Internal Audit (X423.2) Course Syllabus Jim Tiao 1

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1 Internal Audit (X423.2) Course Syllabus Jim Tiao 1 Course Title: Internal Auditing: Operational and Management (X 423.2) Course Catalog Description: An advanced online course designed for accounting, auditing, and business students; CPA, CIA, and CMA candidates; CPAs, CIAs, and CMAs; controllers and internal auditors; financial and auditing managers; corporate executives; and federal and state auditors and managers. Topics include Internal Auditing (IA) fundamentals; IA standards; internal controls; IA working papers, procedures, evidences, sampling, and flow-charting; major areas of operational auditing (covers major areas, such as production, marketing, finances, EDP, purchasing, personnel, etc.); fraud detection, including a discussion of the latest developments in financial crimes; major areas of management auditing; IA reports; and evaluation of the IA function. Prerequisite: X 120A, B, and C Intermediate Accounting Theory and Practice, or consent of instructor. WELCOME ANNOUCEMENT: Instructor: Jim Tiao, CIA, CISA Welcome to the Fall Quarter and to my class. I look forward to meeting you soon and working together to achieve the learning objectives for this course. If you are new to online classes, I want to assure you it is easy to adapt to. Please take time to familiarize yourself with the Blackboard environment and its many features and tools. To begin, along the left side of your screen, you will see a course menu/navigation bar. Click on "Course Documents to view the course syllabus. A copy of the entire syllabus is provided which you may want to print it out for future reference. Click on "Syllabus" to view your weekly discussions and assignments. The Discussion Boards will be a major part of this course and provide many opportunities for you to interact with me as well as with your fellow classmates. It is important for you to check the discussions boards frequently and participate fully in order to have a lively and active virtual classroom. You will find information on how to contact me as well as your course manager (tech support) under Staff Information. Other communication features are under Communication section. Click on the other menu items and become comfortable with the online Internal Auditing course. I am happy you are here and I am here to assist you with gaining a deeper understanding of internal auditing, its processes and its role within an organization. hope you enjoy this learning experience! I Jim Tiao, CIA, CISA

2 Internal Audit (X423.2) Course Syllabus Jim Tiao 2 Staff Information Facilitator: Phone: Office Location: Office Hours: Jim Tiao [email protected] Sometimes, it s easier to answer your questions by phone, so feel free to call me at (Mon-Sat: 8am 3pm PST) Online I check my daily and should respond within 24 hours Hello and welcome to the class: My name is Jim Tiao and I will be teaching this online course. I started my career in internal auditing right after getting my MBA from UCLA and began working for the University of California s Internal Audit Division. As an internal auditor, I was involved in a broad range of reviews of operations and programs throughout the UC system and its medical centers. I then gained some international experience by joining an oil services firm with several diverse divisions and international operations. The internal audit work has provided me with a bird s eye view of these large organizations as well as providing me with great experience in the nuts and bolts of some of its core business processes and operations. I then joined Honda in the early 80 s as it began to expand its operations in the US and fortunate enough to be part of its growth and success that it now enjoys. At Honda, I managed the audit groups responsible for the sales/marketing and captive-finance divisions and supported audits of the manufacturing divisions. I have also managed the IT audit group for a period of time, as well as leading the efforts to comply with the Sarbanes-Oxley Act. In addition, I have managed the administrative, IT and accounting functions for one of Honda s trading companies for several years. I have taught the Internal Auditing course at UCLA Extension, as well as management accounting courses at California State University at Dominquez Hill. In addition, I have my Certified Internal Auditor (CIA) and Certified Information Systems Auditor (CISA) designations. As you can see, most of my professional career has been in internal auditing, and I ve seen its growth and continued evolution into its important role in supporting today s need for more accountability and transparency. I ve eager to share my knowledge and experience with you and looking forward to working with you.

