ACCT 205: ADVANCED AUDITING

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1 ACCT 205: ADVANCED AUDITING I. ABOUT THE COURSE Developments in Public Accounting Over the past three years, the public accounting profession in Singapore and worldwide has witnessed dramatic, even headline-grabbing developments. Numerous accounting scandals in the United States, involving respected, high-profile companies and their auditors, have shaken public confidence in the profession to the core. At the same time, depressed economic conditions have led to measures to improve business competitiveness by removing unnecessary red tape. These factors have combined to produce wide-sweeping changes to: the legal forms in which CPAs may now practise; the entities that require financial statement audits; and services, economic interests and relationships that CPAs are not allowed to provide or maintain. The dot.com bubble also served to demonstrate wide-ranging changes in the business models and operations of entities that CPAs audit. The pervasive importance of computerized information and operating systems highlights the requirement for all CPAs to be familiar with computer assisted audit tools and techniques (CAATTs), and the framework within which they are used. Course Objectives ACCT 205 is the second of two courses on audit and assurance services, designed to equip students with the necessary entry-level knowledge, skills and attitude for a career in public accounting. It builds on the first course, ACCT202: Audit & Assurance, in two ways: Knowledge: students will learn in more depth about application of specific audit analysis and procedures, especially CAATTs; and more breadth regarding understanding the environment in which the profession operates. They will also need to integrate knowledge gained from financial and management accounting, information systems and other courses. Skills and attitude: students will learn to develop further as independent learners and problem-solvers. They will be required to identify problem issues, gather original information to enable them to analyse more complex situations, become familiar with a widely-used audit software package, practice their formal presentation and discussion management skills, and produce audit documentation and reports. The course is organized into three broad parts. Part 1 (4 seminars) extends the material and techniques taught in ACCT 202 by covering audit and assurance practices in more depth and detail. Students will analyse cases and produce workpapers in class. Part 2 (5 seminars) covers basic audit issues and methodology in auditing computerized systems, including 2 hands-on sessions with ACL, a leading audit software. Part 3 (3 seminars) will identify and analyse important issues facing the profession today. Students will independently identify significant contemporary issues of interest to them, research the areas to recommend key readings for other students on the course, formally present their findings and conclusions, and manage a seminar discussion on the topic.

2 II. SEMINAR SCHEDULE Week : Topic(s) Seminar - Date (w/b) 1:1 18/8 Audit and Assurance Services: Principles and Opportunities 2:2-25/8 Audit Documentation: Risk analysis & Audit planning Text Readings M:21 OR Kn:17 SSAs 910,920,930 ED/SSA 100 SAP18 Kn:5-8 SSA 9,23,25,30 In-class activities Assignment Case analysis Work paper documentation 3:3-1/9 Tests of Controls M:10-16 SSA 6 4:4 8/9 Substantive Tests M:8,9 OR Kn:16 SSA 8,19 5:5-15/9 Auditing Computerised Environments: Accounting information and operating systems today H:1,2&3 SSA 14,15 (inc Add 1,2,3) Field observation 6:6-22/9 Control issues and computer assisted audit tools and techniques (CAATTs) H: 4&6 SSA6 Add 1&2 Case analysis 7:7-29/9 CAATTs for substantive tests H: 7,8&9 SSA16 Computer lab session 8: no seminar 6/10 9:8-13/10 BREAK Auditing Computerised Environments: CAATTs for substantive tests ACL assignment 10:9-20/10 Security and systems reliability issues H: 5&10 Field observation

3 Week : Seminar Date (w/b) Topic(s) Text Readings In-class activities Assignment 11:10 27/10 12:11 3/11 13:12 10/11 Current Professional Developments: including Audit judgement and quality Audit failure and effectiveness Litigation Corporate governance Regulatory reform Auditor independence Non-audit services To be assigned by presentation groups Presentations Reports 14: no seminar 17/11 15: no seminar 24/11 Revision Final Examination III. TEXTS AND OTHER READINGS The Seminar Schedule above shows the relevant Text Readings for Seminars 1-9 (readings for Seminars will be provided by students). In general, students will benefit far more from the seminars if they make it a practice to skim through the text readings before the seminar. This will help them to understand the material presented better, and will also equip them to participate, either by asking pertinent questions or making relevant comments (see section IV below on Course Assessment: Class Participation). For seminars 2-4 in particular, students are expected to read prior to each seminar, as class-time will be spent on analysis and documentation based on application of the readings assigned. Aside from the text readings listed, students will also be provided with Other Readings as the semester progresses. These comprise short articles from newspapers and professional journals and brief research articles/summaries. These readings will be used for class illustration and discussion, and students are expected to read through them beforehand and bring them to class. M: William Messier, Auditing and Assurance Services: A Systematic Approach, 3 rd edition, McGraw-Hill, 2002 (Call # HF5667 MES 2003)

