College of Charleston
Department of Accounting and Legal Studies
ACCT 509 – Advanced Auditing Concepts
Fall 2013: Education Center, Room 113
MW 2:00-3:15pm
COURSE ADMINISTRATION
Professor: Robert Hogan
E-mail: hoganrs@cofc.edu
Phone: 843-953-0379
Office: Beatty, Room 334
Office Hours: Monday 9:30-11:30, Tuesday 1:30-2:30, and Wednesday 9:30-11:30
Textbook: None; Articles/Handouts/Case Studies provided by the Professor
Prerequisites: Undergraduate Auditing Course
“Such I take to be the duty of the auditor: He must be honest—that is, he must not certify
what he does not believe to be true, and he must take reasonable care and skill before he
believes what he certifies is true.” – Unknown English Judge
ACCT 509 ADVANCED AUDITING CONCEPTS - COURSE DESCRIPTION
Various strategic and ethical aspects of external auditing are examined in this course. The
focus is on current issues facing the auditing profession with an emphasis on the challenges
facing the audit practitioner in the foreseeable future.
COURSE LEARNING OBJECTIVE
1. Increase students’ specific knowledge as related to auditing. This includes an
understanding of the professional role of the auditor, the impact of regulation on the
audit function, managing the auditor/client relationship, assessing audit risk,
developing professional skepticism, increasing awareness toward ethical dilemmas,
as well as expanding the students’ knowledge regarding International Financial
Reporting Standards (IFRS).
2. Refining the students’ communication skills, both verbal and written. This objective
is addressed within the course through numerous written assignments, and essay
format exams as well as several presentations.
3. Develop the students’ skills with regard to working within a team environment.
While much of the course is based on work performed on an individual basis, the
presentations will be conducted in a group format.
SCHOOL OF BUSINESS LEARNING OBJECTIVES
To stimulate Effective Communication, students will prepare written documents that are
technically correct and consistent with professional writing practices. Additionally the
course requires students to prepare and effectively present relevant discipline specific
knowledge utilizing the technological tools available within the classroom.
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Ethical Awareness is promoted in this course by directly examining ethical situations and
requiring that students recognize and be able to appraise the ethical dilemmas involved.
Students will be encouraged to engage in discourse aimed at resolution of these dilemmas
utilizing relevant discipline specific knowledge.
The students’ Global Awareness will be heightened through the examination of IFRS as
well as case studies that involve international and multi-national firms. These cases will
challenge the students to consider the implications of business decisions while evaluating
and integrating innovative applications of these implications.
Students will demonstrate critical thinking skills in identifying and evaluating problems
and opportunities in the business environment and there by improve their Problem
Solving Abilities. The students will be challenged to apply analytical techniques to
formulate creative solutions utilizing both discipline specific knowledge as well as the
students own personal experiences.
ACCOUNTANCY GRADUATE PROGRAM LEARNING OBJECTIVES
The course relates to the accountancy graduate program learning objective of Broadened
Perspective by specifically addressing both IFRS and ethical dilemmas and requires
technically correct, clear, and concise oral and written presentations which address
Effective Communication. The course is designed to develop Specialized Technical Skills
and Knowledge within the area of auditing. Guest speakers from professional practice will
be joining the students in the classroom to provide “real world” insights and aid in the
students’ Professional Development.
COURSE EXPECTATIONS
Classroom Readiness
An effective and productive seminar course requires the active participation of all students.
Accordingly, the timely reading of assigned case studies and other materials and
attendance and active participation in classroom discussions and analyses comprise a
significant part (25%) of your course evaluation and final grade.
I will lecture on each assigned reading to ensure that the key learning points are presented
and to provide a framework for our classroom discussions. However, developing opinions
and learning to express those opinions in a group setting is critical to your success as a
professional. Accordingly, during our classroom discussions, you will be expected to
express your thoughts and conclusions and to challenge the ideas and positions taken in the
case studies. You should also feel free to challenge others (including me) on their points of
views and positions taken. Although you may initially be uncomfortable with this level of
participation, remember that we are very interested in your opinion and most case studies
do not have just one correct answer.
Graded Case Studies
There will also be three graded case studies that you will complete out of the classroom.
Each case study represents 5% of your final grade. These case studies will be related to but
different from the assigned case studies and readings discussed in the classroom and
should take three or four hours to complete. I will provide you with the graded case studies
on a timely basis.