3 Internal Audit (X423.2) Course Syllabus Jim Tiao 3 Instructor Expectations I'm looking forward to working with you, learning about what you're educational goals are, and how you plan to use the course in your career. We bring different kinds of experiences and knowledge and each of you will have different needs, expectations and concerns. As your facilitator, it will be easier to help meet your needs if you communicate these concerns directly to me on a timely basis. I hope you'll always find that I am responsive and supportive. Here are a few expectations I would like emphasis: Commit to doing your best in this course and interacting with your classmates. Read the chapters and submit the completed assignments on time. Participate in group discussions on a timely and meaningful basis. Stay on schedule so everyone can benefit from each other s postings/replies. Discussion Questions (DQ) & Interacting with Classmates: Each student is expected to post a well-researched answer to each discussion question, and post thoughtful replies to at least one other student s postings. This means a minimum of 2 postings per DQ. Pacing your work earlier in the week will give you more time to get feedback from your classmates, learn from their viewpoints and allow you to further demonstrate and enhance your understanding of the issue or topic with your replies. Your responses should include more than phrases such as "I agree with that" or "Interesting comment." A substantive posting should include your assessment and critical analysis of what you read (cite your sources textbook, articles, etc), and/or what you experienced, a short synopsis of key concepts, or why other arguments could be incorrect. Your posts should feature good writing, correct spelling and mechanics. Internal auditors are judged by the quality, clarity and depth of their communication skills. Communication should be professional and use good netiquette. In the spirit of scholarly discussion, I expect responses that agree and disagree with others, as long as they apply to the topic and are respectful. Your postings should help you to test your ideas, reinforce what you have learned, and share resources with others in the class. Please review the Discussion & Reflection Rubric sheets for more details. Posts/replies made after the assigned week will lose points as discussed in the grading section. Instructor s Comments in the DQs: I will be in the classroom several times a week to make sure the discussions are heading in the right direction and/or provide clarification, as needed, to stimulate interaction among the group. And typically, I will summarize the discussions with some closing comments that emphasis a real world perspective on these auditing issues. No posted messages are private - so please feel free to call me directly if you have any personal or specific questions that the group may not benefit from. I'd like to talk and get to know you. Of course, you can send an and I will respond within 24 hours. If after reading the assignment/dq, you do not understand what to do, please call or me so that I can explain the assignment. This is much better than turning in an assignment that is not done correctly or timely and losing points.

4 Internal Audit (X423.2) Course Syllabus Jim Tiao 4 Syllabus Outline This page organizes your course by weeks & textbook chapters: In addition to the required readings from the textbook, you ll be expected to perform additional research and inquiry on the web, as needed, for various assignments/dqs. Week 1 - Introduction to Internal Auditing (Chapter 1 of textbook) Week 2 - Professional Standards & Ethics (Chapter 2) Governance & Risk Management (Chapter 3) Week 3 - Business Process & Business Risks (Chapter 4) Week 4 - Internal Control (Chapter 5) Week 5 - Reflection/Open Discussions & Assignment Week 6 - Information Technology Risks & Controls (Chapter 6) Fraud Risks & Controls (Chapter 7) Week 7 - Gathering and Documenting Evidence (Chapter 9) Week 8 - Conducting Assurance Engagements (Chapter 10) Week 9 - Communicating Audit Results & Follow-up (Chapter 11) Week10 - Consulting Engagements (Chapter 12) FINAL EXAM

5 Internal Audit (X423.2) Course Syllabus Jim Tiao 5 Course Introduction Learning Goals By the end of this course, a successful learner should be able to: Define and discuss the roles and responsibilities of internal auditors (IA) within an organization and its professional practices Analyze and critique governance, risk management and internal control concepts Use the methods for providing a risk-based, process and control-focused internal auditing approach, including: o Designing steps for the planning phase o Collecting and documenting audit evidence o Communicating audit results Recognize specific risk issues related to information technology and fraud situations Identify the similarities and difference between assurance and consulting engagements

