THE COLLEGE OF THE BAHAMAS Abbreviation and Number: ACCA 414 AB Paper No.: 15-86 School: Business Department: Accounting Credits: 3 Course Sequence: ( X ) Fall ( ) Spring ( ) Fall and Spring ( 3 ) Lecture ( ) Seminar ( ) Laboratory ( ) Studio ( ) Kitchen Hours Per Week: ( ) Other (Specify) Pre-requisite(s): Fourth Year Standing in Accounting or permission of Chair/Instructor Co-requisite(s): None COURSE DESCRIPTION This is the first of a two-course sequence. In this course students examine internal control, control risk, ethics, legal liability, audit planning, documentation, materiality and risk, and audit programmes. Generally Accepted Auditing Standards (GAAS), Statements on Auditing Standards (SAS) and International Standards on Auditing (ISA) are employed. SPECIFIC OBJECTIVES Upon successful completion of this course, students will be able to 1. Examine the nature and functions of auditing; 2. Evaluate auditing, attestation and assurance services; 3. Apply the concepts of materiality and risk; 4. Examine factors used to determine a client s business risk and the risk of material misstatement; 5. Analyse the relevance and reliability of types of audit evidence; 6. Apply the steps involved in planning an audit; 7. Examine the components and limitations of internal controls; 8. Develop an overall audit plan; 9. Prepare audit programmes; 10. Assess the impact of technology on the audit process; and 11. Compare GAAS, SAS and ISA as they apply to an audit. COURSE CONTENT I. Demand for Audit and Assurance Services A. Auditing versus accounting B. Types of audits and auditors C. Role of Certified Public Accountant (CPA) D. Financial statements i. Balance Sheet ii. Income Statement iii. Statement of Retained Earnings iv. Statement of Cash Flows II. Professional Bodies and Standards A. Certified Public Accounting Firms i. Activities ii. Structure iii. E-Commerce
B. American Institute of Certified Public Accountants (AICPA) C. Generally Accepted Auditing Standards (GAAS) D. Statements on Auditing Standards (SAS) E. International Standards on Auditing (ISA) F. Financial Accounting Standards Board (FASB) G. State Board of Accountancy H. Securities and Exchange Commission (SEC) I. Governmental Accounting Standards Board (GASB) J. Public Company Accounting Oversight Board (PCAOB) K. Professional development L. Quality control M. Regulations N. Peer Review Inspections III. IV. Audit Reports A. Standard Unqualified B. Unqualified with explanatory paragraph or modified wording C. Departures D. Materiality E. Conditions requiring departure F. Auditor s decision process G. Impact of E-Commerce Professional Ethics A. Dilemmas B. Framework for ethical decision-making C. Need for ethical conduct in professions D. Code of Professional Conduct E. Independence Rule of Conduct and Interpretations F. Other Rules of Conduct G. Enforcement V. Legal Liability A. Environment B. Business failure, audit failure and audit risk C. Clients and third parties under Common Law D. Civil Liability under the Federal Securities Laws E. Criminal Liability F. Profession, firms and individuals VI. Responsibilities and Objectives A. Audit of financial statements B. Management and auditor C. Financial statement cycles D. Transaction-related E. Balance-related Page 2 of 5
VII. VIII. IX. Audit Evidence A. Nature B. Decisions C. Persuasiveness D. Types E. Documentation F. Substantive procedures G. Information Technology (IT) i. Impact ii. Environments iii. Controls iv. Audit testing v. Risks vi. Issues Audit Planning and Analytical Procedures A. Client acceptance B. Initial audit planning C. Client s business and industry D. Client business risk E. Preliminary analytical procedures F. Purposes of audit planning G. Types H. Financial ratios Materiality A. Preliminary judgement i. Setting ii. Allocating about segments B. Types of risks i. Inherent ii. Control iii. Acceptable audit iv. Fraud v. Planned detection risk C. Relationship of risks to evidence D. Factors influencing risks E. Assessment F. Evaluating results X. Internal Control A. Client and auditor concerns B. Components C. Procedures to obtain an understanding D. Assessment Page 3 of 5
E. Limitations F. Corporate Governance XI. Overall Audit Plan and Programme A. Tests to perform B. Evidence mix C. Design and preparation D. Accounts balances i. Assets ii. Rights iii. Completeness iv. Cut off v. Valuation vi. Financial statement presentation and disclosure ASSESSMENT Assignments.... 10% Case Studies 10% In-Class Tests... 40% Project... 10% Final Examination... 30% Total 100% REQUIRED TEXT Arens, A.A., Elder, R.J., & Beasley, M.S. (2014). Auditing and assurance services: An integrated approach (15 th ed.). Upper Saddle River, New Jersey: Prentice Hall. SUPPLEMENTARY READINGS/MATERIALS Afterman, A. B. (1995). SEC regulations of public companies. Upper Saddle River, New Jersey: Prentice Hall. Auditing Standards Board, (SASs). (2015). Statement on auditing standards (SAS). Jersey City, New Jersey: American Institute of Certified Public Accountant AICPA. Beasley, M.S., Buckless, F.A., Glover, S.M., & Prawitt, D.F. (2003). Auditing cases: An active learning approach. Upper Saddle River, New Jersey: Prentice Hall. Buckless, F.A., Ingraham, L.R., & Jenkins, J.G. (2004). Comprehensive assurance & systems tool and integrated practice set. Upper Saddle River, New Jersey: Prentice Hall. Elder, J.R., Beasley, M. S., & Arens, A. A. (2003). Sarbanes-Oxley case study. Upper Saddle River, New Jersey: Prentice Hall. International Federation of Accountants (IFAC). (2004). International standards on auditing (ISA). New York: IFAC. Knechel, W.R. (2001). Auditing assurance and risk (2 nd ed.). Cincinnati, Ohio: South-Western College Publishing, Thomson Learning. Trussel, J., & Hoyle, J.B. (2003). The lakeside company, cases in auditing (9 th ed.). Upper Saddle River, New Jersey: Prentice Hall. JOURNALS Accounting and Business Research Journal of Accountancy Page 4 of 5
Journal of Internal Auditors WEBSITES www.aicpa.org www.ifac.org www.gao.gov aahotline@aicpa.org www.sec.gov/rules/propridx.htm Page 5 of 5