AUDITING 732 SYLLABUS
Spring 2011
1. General Information
INSTRUCTOR:
OFFICE:
Class Time:
OFFICE HOURS:
TELEPHONE:
e-mail:
Dr. Scott D. Vandervelde
305
T & TH 8:00-9:15 room 363
9:15-10:15 T, TH & by appointment
777-6075
vandervelde@moore.sc.edu
2. Required Text:
Loebbecke, The Auditor, Prentice-Hall, 1999.
Covey, The 7 Habits of Highly Effective People, Simon & Schuster, 1990.
Bell, Marrs, Solomon, & Thomas, Auditing Organizations Through a Strategic-Systems Lens:
The KPMG Business Measurement Process, 1997: GIVEN OUT IN CLASS
Bell, Peecher, & Solomon, The 21st Century Public Company Audit: Conceptual Elements of
KPMG’s Global Audit Methodology, 2005. GIVEN OUT IN CLASS
Messier, Glover, and Prawitt, Auditing and Assurance Services: A Systematic Approach, 6th or
7th edition. Chapters 8 and 9. (you can purchase just these chapters on-line if you do not
already have the textbook).
Readings given out in class
3. Optional Course Materials:
Wall Street Journal
Statements on Auditing Standards
Journal of Accountancy
4. Prerequisites:
Undergraduate Auditing
5. Objectives of the Course:
(a) Primary Objective
1. Improve your ability to think about auditing conceptually and practically.
2. Understand the role and importance of auditing in society.
3. Develop a reasonable understanding of the challenges facing the auditing profession.
4. Improve professional skills that will advance your career opportunities.
5. Develop your communication, intellectual, and interpersonal skills.
1
(b) Secondary Objectives
1. Encourage students to think independently and present ideas with confidence (not arrogance).
2. Integrate ethical behavior and professionalism.
3. Develop students' ability to perform assigned tasks on a timely basis and develop their ability
to work under pressure.
6. Teaching Approach
This course will be taught using a seminar approach. The approach includes the following major
features:
(a) Limited Lectures
The professor will act more as a facilitator to make sure certain points are made regarding the
assigned readings. There will not be daily lectures. Some days the professor will shoulder more of the
discussion responsibility. If you start to think that I am doing too much of the talking, then you can
assume that means I am not happy with the class and the level of effort being put into the
readings/discussion. You can also do something about that by stepping up the contribution you are
making during class discussions.
(b) Active learning
Students are expected to present ideas and questions to be discussed on the assigned readings and
any additional articles brought to class. Students are also expected to challenge the ideas in the readings.
Students will be responsible to lead the discussion on the daily readings.
(c) Interactive
Students are expected to answer questions posed by others in the class in addition to actively
expressing their views on any topic being discussed. If students do not feel comfortable with an idea
shared during the class or expressed in the readings, he/she is expected to challenge/question the idea.
7. Exams
Exams will be based on class readings and discussion. There will be one midterm and one final.
Exams will primarily be essay questions. The exams may be in class or take-home to be determined by
the professor prior to the exam date. If an exam is take home, you will be required to sign something that
says that you will work alone or be given a failing grade. Additional information regarding exams will
be provided as the exam dates approach. There will be no make-up exams. Copying other students’
answers or assisting others is considered a violation of academic integrity and will result in zero
points for all students involved. I will also pursue the most severe consequences allowable by the
University of South Carolina.
2
8. Weekly Readings
Given the small number of “assignments” that you have to complete and turn in, you are
expected to read and be prepared to discuss every reading. Being prepared will enhance your learning
and the learning of your classmates (and make me happy ). Below are some general things to think
about when reading, but are not “hard” requirements. These are just general guidelines to help you in
thinking about the readings.
1. What is the main question or topic of the reading?
2. Why is it important?
3. How does/do the author(s) address the issue?
4. What questions do you have about the topic?
5. How does it relate to any of the other readings from class?
6. How does the reading impact the auditing profession?
7. How might the reading impact YOUR auditing career, or how might YOU apply the ideas
from the reading when you are an auditor?
Your best chance for success in this class and for the information learned during this class to
positively impact your career comes from a clear focus when doing the weekly readings. I strongly
encourage you not to read the assignments just trying to get through them, but to actually think about
what is being said in the paper or book. If all you do is approach it as checking something off your list to
complete, then you will not learn as much as if you think about what you are reading. You will also find
that it is significantly easier to participate in class discussions when you think about what you are
reading rather than just reading to “get it done.”
