1999.
Ministry of Commerce, KSA, Auditing Standards, 1406H.
Saudi Organization for Certified Public Accountants (SOCPA), Code of Professional
Ethics.
SOCPA, Quality Control Standars for the Accounting Firm.
Grading:
Your grade will be based on the following:
First Major Exam
Second Major Exam
Final Exam (Comprehensive)
Assignments and Cases
Class Participation & attendence
20%
20%
40%
10%
10%
Class participation means regular attendance, punctuality, making meaningful contributions
and showing evidence of preparation during the discussion of the issues. Considering the
very nature of the course, the instructor will solve demonstration problems in the class.
Then, you will be given a number of assignments which along with class participation will
together count for 20% of your final grade. The assignments will be straightforward cases
where you play the role of a cost accountant. Make sure that you understand each assignment
completely before you work on it. You are encouraged to ask questions inside and outside
the classroom regarding your assignment.
Assignments must be completed by the due date. You should and make the required effort to
answer every question, as well as to develop a good understanding of the issues involved.
Preparing yourself for the coming lectures and active class participation are essential to your
learning process. Case Studies given to you would be of the companies functioning in the
real marketplace. Solving them would require you to obtain information from various
sources including the internet and would help you to follow a research oriented approach to
your learning. You are encouraged to seek guidance from your course incharge regarding the
cases.
Exams will be structured to allow you to apply what you have learned to realistic settings.
Since accounting by its nature is cumulative learning, each topic builds on all previously
‫ الرايض‬66833 .‫ب‬.‫ ص‬- 4548317 : ‫ فاكس‬- 319 ‫ حتويلة‬4548489 / 4548011 : ‫هاتف‬
11586
P.O. Box No. 66833, Riyadh - 11586, Tel. No. 454-8011, 454-8489 - Fax No. 4548317
Riyadh Philanthropic Society for Science
‫مؤسسة الرياض الخيرية للعلوم‬
Prince Sultan University
College of Business Administration
‫جامعة األمير سلطان‬
Dept. of Finance and Accounting
‫كلية ادارة األعمال‬
‫قسم العلوم المالية و المحاسبة‬
acquired knowledge of the subject. Therefore, absence from class can be extremely costly
and it would not let you develop good understanding of the issues.
DN and attendance regulations
DN wil be given to the students who are absent for 16 hours or more (whether excused or
unexcused) during the semester. Attendence will be taken 5 minutes after the start time of the
class .Any student who joins the class later will be allowed to attend the lecture but no
attendence will be granted to him.
Students are required to bring text book in each class.
Please note the following instructions:
a.
b.
c.
d.
e.
Read the assigned material before class meetings.
Do not miss any class.
Pay attention to details.
Ask questions and participate in discussions.
Be regular in doing home-works and assignments because all your course is
interrelated.
Course Calendar
WEEK 1
The Demand for Auditing and other Assurance Services
Read Chapter 1
 Describe auditing and distinguish between auditing and accounting.
 Explain the importance of auditing in reducing information risk.
 List the causes of information risk, and explain how this risk can be reduced.
WEEK 2
The Demand for Auditing and other Assurance Services (Continued)
Read Chapter 1
 Describe assurance services and distinguish audit services from other assurance and
nonassurance services provided by CPAs.
 Differentiate the three main types of audits and identify the primary types of auditors.
 Describe the requirements to becoming a CPA.
WEEK 3
The Public Accounting Profession
Read Chapter 2
 Describe the nature of CPA firms, what they do, and their structure.
 Discuss the nature of US and International auditing standards.
‫ الرايض‬66833 .‫ب‬.‫ ص‬- 4548317 : ‫ فاكس‬- 319 ‫ حتويلة‬4548489 / 4548011 : ‫هاتف‬
11586
P.O. Box No. 66833, Riyadh - 11586, Tel. No. 454-8011, 454-8489 - Fax No. 4548317
Riyadh Philanthropic Society for Science
‫مؤسسة الرياض الخيرية للعلوم‬
Prince Sultan University
College of Business Administration
‫جامعة األمير سلطان‬
Dept. of Finance and Accounting
‫كلية ادارة األعمال‬
‫قسم العلوم المالية و المحاسبة‬