6 Internal Audit (X423.2) Course Syllabus Jim Tiao 6 Course Grading Policies Grading: 300 points possible for all course components Grades are assigned based on quality of work and timely completion as follows: 1. Discussion participation: Varying points are given for each discussion for a total of 145 points. A minimum of 2 postings for each Discussion Question is required to be eligible for maximum number of points. A substantive posting should include your assessment and critical analysis of what you read (cite your sources textbook, articles, etc), and what you experienced, a short synopsis of key concepts, or why some arguments/assumptions could be incorrect. Please review the Discussion-Reflection Rubric for further information on grading guidelines. 2. Assignments: Varying points are awarded for each assignment for a total of 95 points. 3. Final Exam: The final exam is comprised of 28 multiple choice and 4 T/F questions, for a total of 60 points. The final will be available one week prior to the due date which allows for plenty of time to complete the exam. The final will be comprehensive and cover materials from the discussions, assignments and readings. You will have only 1 attempt on this exam. You can save your work and resume the test during the week. The final exam is due at 11:59 PM Tuesday night. Grades are earned as follows: A B C D F points points points points Below 179 points Policies about Deadlines and Late Work: Life happens and I understand that work and family emergencies occur. If you will contact me before the work is late, we can try to work out something that will mesh with your schedule. However, if you don t contact me before-hand, and the work from one week is posted late during the next week, you ll lose up to twenty percent for each day that it is late. After the work is more than 7 days late, it will no longer receive a grade. There are no extensions for the class. All work must be turned in by the last day of class. Academic Policies Cheating, copying other s work, and plagiarism are not tolerated and will result in disciplinary action. Students are responsible for being familiar with the information on Student Conduct in the General Information Section of the UCLA Extension Catalog or on the website at If anything on this syllabus is unclear or ambiguous, please me for clarification.

7 Internal Audit (X423.2) Course Syllabus Jim Tiao 7 Discussion Rubric This rubric will be used to assess the quality of your participation in the online discussion forums. Please use this tool as a guide when constructing your postings. Mechanics of the Posting Participation in the Discussion Content of Posting Critical Thinking Evidenced by Posting Unsatisfactory Basic Proficient Distinguished Uses incomplete Uses complete Uses complete Uses complete sentences, is sentences and the sentences, sentences, organization unstructured in its posting is organization is is clear and thoughtful, organization, and comprehensible. The evident, and the the posting is includes frequent or organization could be posting includes no grammatically correct, consistent errors in improved to present a more than one and free of spelling mechanics (grammar, more coherent mechanical error errors. The tone is clear spelling, usage) in argument, statement, (grammar, spelling, and respectful. each paragraph. The or question. Includes 2 usage) per posting is unreadable -3 mechanical errors paragraph. The tone and there is a distinct grammar, spelling, is clear and lack of tone. usage) per paragraph. respectful The tone is respectful. Provides minimal comments and information to other participants in the forum. Writes a general or superficial posting that is unrelated to the discussion at hand and/or posts no comments. Provides no evidence of agreement or disagreement with an existing discussion. Provides comments, and some new information on a sporadic basis. Interacts with only 1-2 participants in the forum. Demonstrates a restricted understanding of the concepts, topics, and ideas as evidenced by posting information that could be derived from prior posts and/or including highly general comments. Indicates agreement or disagreement with an existing discussion but provides no justification or explanation for comments. Provides comments, discussion, questions, and new information on a fairly regular basis. Interacts with a few participants in the forum. Demonstrates an adequate understanding of the concepts, topics, and ideas as evidenced by posting superficial, or general statements in the forum. Includes a few details in the posting. Indicates agreement or disagreement with an existing discussion including a limited explanation or justification. Provides comments, discussion, and questions without a clear connection to the course material at hand. Provides comments, discussion, questions, and new information on a regular, active, and weekly basis. Shows a high degree of interaction with other participants in the forum. Demonstrates a solid understanding of the concepts, topics, and ideas as evidenced by thoughtful responses and questions that show a clear connection (are integrated) with the course material at hand. The posting shows depth, and includes many supporting details. Demonstrates a critical analysis of an existing posted idea or introduces a different interpretation to an existing concept or idea. Includes comments, discussion, and questions that have a clear connection (are integrated) with the course material at hand.