If I specifically ask you to lead the discussion for a particular reading or to start off the
discussion for a particular reading, you will be given one opportunity during the semester to pass. Your
one pass will not impact your grade. Any additional times you elect to pass will decrease your grade by
5%. Each student is expected to participate. The likelihood of you being asked to lead the discussion or
to start off the discussion will increase if I do not think you are participating enough on a regular basis. I
will make any additional comments not brought up during the discussion.
There will be times that I will give an assignment in class for the next class period. This might
include doing some online research for a CPA exam type question, or an assignment related to one of
the readings. If you are not in class it is your responsibility to obtain anything you missed in class. I do
not accept late work if an assignment is given.
9. The Auditor
You are expected to keep up on the reading of “The Auditor.” You will find it to be a very easy
read, but it will hopefully provide you with things to think about related to starting a successful career in
accounting. Former students who are working in public accounting comment on how things that are
happening to them on the job remind them of this book. I have removed the written assignments from
the course, which I had used in the past. If I believe you are not doing the reading then I will give you
assignments that will be graded by me. We will not always discuss the assigned reading from the
Auditor, but you should be prepared to discuss it. You should also be prepared to add comments to
discussion of other readings based on the story line from the Auditor.
10. 7 Habits
You will be expected to keep up on the reading of this book for class discussions. While reading
each chapter, think about how it applies to you and how it might apply to an auditing situation. Be
prepared to share your thoughts with the class. This will be part of your participation grade in the class.
Assignments will be given if I start to believe you are not doing the reading of the book.
3
11. Current Events
There might be days when I bring an article to class to discuss. All students are expected to
participate in the discussion of the article, even though they have not likely read it prior to class. I will
lead the discussion but expect input from the class. If you find an article that is related to things we have
discussed in class you are welcome to bring it in and lead the discussion. This will add points to your
participation grade, but is not required. Please let me know prior to class that you have an article to
present. I will only allow a maximum of 2 articles presented on any given day. If you are someone who
is not good about participating on a regular basis, this is a good way to help force yourself to participate.
It might also help you be more willing to participate other times after you find out it is not that scary of
an environment to present ideas. If you choose to do this, when thinking about what you want to say,
here are some things to consider: (1) how does it tie into previous class discussions or readings, (2) how
does it impact the auditing profession, (3) how might it impact your or other students future careers, etc.
12. Attendance
Although I do not officially take attendance, if you miss class multiple times it will significantly
impact your participation grade even if you are a strong participator on the days you are in class. This
does not mean that just being in class without saying anything will earn you a solid participation grade.
Given the amount of discussion we have in class about the readings it is important for you to be in class
and be on time. Others will benefit from what you have to say and you will benefit from what your
classmates have to say. If I have to say anything to you about attendance, you can be certain that I will
be deducting points for each absence. This is a graduate class, so I do not believe this should even be an
issue.
13. Group projects
Students will be in pairs to complete the group projects (you select your partner). There will be
three cases that must be completed as the three components of the group project grade. The first two
cases will each be worth 30 points and the third case will be worth 40 points. I will grade the third case
harder than the first two. Although all groups will have the same cases, you are NOT permitted to
discuss the cases with anyone outside of your group (other than the professor). If I find out that
discussion has occurred between groups or with others outside of the class, I will give zero points to all
members of all groups involved. If you have questions that need discussion I encourage you to come see
me. Each case has specific instructions but all cases will involve performing some research using
accounting and/or auditing standards. You must write up the case as a communication with your client
(or the party involved) with explanation/support for how you arrived at your solution(s). The grade will
be based on your analysis, support, and quality of writing. These are the types of tasks you will have to
perform as auditors, including writing up support for your position. The group members will receive the
same grade. The due dates for each paper are identified in the syllabus schedule. For every day the
project is late it will lose 10% of the grade.
On the day the case is due it will be discussed in class. I will select two groups at random to
present what they have found. This means that each group will need to be ready to present even though
only two groups will be presenting. The students who are not presenting need to participate in the
discussion with questions or comments based on whether or not they agree with what the presenters are
saying.
