Program(s): Business Admin Accounting
Program Coordinator(s): Sally Mitzel
Course Leader or Contact: Ernie Kerst
Version: 16.0
Status: Approved - Under Rev (AREV)

Section I Notes: A minimum grade of "B" (70%) in each of ACCG36913 and ACCG31709 allows students a course exemption in Auditing 1 of the CGA program. The CGA Auditing 1 exam must be successfully challenged to obtain the full exemption.

Detailed Description
In Auditing 2 students build upon the theoretical knowledge gained in Auditing 1 by applying auditing standards and techniques. Topics include the study and evaluation of internal control, auditing in a computerized environment and audit sampling. The emphasis in this course is the application of auditing concepts to audit revenues, purchases, production, payroll, finance and investment cycle. The course ends with the completion of the audit and the basic preparation of working papers. Students will learn by participating in class lectures, group discussions, weekly assignments and short reports based on research of current topics in the media.

Program Context

 Critical Performance

By the end of this course, students will have demonstrated the 
ability to design tests based on audit objectives for financial 
statement audits.


Learning Outcomes

To achieve the critical performance, students will have demonstrated 
the ability to:

1.  Explain the purpose and advantages of evaluating a client's 
    internal control
2.  Apply the seven internal control objectives and weaknesses, 
    explain reasonable assurance, and cost/benefit aspects of audit 
    tests.
3.  Compare with examples auditing around, through, and with the 
    computer 
4.  Compare statistical vs. non-statistical (judgmental) sampling 
    examples for each
5.  Prepare a basic audit program for tests of controls and tests of 
    balances.
6.  Describe the transactions, documents, confirmations, controls, 
    and accounts included in the sales cycle, 
7.  Describe transactions, documents, controls, and accounts of the 
    acquisition cycle
8.  Prepare audit tests of control & balances for purchases and 
    disbursements transactions
9.  Explain procedures for the inventory count observation and 
    cut-off 
    tests
10. Describe audit tests, transactions, documents, accounts, and 
    controls of the a) production cycle, b) payroll cycle, c) finance 
    & investment cycle.
11. Prepare analytical and detail audit tests for overall revenue and 
    expense accounts
12. Explain the concepts for subsequent events, contingent 
    liabilities, review of working papers & discovery of errors

Evaluation Plan
Students demonstrate their learning in the following ways:

Test 1 Chapters 9,10,11 - 20%
Consists of multiple choices, short answers, detail 
descriptions/explanations

Test 2 Chapters 12,13,14 - 20%
Consists of multiple choices, short answers, detail 
descriptions/explanations

Comprehensive final exam Ch. 9 to 15 - 40%
Consists of multiple choices, theory questions, detail explanations & 
analysis questions

Assignments working papers and reports - 20%

Total Marks - 100%

Textbooks and Instructional Materials

Smieliauskas and Bewley, Auditing: An International Approach,6th 
McGraw-Hill Ryerson

Module 1  (LO# 1,2,3) Control Evaluation and Testing

- Explain the auditor's need to understand the client's system of 
  internal control
- Understand and explain the purpose of evaluating a client's  
  internal control
- Describe and apply the seven internal control objectives
- Describe  advantages & disadvantages of 3 methods of describing  
  client's system of internal control 
- Identify weaknesses in internal control and audit tests of control  
  (compliance tests)
- Outline the auditor's responsibilities when fraud is detected
- Explain reasonable assurance and the cost/ benefit aspects of 
  testing internal control
- Compare with examples auditing around, threw, and with the computer
- Describe the problems of control risk assessment in a small 
business

Text Reference: Chapter 9

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Module 2  (LO# 4)  Audit Sampling

- Distinguish audit sampling vs. non-sampling work 
- Compare statistical vs. non-statistical (judgemental) sampling 
  with examples for each
- Differentiate between sampling and non-sampling risk

Text Reference: Chapter 10
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Module 3  (LO# 5)Revenues, Receivables, and Receipts Process

- Prepare a basic audit program for tests of controls
- Develop a basic audit program for tests of balances

Text Reference:  Chapter 11

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Module 4 - Review for test 1
________________________________________
Test 1 (Chapters 9,10,& 11)    20%
  
________________________________________
Module 5  (LO# 7,8,9) Purchases, Payables, Payments Cycle

- Describe the transactions, documents, controls, and accounts 
  included in the SAES cycle
- Outline examples of tests of control
- Design audit tests to detect errors
- Explain  the importance of the "existence" objective for the 
  assets of the client
- Explain the importance and procedures to prepare bank and 
  receivables confirmations
- Design substantive audit tests for the accounts in the sales 
  cycle
- Describe 2 common frauds involving receivables and cash 
  accounts
- Describe transactions, documents, controls, and accounts of 
  the acquisition cycle
- Prepare audit tests of control for purchases and 
  disbursements transactions
- Design audit procedures for detecting errors and 
  irregularities
- Explain the importance of completion objective for 
  liabilities and related audit tests
- Explain procedures for the inventory count observation and 
  cut-off tests

Text Reference: Chapter 12
________________________________________

Module 6  (LO# 10) Production and Payroll Process
- Describe the transactions, documents, accounts, and controls 
  of the production cycle
- Outline control tests for production transactions
- Design audit tests to detect errors and irregularities in 
  the Production process
- Describe the transactions, controls, accounts, and documents 
  in the payroll cycle
- Design control tests and tests of balances for the payroll 
  cycle

Text Reference: Chapter 13
________________________________________
Module 7  (LO# 10) Finance and Investment Process

- Describe transactions, controls, accounts, and documents of 
  the finance & investment cycle
- Design tests of control for the liabilities, equity, and 
  investment transactions
- Design tests to detect errors and other irregularities
- Prepare audit tests for overall revenue and expense accounts

Text Reference: Chapter 14
________________________________________
Module 8  Review  for Test 2 Chapters 12,13,14

________________________________________
Test 2 (Module 5 to 8)   20%
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Module 9 (LO# 12) Completing the Audit
- Describe analytical procedures for the completion of the 
  audit
- Explain the use of various letters and reports in completing 
  the audit
- Explain and apply the concepts for subsequent events and 
  contingent liabilities
- Explain the actions required for discovery of errors after 
  the audit is completed 
- Describe the actions for review of working papers

Text Reference: Chapter 15
 

Assignment is due
________________________________________
Module 10  Review from Chapters 9 to 15
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Comprehensive Final Exam 40%
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