8 Internal Audit (X423.2) Course Syllabus Jim Tiao 8 Reflection Rubric During your course, you will be asked to reflect on your work and how you will apply what you have learned. This rubric will help you assess your reflections. Coherence & Relevance Transformation Unsatisfactory Basic Proficient Distinguished One cannot discern Paper adequately Paper describes the Paper thoroughly the learner s describes the learner s learner s thoughts, describes the learner s perceptions and perceptions, attitudes perceptions, perceptions, attitudes attitudes or what he and what she or he attitudes and what and what he or she or she learned. learned; however, was learned; a few learned from the gaps and omissions gaps or omissions project. are present. are present. It is not clear how the experiences transformed the learner. There are gaps in the learner s description of how the experiences helped transform him or her into a scholarpractitioner. Learner adequately describes how the experiences helped transform him or her into a scholarpractitioner. Learner clearly describes how the experiences helped transform him or her into a scholarpractitioner. The rubrics provide a way for you and your facilitator to agree on the level of performance. It provides the performance-based criteria that help to steer discussions so that they are effective and reflect on your learning experiences.

9 Internal Audit (X423.2) Course Syllabus Jim Tiao 9 Course Materials and Resources Syllabus: JTiao_IA Online Syllabus.doc Textbook: Internal Auditing: Assurance & Consulting Services by Kurt F. Reding et al, published by The Institute of Internal Auditors Research Foundation, 2007 edition, ISBN Other Instruction materials: weekly folders) (refer to Lectures/PowerPoint and other materials included in the External links- Institute of Internal Auditors: Information Systems Audit & Control Association: Control Framework: Internet/Discussions Forum etiquette:

10 Internal Audit (X423.2) Course Syllabus Jim Tiao 10 Course Calendar: Fall 2009 All Weekly Assignments & DQs due by Tuesday midnight Week 1 Sept 30 Wed Thurs Fri Sat Sun Mon Tues W1A1- IIA website 5 W1DQ1- Post Bio & Follow-ups 5 W1DQ2 - External and Internal Auditing10 W1DQ3-State of the IA Profession 10 Week 2 Oct 7 W2DQ1- Risk Management 10 W2DQ2- ERM10 W2A1- PPF 5 Week 3 Oct 14 Week 4 Oct 21 Week 5 Oct 28 Week 6 Nov 4 Week 7 Nov 11 Week 8 Nov 18 Week 9 Nov 25 Week1 0 Dec 2 W3DQ1- Auto Industry risks 5 (Final Exam posted) W4DQ1- IC Myths 10 W5DQ1- Open Discussions 10 W6DQ1- Significant IT issues 10 W7DQ1- Design & Operating Effectiveness 5 W8DQ1- Audit Coverage 10 W9DQ1- Audit Criteria 10 W10DQ1- Course Reflections 10 W6DQ2- Frauds 10 W3DQ2- Entity risk model; audit universe 10 W4A1- IC Framework 5 W7A1- MCQs 10 W8A1- MCQs 10 W3A1- MCQs 5 W4DQ2- Governance, risks & controls 10 W6A1- CoBiT 5 W5A1- Risks, controls & audit tests 15 W7A2- Sampling risks 5 W8A2- Design Adequacy 5 W9A1- Communicat ing Results 10 W3A2- Risk/Control Matrix 5 W4A2- MCQs 5 W6A2- MCQs 5 Last day to submit Final Exam 60 DQ = Discussion Question: 145 points (Requires a minimum of 2 postings to be eligible to receive maximum points. A substantive posting should include your assessment and critical analysis of what you read (cite your sources textbook, articles, etc), and what you experienced, a short synopsis of key concepts, or why some arguments could be incorrect) Postings submitted after the assigned week will not receive full credit. A = Assignments (quizzes/homework): 95 points Final Exam: Is comprised of 28 multiple choice and 4 T/F questions, for a total of 60 points. The final will be available one week prior to the due date which allows for plenty of time to complete the exam. The final will be comprehensive and cover materials from the discussions, assignments and readings. You will have only 1 attempt on this exam. You can save your work and resume the test during the week. The final exam is due at 11:59 PM Tuesday night. No late submissions will be accepted.