In order to complete the projects you will need to have access to research software. Some of the
research can be performed using the SEC web site; however, the School of Accounting has a license that
allows you to use the FASB Accounting Standards Codification website free of charge. The web site
address is http://aaahq.org/ascLogin.cfm. The User ID = AAA51352, and the Password = Sm85gmh.
4
14. Classroom modifications and accommodations
I would like to hear from anyone who has a disability which may require some modification of
seating, testing or other class requirements so that appropriate arrangements may be made. Please see
me after class or during my office hours. I do not assign seats, so sit where you will be best able to learn
and contribute to the class.
15. Grading
The final course grade will be determined as follows:
100
Midterm Exam
100
Cases
70
Class Participation
30
Assignments
100
Final Exam
400
Total Course Points
Grading Scale
A
90.0%+
B+
87.0- 89.9%
B
80.0- 86.9%
C+
77.0- 79.9%
C
D
F
70.0- 76.9%
60.0- 69.9%
Below 60.0%
5
16. UNIVERSITY OF SOUTH CAROLINA HONOR CODE
It is the responsibility of every student at the University of South Carolina Columbia to adhere steadfastly
to truthfulness and to avoid dishonesty, fraud, or deceit of any type in connection with any academic
program. Any student who violates this Honor Code or who knowingly assists another to violate this
Honor Code shall be subject to discipline.
The Honor Code is intended to prohibit all forms of academic dishonesty and should be interpreted broadly to
carry out that purpose. The following examples illustrate conduct that violates this Honor Code, but this list is not
intended to be an exhaustive compilation of conduct prohibited by the Honor Code:
1. Giving or receiving unauthorized assistance, or attempting to give or receive such assistance, in
connection with the performance of any academic work.
2. Unauthorized use of materials or information of any type or the unauthorized use of any electronic or
mechanical device in connection with the completion of any academic work.
3. Access to the contents of any test or examination or the purchase, sale, or theft of any test or
examination prior to its administration.
4. Use of another person’s work or ideas without proper acknowledgment of source.
5. Intentional misrepresentation by word or action of any situation of fact, or intentional omission of material
fact, so as to mislead any person in connection with any academic work (including, without limitation, the
scheduling, completion, performance, or submission of any such work).
6. Offering or giving any favor or thing of value for the purpose of influencing improperly a grade or other
evaluation of a student in an academic program.
7. Conduct intended to interfere with an instructor’s ability to evaluate accurately a student’s competency or
performance in an academic program.
Whenever a student is uncertain as to whether conduct would violate this Honor Code, it is the responsibility of
the student to seek clarification from the appropriate faculty member or instructor of record prior to engaging in
such conduct.
6
17. Tentative Schedule: this schedule is tentative and is expected to change. You are expected to be in
class, so any changes that are announced are your responsibility.
Date
T 1/11
Topic
Homework
Introduction
What does it take to effectively
serve audit clients?
TH 1/13
No Class
Work on assignment given out in class
T 1/18
Importance of Auditing.
Nelson, Elliott, and Tarpley (The Accounting
Review 2002)
Kinney and Martin (Auditing Journal 1994)
TH 1/20
Economic & Social Explanations Wallace (1987)
for Auditing
The Auditor Ch. 1
T 1/25
Independence
TH 1/27
Independence
T 2/1
Materiality
Pany & Wheeler (Accounting Horizons: Dec.
1989)
The Auditor Ch. 4
Covey pp. 46-62
TH 2/3
Strategic Auditing
KPMG pp. 1-32
T 2/8
Strategic Auditing
TH 2/10
Strategic Auditing
KPMG pp 33-72
The Auditor Ch. 5
Covey Habit 1 pp 65-94
KPMG 21st Century: Chapter 4 only
T 2/15
Strategic Auditing
Covey pp. 95-118
TH 2/17
T 2/22
Virtual Control Corporation
Virtual Control Corporation
Group Project #1 Due
VCC Case materials
Improving Your Company’s Return…
Preparing to Negotiate
The Auditor Ch. 6
Covey pp. 118-129
TH 2/24
Auditor Client Negotiations
The Auditor Ch. 7
Covey Habit 2 pp. 95-144
Kinney (Accounting Horizons: March 1999)
Bazerman et al. (Harvard Business Review
2002)
The Auditor Ch. 2
7 Habits pp. 15-29
Sarbanes Oxley (no reading)
The Auditor Ch. 3
Covey pp. 29-45
7
T 3/1
Midterm Exam
TH 3/3
Guest Speaker – KPMG
T 3/8
TH 3/10
Spring Break – No Class
Spring Break – No Class
T 3/15
ZZZZbest Case
TH 3/17
Fraud
T 3/22
Fraud
TH 3/24
Personal and professional ethics
in reporting time, documenting
work, etc.