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Presentations
Each student will participate in three presentations and will have the opportunity to hold
the role of Senior Auditor once. As Senior Auditor, the student will have two Staff
Auditors (two other students) assisting on the presentation. For the other two presentations
the student will hold the role of Staff Auditor. These presentations comprise a significant
part of your final grade (25%) in the course and will be determined through a combination
of scores provided by the professor, the Senior Auditor or your Staff Auditors, as well as a
self-assessment. Additional details regarding this portion of the course will be provided as
the course progresses.
Examinations
There will be three examinations: two interim exams, and a final examination. In total,
examinations represents 35% of your final grade. All exams are closed book and will be
based upon the lessons learned and key positions and conclusions from the assigned
reading assignments, case studies, and classroom discussion. Exam dates are noted on the
course calendar below. In general, students will NOT be allowed to take exams other than
during the scheduled times. I do not give make-up exams. Please contact me immediately
if you have a scheduling problem.
Special Assistance
Any students who require special accommodations on exams or other coursework should
first consult with the Center for Disability Services regarding the SNAP program, and then
schedule an appointment to meet with me to discuss these accommodations.
ETHICS/INTEGRITY
Lying, cheating, attempted cheating, and plagiarism are violations of our Honor Code.
Please remember that unauthorized collaboration with other students is a form of cheating
and, accordingly, work performed for this class must be your own original work. Other
forms of cheating include possessing or using an unauthorized study aid, copying from or
consulting with another person during an exam, using technological tools inappropriately,
turning in written work that was prepared by someone other than yourself, and making
minor modifications to the work of someone else and turning it in as your own. If you are
not sure whether something you plan to submit would be considered either cheating or
plagiarism, it is your responsibility to ask for clarification.
If you use references for any assignment, please follow citation procedures accepted in U.S.
universities, including full, appropriate citation of any materials accessed via the Web. You
must not copy information from websites unless you put it in quotation marks and directly
cite the source. Do not assume that some usage or action is acceptable if you are unsure.
Either ask me about it or consult credible sources of information on the subject.
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GRADING SUMMARY
For ACCT 509, your course grade will be determined by the cumulative number of points
you earn on the various assignments given throughout the semester as shown below:
Assignment:
Allocated Points
Classroom Participation 250
Graded Cases (3)
150
Presentations
250
Mid-term Exams (2)
200
Final Exam
150
Total Possible Points
1,000
The base score for each letter grade is as follows:
A: 930; B+: 870; B: 830; C+: 770; C: 730; F: Below 695.
If you would like to review your grade and/or discuss your progress in the class, please
stop by my office at any time during my office hours.
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ACCT 509 COURSE CALENDAR
Note that the following schedule is tentative, and will be adjusted during the semester as
necessary. Any changes will be announced in class and posted on the OAKS site. You are
responsible for keeping yourself informed of any changes.
Day
Wednesday
Monday
Date
Aug 21
Aug 26
Wednesday
Aug 28
Monday
Sept 2
Wednesday
Sept 4
Monday
Sept 9
Wednesday
Sept 11
Topic # Topic Description & Reading List
Course Introduction
1
AICPA Code of Professional Conduct / Professionalism
• AICPA Code of Professional Conduct
• Bill DeBurger, In-Charge Accountant (Case
Study)
• Leigh Ann Walker, Staff Accountant (Case Study)
2
Substantive Testing vs. Internal Control Analysis
• Substantive Audit Sampling—The Challenge of
Achieving Efficiency Along with Effectiveness
(Accounting Horizons)
• Auditor Judgment Concerning Establishment of
Substantive Tests Based on Internal Control
Reliability (Auditing: A Journal of Practice &
Theory)
3
Internal Controls
• Determinants of weaknesses in internal control
over financial reporting (Journal of Accounting
and Economics)
• Howard Street Jewelers, Inc. (Case Study)
• First Keystone Bank (Case Study)
4
A Crisis of the Public Trust (Arthur Andersen)
• The Good Auditor - Skeptic or Wealth
Accumulator? Ethical Lessons Learned from the
Arthur Andersen Debacle (Journal of Business
Ethics)
5
The Sarbanes-Oxley Act
• Sarbanes-Oxley and Public Reporting on Internal
Control: Hasty Reaction or Delayed Action?