11 Internal Audit (X423.2) Course Syllabus Jim Tiao 11 Week 1: Introduction to Internal Auditing Learning objectives; Report on the current state of internal auditing and the profession Identify career and reference resources for the profession Distinguish between internal auditing and external auditing services Readings: (Textbook: Internal Auditing-Assurance & Consulting Services by K. Reding) Chapter 1-Introduction to Internal Auditing The relationship between a company s Audit Committee & Internal Audit: (Audit Committees & Internal Audit.doc) References/Resources: Institute of Internal Auditors website: Major accounting firms sites: W1DQ1 - Post your Biography (2.5 points) & Follow-up (2.5 Points) Please post a bio to this discussion forum that includes information about your work background, education, and what you hope to get out of this course (certificate requirement, personal development, etc.). Include your experience with internal auditing (IA) and online learning. Please include something about your personal interests, your address and a photo so we can envision you as we work together. Please reply to at least one other classmate regarding a point of interest from their bio. It could be in response to similar work history, common experience or other connections. The response should help stimulate the building of a network by sharing experiences and information with each other W1A1 Institute of Internal Auditors (5 points) Tour the Institute of Internal Auditors ( which is the leading voice for the internal audit profession by setting standards for its practice and resources for professional development and certification. Post your comments on at least one feature/topic within the site to share with your classmates how the specific feature might help them with this course or their career. When you post your reply to this assignment, please include the specific feature/topic in the Subject Line of your response. W1DQ2 External and Internal Auditing (10 Points) Both internal audit and external audit provides assurance and consulting services to its clients. Although they have many similarities, they also have several differences. Provide your comments on the similarities and differences between the two auditing functions. Make sure to critique at least one other student s posting in addition to your own. W1DQ3 State of the Internal Auditing profession (10 points) Search the web for information on the state of the internal auditing profession in today s environment. (Please cite the source and date of your information). Discuss how the current financial crisis, recession and/or recent legislation has impacted the following: 1). Internal Audit s role & status within an organization, 2) Its relationship with the external auditors, 3) Importance of the Certified Internal Auditor (CIA) designation, and 4) other trends related to the internal auditing profession. Make sure to critique at least one other student s posting in addition to your own.

12 Internal Audit (X423.2) Course Syllabus Jim Tiao 12 Week 2: Professional Standards; Governance & Risk Management Learning objectives: Recognize the profession s ethics and standards and locate its guidance materials. Apply and criticize governance, risk management & enterprise risk management (ERM) concepts Readings: Chapter 2-Professional Practices Framework (PPF) Chapter 3-Governance and Risk Management Resources/References: IA Around the World-Vol 3 (pdf files) W2DQ1-Risk Management (10 points) Refer to the relevant everyday questions outlined in Chapter 3 that can be used to apply risk management thinking. Think about some of the common business processes for an organization or any process of your choice. Select one (payroll, accounts payable, estimating reserves, taking a vacation, remodeling a kitchen, etc. ) and answer the following questions: 1) What are you trying to accomplish (i.e. what are the objectives of your selected process? Be S.M.A.R.T. (specific, measureable, achievable, realistic & trackable) with your objectives 2) What could stop you from accomplishing it? (i.e. related risks) 3) What can you do to make sure those things don t happen? (i.e. control activities). Make sure to critique at least one other student s posting in addition to your own. Please include the name of your process in the Subject Line of your posting. W2DQ2-Enterprise Risk Management (ERM) (10 points) Now that you have had a chance to read about the ERM framework (as described in Chapter 3 of the textbook), go to to read about how a public company discusses its business risks. Select a company to review, and go to the form, 10-K and read, in particular item 1 (Business risks) and item 7 (Management s discussions & analysis of ) in its most recent 10-K filing. Please provide your comments to the following: 1. Company name and a brief summary of its business and related risks 2. Most companies practice many of the ERM principles, but may not have a formal process in place. Can you determine if your selected company has implemented a formal ERM process? If so, please summarize its approach. 3. Most companies may NOT have a formal ERM process in place. Please provide your thoughts and comments on why many companies do not have a formal ERM process. Make sure to critique at least one other student s posting in addition to your own. And please include the name of your company in the Subject Line of your posting. W2A1- IIA s Professional Practices Framework (5 points) The specifics of the professional standards can be found at the following site: For this assignment, provide the following: 1. Choose one of the standard from either the Attribute or Performance standards and discuss why the standard is important to the professional practice of internal auditing. 2. Why is it important for the internal audit function to follow these professional standards? Please include the name of the standard on the Subject Line of your post.