Identify quality control standards and practices within the accounting profession.
WEEK 4
Audit Reports
Read Chapter 3
 Describe the parts of the standard unqualified audit report, and specify the conditions
required to issue this report.
 Describe the five circumstances when an unqualified report with an explanatory paragraph
or modified wording is appropriate.
 Identify the types of audit reports that can be issued when an unqulified opinion is not
justified.
WEEK 5
Legal Liability
Read Chapter 4
 Understand the littigious environment in which CPAs practice.
 Differentiate among business failure, audit failure, and audit risk.
 Describe accountants’ liability to clients and third parties, and describe their civil liability.
WEEK 6
Professional Ethics
Read Chapter 5
 Distinguish ethical from unethical behavior, and describe the impotance of ethical conduct.
 The AICPA Code of Professional Conduct. Apply its rules on independence.
 Describe the enforcement ment mechanisms for the rules of conduct.
 Understand Sarbanes-Oxley-Act and other SEC and PCAOB requirements and additional
factors that influence auditor independence.
First Major Examination
WEEK 7
Audit Responsibilities and Objectives
Read Chapter 6
 Objective of conducting an audit. Distinguish management’s from auditor’s responsibilities.
 Responsibility for discovering material misstaements.
 Link the eight general balance-related audit objectives to management assertions for account
balances.
 Explain the relationship between audit objectives and the accumulation of audit evidence.
WEEK 8
Audit Evidence
Read Chapter 7
 Contrast audit evidence with evidence used by other professions.
 The four audit evidence decisions that are needed to create an audit program. Identify and
apply the eight type of evidence used in auditing.
‫ الرايض‬66833 .‫ب‬.‫ ص‬- 4548317 : ‫ فاكس‬- 319 ‫ حتويلة‬4548489 / 4548011 : ‫هاتف‬
11586
P.O. Box No. 66833, Riyadh - 11586, Tel. No. 454-8011, 454-8489 - Fax No. 4548317
Riyadh Philanthropic Society for Science
‫مؤسسة الرياض الخيرية للعلوم‬
Prince Sultan University
College of Business Administration
‫جامعة األمير سلطان‬
Dept. of Finance and Accounting
‫كلية ادارة األعمال‬
‫قسم العلوم المالية و المحاسبة‬


The purposes of audit documentation and prepare organizes audit documentation.
Describe how technology affects audit evidence and audit documentation.
WEEK 9
Audit Planning and Analytical Procedures
Read Chapter 8
 Adequate and initial audit planning, and preliminary analytical procedures. The purposes of
analytical procedures and the timing of each purpose.
 The five major types of analytical procedures and selecting the most appropriate one.
 Compute common financial ratios.
Second Major Examination
WEEK 10
Materiality and Risk
Read Chapter 9
 What amounts to consider material?, allocate materiality to segments of the audit during
planning, and define risk in auditing. Audit risk model and its components.
 Describe the audit risk model and its components and the impact of engagement risk on
acceptable audit risk.
 Discuss the relationship of risks to audit evidence.
 Discuss how materiality and risk are related and integrated into the audit process.
WEEK 11
Section 404 Audits of Internal Control and control Risk
Read Chapter 10
 Explain the five components of the COSO internal control framework, obtain and document
on understanding of internal control.
 Assess control risk by linking key controls and control deficiencies to transaction-related
audit objectives.
 Describe the differences in evaluating, reporting, and testing interal control for nonpublic
companies.
WEEK 12
The Impact of Information Technology On the Audit Process
Read Chapter 12
 How IT improves internal control? Risks that arise from using an IT-based accounting
system. How general and application controls reduce IT risks.
 Use test data, parallel simulation, and embeded audit module approaches when auditing
through the computer.
 Identify issues for e-commerce systems and other specialized IT systems.
WEEK 13
Read Chapter 13
Overall Audit Plan and Audit Program
‫ الرايض‬66833 .‫ب‬.‫ ص‬- 4548317 : ‫ فاكس‬- 319 ‫ حتويلة‬4548489 / 4548011 : ‫هاتف‬
11586
P.O. Box No. 66833, Riyadh - 11586, Tel. No. 454-8011, 454-8489 - Fax No. 4548317
Riyadh Philanthropic Society for Science
‫مؤسسة الرياض الخيرية للعلوم‬
Prince Sultan University
College of Business Administration
‫جامعة األمير سلطان‬
Dept. of Finance and Accounting
‫كلية ادارة األعمال‬
‫قسم العلوم المالية و المحاسبة‬



Use the five types of audit tests to determine whether financial statements are fairly stated.
Design an audit program.
Compare and contrast transaction-related audit objectives with balance-related and
presentation and disclosure-related audit objectives.
 Integrate the four phrases of the audit process.
WEEK 14
Audit Of the Inventory and Warehousing Cycle
Read Chapter 21
 Describe the business functions and the related documents and records in the inventory and
warehousing cycle.
 Explain the five parts of the audit of the inventory and warehousing cycle.
 Design and perform audit tests of cost accounting.
 Apply analytical procedures to the accounts in the inventory and warehousing cycle.
WEEK 15
Audit Of the Inventory and Warehousing Cycle (Continued)
Read Chapter 21
 Design and perform physical observation audit tests for inventory.
 Design and perform audit tests of pricing and compilation for inventory.
 Itegrate the various parts of the audit of the inventory and warehousing cycle.
Week 16
Final Examination
‫ الرايض‬66833 .‫ب‬.‫ ص‬- 4548317 : ‫ فاكس‬- 319 ‫ حتويلة‬4548489 / 4548011 : ‫هاتف‬
11586
P.O. Box No. 66833, Riyadh - 11586, Tel. No. 454-8011, 454-8489 - Fax No. 4548317