4 Kn: W. Robert Knechel, Auditing: Assurance and Risk, 2 nd edition, South-Western College Publishing, 2001 (Call # HF5667 KNE 2001) H: James A. Hall, Information Systems Auditing and Assurance, South-Western College Publishing, 2000 (Call # QA76.9.A93 HAL 2000) SSA/SAP Singapore Standards on Auditing / Statements of Auditing Practice, ICPAS Members Handbook Vol.II (Call # R HF5616.S55 ICPAS) IV. COURSE ASSESSMENT Component Weightage Skills assessed % Class participation (all seminars 1-12) 15 Verbal communication, active listening and responding: thinking on your feet Audit Documentation 10 Case analysis, interview skills, writing skills (seminars 2-4) ACL assignment (seminar 8) 10 Data analysis, software knowledge, writing skills Formal presentation / Discussion management (seminars 10-12) 10 Formal presentation skills, using prepared materials; stimulating and managing group discussion Report and readings (seminars 10-12) 15 Independent information search, analysis of current issues and events, formal report writing Final examination (week 15) 40 Case analysis, evaluation and synthesis, writing skills TOTAL 100 Class participation (15%) Feedback from the profession continues to indicate the overwhelming importance of communication skills for individuals who aspire to succeed in public accounting. At the junior level, audit assistants need to know how to interact with client staff by asking relevant questions and analyzing verbal and non-verbal responses. From the audit senior level upwards, client interaction and management becomes a vital criterion in performance evaluation. Thus listening carefully, questioning tactfully and responding professionally are skills that must be cultivated. All seminars will be conducted interactively, featuring discussions, in-class interviews, case analyses, group work and/or presentations. The purpose of the seminars is to facilitate an active learning environment in which students and faculty learn from an exchange of information, ideas and views. Faculty assume that students have prepared for the seminars by reading the assigned texts and working through assignments.

5 Preparation and attendance are necessary but not sufficient conditions for gaining participation marks. Students must attend seminars with the attitude to participate, and demonstrate this attitude through verbal communication. Participation will be evaluated on the basis of spontaneity, quantity and quality (experience has indicated that a certain critical mass of quantity is necessary to elicit the required quality). Peer evaluation will be sought and used in providing interim grades during the mid-semester break. Participation will be graded in all seminars Audit documentation (10%) Three pieces of written work will be completed in-class during Seminars 2-4, on an individual basis. The purpose of the exercise is to enable students to apply audit techniques learnt previously, as well as to develop questioning skills. The cases to be analysed will be handed out at the start of each session. Students will be given 30 minutes to read the case, and a further 30 minutes to raise questions. Students will then use the remaining time to produce documentation on the problem identified, the evidence collected and the conclusion reached. ACL assignment (10%) The purpose of the assignment is to test how well students can use ACL to analyse given data, perform substantive audit tests, evaluate results and reach justifiable conclusions. The assignment will be completed during the normal seminar period in Week 8. More details about the test format, content, venue and other arrangements will be announced closer to the date. Formal presentation / Discussion management (10%) Report and readings (15%) These related assessment components will require students to develop their abilities to integrate their knowledge from various courses within the B.Acc programme in order to identify issues of current professional interest, independently search for information on these issues, and formally present their findings. In Seminar 1, each student will be randomly assigned to a team of 5-6 students each (depending on the total class size). Each team will submit 2-3 topics in which they are interested. The team members, topics assigned and dates of presentation will be confirmed in Week 5. Each team is required to make a formal presentation in either Seminar 10, 11 or 12 (2 teams to each seminar). During the presentation, each team member will present for a minimum of 5 and a maximum of 10 minutes, using materials such as handouts, exhibits and Powerpoint slides. The team as a whole will also be responsible for managing a minute discussion session on their topic: stimulating discussion if necessary,

6 answering questions raised and dealing with any comments made. The grade for presentation and discussion management will be given on an individual basis. Assessment criteria include: how interesting and convincing the presentation is; the quality of prepared materials and how well they are used; the management of the discussion session; and adherence to the overall time constraints. Prior to the presentation, each team will source a minimum of 3 key readings for their topic, to serve as assigned readings for other students on the course. On the day before their presentation, each team will submit a report on their topic, which will include their analysis of the key readings assigned, any other information gathered, and evaluation of the issues examined. The report grade will be shared by all the team members. The report requirements are: maximum of 10 A4 pages (including appendices), printed in 12-point Times New Roman and double-spaced. Any material submitted which exceeds this limit will not be graded. Assessment criteria for the report and readings include: relevance of the readings; quality of analysis and writing; adherence to report requirements; timely submission (20% will be deducted for each day late); no plagiarism (use of materials from any sources without proper citation). Final Examination (40%) The final examination will be a 2 ½ hour paper based on all topics and materials covered during the semester. The questions will be case-based. V. CODE OF INTEGRITY Students on this course are expected to abide by the SMU Code of Academic Integrity at all times (refer to Plagiarism, cheating or any other form of academic dishonesty will not be tolerated. VI. INSTRUCTOR Name: Joanne Tay joannetay@smu.edu.sg Tel: Office: School of Accountancy 05-10