13 Internal Audit (X423.2) Course Syllabus Jim Tiao 13 Week 3 Business Processes & Risks Learning objectives: Explain how a business structure its activities to achieve their objectives Describe approaches for documenting and analyzing business processes and related risks Design a risk/control matrix for a business process Readings; Chapter 4-Business Processes & Business Risks W3DQ1-Auto Industry risks (5 points) 1. Name at least four of the most important business processes and key business risks for a large automotive company. 2. Comment on whether you believe companies like GM and Toyota have basically the same business processes and risks. Make sure to critique at least one other student s posting in addition to your own. W3DQ2-Entity s Risk Model/Audit Universe (10 points) Chapter 4 covers an approach that a company could take in developing a detailed business risk model. The Sarbanes-Oxley Act now requires public companies to identify, document and assess their financial reporting processes. Discuss how compliance with SOX has or should affect the internal auditor s definition of their audit universe, and its annual audit plans. Make sure to critique at least one other student s posting in addition to your own. W3A1- Multiple Choice Questions (5 points) In the Assignment section of the course menu, go to Chapter 4 Quiz. This assignment is to assess your understanding of some of the key concepts for business processes and risks. You will get two attempts to find the correct answer. If you are unsure about a particular question, submit your questions and concerns to the class for an open discussion of the issues or assumptions involved, but please do NOT provide the actual answer. W3A2-Risk/Control Matrix (5 points) Develop a risk and control matrix, using the attached Word document file (under Course Documents/Week 3), for the following assignment: A company night is to be sponsored by a school s internal audit student club. The event is designed to provide internal audit functions in companies, government agencies, and service providers the opportunity to interact with college students to increase the students awareness of the opportunities in the internal auditing profession. Food and beverage (including beer and wine) will be a part of the event. The event will be held in a rented party facility in a park adjacent to campus. The plan is that the expenses related to the event will be covered by a sponsorship fee charged to the attending internal audit functions Submit your answers directly to my address: [email protected] and post a note to this discussion forum that you have completed the assignment.

14 Internal Audit (X423.2) Course Syllabus Jim Tiao 14 Week 4 - Internal Control Learning objectives; Define what is meant by internal control Identify the components of an effective internal control framework Assess common myths about internal control Examine and discuss real world risk management practices Readings: Chapter 5 Internal Control Lecture: A PowerPoint presentation on internal controls: Internal Control Slides.ppt Resources/References: Visit other sources of recognized control frameworks and models: Committee of Sponsoring Organizations (COSO): Canadian Chartered Accountants (CoCo): W4DQ1-Internal control myths (10 points) Listed below are statements about internal control. Please discuss why you believe each statement is a myth, fact, or somewhere in between, and your reasoning and basis: 1. Internal control starts with a strong set of policies & procedures. 2. Internal control is a finance thing! 3. With downsizing & empowerment, we have to give up certain amount of control. 4. Internal control: That s why we have internal auditors. 5. If internal controls are strong enough, we can be sure there will be no fraud. Make sure to critique at least one other student s posting in addition to your own. W4A1-Internal control framework (5 points) Post your comments to the following questions: 1. What is the connection between the Sarbanes Oxley Act and an internal control framework? 2. The COSO framework identifies ethics & integrity as an important factor of a company s control environment (i.e. company culture). What do you think are some of the attributes of a highly effective ethic culture in an organization. W4DQ2- Governance, risks & controls (10 points) Let s discuss some of the concepts from the textbook as it applies to the slew of bankrupt and failed companies during this recent financial crisis. 1. What can you say about those companies risk assessment and risk appetite practices? 2. Did you believe that those companies had weak governance practices? Why or why not? 3. Discuss whether you think companies could have effective internal controls over financial reporting (i.e. SOX 404 compliance), yet still have major weaknesses in its overall system of internal controls. Make sure to critique at least one other student s posting in addition to your own. W4A2-Multiple Choice Questions (5 points) In the Assignment section of the course menu, go to Chapter 5 Quiz. This assignment is to assess your understanding of some of the key concepts on internal control. You will get two attempts to find the correct answer. If you are unsure about a particular question, submit your questions and concerns to the class for an open discussion of the issues or assumptions involved, but please do NOT provide the actual answer.