Group Project #2 Due
Personal and professional ethics
in reporting time, documenting
work, etc.
Hamilton Wong Case (on blackboard)
Tommy O’Connell Case (on blackboard)
The Auditor Ch. 13
Covey pp. 204-221
Kelley and Margheim (Auditing 1990)
Buchheit, Pasewark, and Strawser (J. of Bus.
Ethics 2003)
The Auditor Ch. 14
Covey Habit 4 pp. 204-234
TH 3/31
Internal Controls
PCAOB AS5
PCAOB AS 5 First Year Implementation
Covey pp. 235-253
T 4/5
Guest Speaker – Elliott Davis
TH 4/7
Internal Controls
The Auditor Ch. 10
Covey Habit 5 pp. 235-260
T 4/12
Internal Controls
KPMG Balancing Risk and Controls with
Business Improvement
KPMG Making Compliance Sustainable
The Auditor Ch. 11
Covey pp. 261-271
TH 4/14
Audit Committees
Raghunandan et al. (Accounting Horizons:
June 2001)
Beasley et al. (Accounting Horizons: Dec.
T 3/29
ZZZZbest Case (will be on Blackboard)
The Auditor Ch. 8
Covey pp. 145-162
SAS 99 (Journal of Accountancy: Jan. 2003)
Ramos (Journal of Accountancy: Jan. 2003)
Covey Habit 3 pp. 145-182
Zikmund
Journal of Accountancy Checklist (2005)
Crazy Eddie (on Blackboard)
Covey pp. 185-203
8
2000)
Sarbanes Oxley (no reading)
Auditor Ch. 9
Covey Habit 6 pp. 261-284
T 4/19
Statistical Sampling
TH 4/21
Statistical Sampling
Group Project #3 Due
T 4/26
Reading Day – No Class
F 4/29
(9:00 am)
Final Exam
Chapter 8
The Auditor Ch. 12
Covey pp. 287-299
Chapter 9
Covey Habit 7 pp. 287-319
9
Emergency Preparedness and Contingency Planning
The goals of emergency preparedness and contingency planning are three-fold;
1. To minimize injury and death;
2. to deliver aid to those in need as quickly as possible;
3. to minimize the time necessary to resume functionality.
In the event of a drill or an emergency, campus alarms – internal and/or external will sound!
In the event of a fire, bomb, or other building catastrophe:
1.
Leave the building!
 Use the stairs. The quickest method for exiting via the stairs is to stay on a straight path until you
meet a wall before turning. Do not turn on the landing in the middle of the stairs. This causes a
bottleneck as people attempt to merge. Women in heels should remove their shoes before taking
the stairs.
 Staff and faculty are responsible for students in their offices, common areas and classrooms
during an emergency or drill.
o Students in faculty offices or departmental common areas should exit the building with
that department and report to that department’s assembly site. Be sure to give your
name to the Safety Warden at the assembly site.
o If you are in class, you will exit the building with your instructor and follow him/her to the
proper assembly site. Once your class is at the assembly site, your instructor will take
roll. Any “missing” students will be reported to the Health & Safety warden immediately.
 Disabled individuals (whether faculty, staff or student) should be taken to the nearest stairwell
entrance and left by said entrance. Their name and location should be reported to the Health &
Safety warden immediately upon reaching the assembly site. Firemen and emergency crew will
be responsible for removing them from the building.
2.
Cross the street!
 Do not stop on the building side of the street. A fire or bomb can and will turn glass, metal
framing and other building materials into deadly projectiles. You are not safe on the building side
of the street. If you are in a faculty office, a department or class room, report to the assembly site
instructed by your professor or department faculty or staff.
 Students who stop at doorways, benches, tables or are standing on the building side of the street
will be asked to move across the street. Any student(s) who will not comply will be reported to
the nearest Health & Safety warden immediately.
3.
Meet and stay at the assembly site!
 Once you have reported to an assembly site it is very important that you stay at assembly site
until released by the Health & Safety warden.
10
11