(Accounting Horizons)
• NextCard, Inc. (Case Study)
6
Post-SOX and the PCAOB
• An Experimental Examination of Factors That
Influence Auditor Assessments of a Deficiency in
Internal Control over Financial Reporting
(Accounting Horizons)
• Determinants of the Persistence of Internal
Control Weaknesses (Accounting Horizons)
• Ligand Pharmaceuticals (Case Study)
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Monday
Sept 16
7
Wednesday Sept 18 Exam I
Monday
Sept 23
8
Wednesday
Sept 25
8
Monday
Sept 30
9
Wednesday
Oct 2
9/10
Monday
Oct 7
10
Wednesday
Oct 9
11
Monday
Oct 14
Fall Break
The Role of Audit Committees / Corporate Governance
• Auditing Audit Committees: An Educational
Opportunity for Auditors (Accounting Horizons)
• From clear to complicated: Buying and selling
accounting services post Sarbanes-Oxley
(Business Horizons)
Audit Risk
• Audit Risk: Tracing the Evolution (Accounting
Horizons)
• Why Good Accountant Do Bad Audits (Harvard
Business Review)
Audit Risk
• Tread Lightly Through these Accounting
Minefields (Harvard Business Review)
• An Examination of the Credence Attributes of an
Audit (Accounting Horizons)
Auditor-Client Relations
• Improving Client Relations (Internal Auditor)
• The relative effectiveness of persuasion tactics in
auditor–client negotiations (Accounting,
Organizations and Society)
• College Wear Novelties (Case Study)
Auditor-Client Relations / Earnings Management
Readings for Earnings Management:
• How Are Earnings Managed? Examples from
Auditors (Accounting Horizons)
• Client Risk Management: A Pecking Order
Analysis of Auditor Response to Upward
Earnings Management Risk (Auditing: A Journal
of Practice & Theory)
Earnings Management
• Is Enhanced Audit Quality Associated with
Greater Real Earnings Management? (Accounting
Horizons)
The Role of Professional Skepticism
• Dr. Smith Goes to Washington (Accounting
Horizons)
• Research on Auditor Professional Skepticism:
Literature Synthesis and Opportunities for Future
Research (Auditing: A Journal of Practice &
Theory)
• The Flaw of Averages (Harvard Business Review)
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Wednesday
Oct 16
12
Monday
Oct 21
12
Wednesday
Oct 23
12
Monday
Wednesday
Oct 28
Oct 30
Exam II
13
Monday
Nov 4
14
Wednesday
Nov 6
14
Monday
Nov 11
15
Wednesday
Monday
Nov 13
Nov 18
15
16
Ethics and Audit
• How Auditors Get into Trouble – And How to
Avoid it (The Journal of Corporate Accounting
and Finance)
• Auditor Independence: The Challenge of Fact and
Appearance (Accounting Horizons)
• Avis Love, Staff Accountant (Case Study)
Ethics and Audit
• The Wall of Deceit (Internal Auditor)
• Tommy O’Connell, Audit Senior (Case Study)
Ethics and Audit
• Through the Ethics Looking Glass: Another View
of the World of Auditors and Ethics (Journal of
Business Ethics)
Revenue Recognition
• Regina Company Inc. (Case Study)
Fraud: The Role of Audit in Detection and Prevention
• Financial Reporting Fraud: Are Standards’ Setters
and External Auditors Doing Enough?
(International Journal of Business and Social
Science)
• Assessing the Risks of Accounting Fraud
(Commercial Lending Review)
• ZZZZ Best Company, Inc. (Case Study)
Fraud: The Role of Audit in Detection and Prevention
• Auditor's Responsibility for Detecting Fraud (The
CPA Journal)
• Decomposition of Fraud-Risk Assessments and
Auditors' Sensitivity to Fraud Cues
(Contemporary Accounting Research)
Internal Audit
• A Summary of Research on External Auditor
Reliance on the Internal Audit Function
(Auditing: A Journal of Practice & Theory)
• Internal Auditors’ Fraud Judgments: The Benefits
of Brainstorming in Groups (Auditing: A Journal
of Practice & Theory)
Internal Audit
Deferred Taxes
• FASB 109: Auditing Considerations of Deferred
Tax Assets (Journal of Accountancy)
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Wednesday
Nov 20
Monday
Nov 25
Wednesday
Monday
Nov 27
Dec 2
Monday
Dec 9
17
Employee Benefit Plan Audits
• Best Practices in EBP Audits (Journal of
Accountancy)
• Employee Benefit Plan Audits: Best Practices
(Employee Benefit Plan Review)
• Developing a Framework for a Successful
Employee Benefit Plan Audit (Employee Benefit
Plan Review)
18
IFRS / International Issues
• US GAAP Convergence and IFRS (PWC’s
Website)
• Parmalat Finanziaria, S.p.A. (Case Study)
• Kaset Thai Sugar Company (Case Study)
Thanksgiving Holiday
18
IFRS / International Issues
• The Importance of being Financially Bilingual
(PWC’s Website)
• Republic of Somalia (Case Study)
12:00 – 3:00 Final Exam
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