15 Internal Audit (X423.2) Course Syllabus Jim Tiao 15 Week 5 Open Discussions; Assignment Learning objectives: To re-enforce, challenge or question concepts learned to date Analyze risks, formulate controls and design audit tests for an audit engagement W5DQ1-Reflections & Open Discussions (10 points) A. We have gone over the fundamental concepts of internal auditing and its role on governance, risk management and internal controls. Reflect on these key areas and post your comments, questions and/or concerns on any topic. Please include the topic in the subject line of your posting. B. It s been said that internal control in an organization are like the brakes in a car. Do you agree with this statement? Please provide your reasoning and arguments on why this is a good or poor analogy. Make sure to critique at least one other student s posting in addition to your own. W5A1 - Risks, Controls & Audit Tests (15 points) The attached assignment (see file in Course Documents section/week 5) is a good exercise to review your understanding of a risk-based, process approach to evaluating internal controls. Provide your answers in the attached word document and it directly to me at jim.tiao@live. com. And post a note in this discussion forum that you have completed this assignment. (refer to attached file: W5A1-Risks, Controls & Audit Tests Assigment.doc).

16 Internal Audit (X423.2) Course Syllabus Jim Tiao 16 Week 6 IT Risks; Fraud Learning objectives: Report and discuss fundamental IT concepts, risks and IT controls Examine and evaluate fraud situations Recognize fraud prevention, deterrence and detection programs Explain professional skepticism and professional judgment, Readings; Chapter 6-Information Technology Risks and Controls Chapter 7-Fraud CoBiT Executive Summary (pdf file) W6DQ1-Significant IT Issues (10 points) Research the internet and identify at least 3 IT risks of current significance to share with the class. (Please cite your sources). Include in your discussion, the scope, complexity, and likelihood of the IT risk and whether you believe technology changes will reduce/increase such risks. Make sure to critique at least one other student s posting in addition to your own. W6DQ2-Fraud Situations (10 points) A. Search the internet to gain a deeper understanding of a recent and major case of fraud within an organization (there have many, including Enron, WorldCom, Tyco, Healthsouth, etc, or you could find your own). Describe the circumstances that surrounded the fraud, including but not limited to: 1. Who was involved, financial impact and consequences. 2. Detail nature of how it was perpetrated (i.e. control breakdown, mgmt override, collusion) 3. What role, in any, the internal auditors and external auditors played B. Discuss whether you believe that only a small portion of the frauds that occur within a company are ever discovered. Back up your reasoning with facts, examples or other arguments. Make sure to critique at least one other student s posting in addition to your own. W6A1-CoBiT (5 points) Review the attached Executive Summary of the CoBiT framework. For more details, go to the following site: Post your comments and observations regarding the CoBiT framework, discuss how it relates to the COSO framework and how internal auditors, who are not IT specialists, could use this tool, if at all. W6A2-Multiplec Choice Questions (5 points) In the Assignment section of the course menu, go to Chapter 7 Quiz. This assignment is to assess your understanding of some of the key concepts for fraud issues. You will get two attempts to find the correct answer. If you are unsure about a particular question, submit your questions and concerns to the class for an open discussion of the issues or assumptions involved, but please do NOT provide the actual answer.

17 Internal Audit (X423.2) Course Syllabus Jim Tiao 17 Week 7 - Audit Evidence Learning objectives: Compare and discuss tests of design and tests of operating effectiveness for an audit of a business process Organize and preparing working papers to support audit evidence gathered during fieldwork Recognize statistical and nonstatistical sampling approaches in audit testing Readings; Chapter 9-Gathering and Documenting Audit Evidence W7DQ1- Design & Operating Effectiveness (5 points) 1. Should auditors consider both the "design adequacy" and operating effectiveness" of key controls activities in every audit? Why or why not? 2. Is evaluating control design more challenging than evaluating operating effectiveness? Include your arguments for your position. Make sure to critique at least one other student s posting in addition to your own. W7A1-Multiple Choice Questions (10 points) In the Assignment section of the course menu, go to Chapter 9 Quiz. This assignment is to assess your understanding of some of the key concepts for gathering audit evidence. You will get two attempts to find the correct answer. If you are unsure about a particular question, submit your questions and concerns to the class for an open discussion of the issues or assumptions involved, but please do NOT provide the actual answer. W7A2-Sampling risks (5 points) What is meant by sampling risks and what is its impact on audit findings? Provide your responses directly to me at [email protected] and post a note to this discussion forum that you have completed this assignment.

18 Internal Audit (X423.2) Course Syllabus Jim Tiao 18 Week 8 Assurance Engagements Learning objectives: Determine the purpose, objectives and scope of an audit engagement Examine the steps involved in a process-level risk assessment Describe how to evaluate design adequacy Assess audit coverage concerns and issues Readings: Chapter 10-Conducting the Assurance Engagement W8DQ1-Audit Coverage Issues (10 points) What are the consequences of identifying too many or too few key process-level risks in performing an assurance audit? Make sure to critique at least one other student s posting in addition to your own. W8A1-Multiple Choice Questions (10 points) In the Assignment section of the course menu, go to Chapter 10 Quiz. This assignment is to assess your understanding of some of the key concepts for assurance engagements. You will get two attempts to find the correct answer. If you are unsure about a particular question, submit your questions and concerns to the class for an open discussion of the issues or assumptions involved, but please do NOT provide the actual answer. W8A2-Design Adequacy (5 points) What are some of the considerations (the key questions to ask) when evaluating the design adequacy of controls for a business process? Submit your answers directly to my address: [email protected] and post a note to this discussion forum that you have completed the assignment.

19 Internal Audit (X423.2) Course Syllabus Jim Tiao 19 Week 9 Communicating Results Learning objectives: Identify the different forms of and steps involved in creating effective communications within an engagement Recognize what is involved in effective monitoring of and follow-up on audit results Readings: Chapter 11-Communicate Assurance Engagements Outcomes W9DQ1-Audit Criteria (10 points) Criteria usually are either standards, policy, or procedures used in making an audit evaluation. What should an auditor do if there are no clearly established criteria that can be used? Make sure to critique at least one other student s posting in addition to your own. W9A1-Communicating Results Assignment (10 points) See attached file (under Course Documents/Week 9) for an exercise on communicating audit results for an engagement. Provide your responses directly to me at [email protected] and post a note to this discussion forum that you have completed this assignment. (see W9A1 Communicating Results Assignment.doc)

20 Internal Audit (X423.2) Course Syllabus Jim Tiao 20 Week 10 Consulting Engagements; Reflection/Final Exam Learning objectives; Compare the different aspects of consulting vs assurance services Reflect on what you ve learned and prepare your approach to utilize such knowledge to advance your career Predict where you believe the internal audit profession is headed Readings: Chapter 12-Conducting Consulting Engagements W10DQ1-Course Reflections; Internal auditing (10 points) A. We have covered a lot of topics on the fundamentals of internal auditing over the past 10 weeks. This is good time to reflect on your original objectives for taking this course and whether you have successfully achieved them. To sustain continuous learning, reflect on a subject matter or topic covered in this course that you want to delve into more depth and/or breadth. Please describe the topic(s) and discuss what steps your plan to take to gain a deeper understanding or perspective. Please include the topic in the Subject Line of your posting. B. Just recently, the SEC updated its NYSE listing standards so that listed companies must maintain an internal audit function to provide management and the audit committee with ongoing assessments of the company s risk management processes and system of internal control.. Do you believe this will increase the demand for internal auditing in private companies or non- NYSE public companies? Please provide your arguments on why you think it will or won t. Make sure to critique at least one other student s posting in addition to your own. FINAL EXAM (60 points) The final exam is comprised of 28 multiple choice and 4 T/F questions, for a total of 60 points. The final will be available one week prior to the due date which allows for plenty of time to complete the exam. The final will be comprehensive and cover materials from the discussions, assignments and readings. You will have only 1 attempt on this exam. You can save your work and resume the test during the week. The final exam is due at 11:59 PM Tuesday night. Good luck.