Program(s): Business Admin Accounting
Program Coordinator(s): Sally Mitzel
Course Leader or Contact: Ernie Kerst
Version: 17.0
Status: Approved - Under Rev (AREV)

Section I Notes: ACCG31709 and ACCG36913 together qualify for a course exemption only in the CGA program. A minimum grade of "B" (70%) in EACH course is required and students must pass the CGA Auditing 1 exam and any other CGA requirements for full exemption.

Detailed Description
Students learn principles and procedures used to gather evidence to support the "Auditor's Report" for the audit of Financial Statements. Other types of audits are briefly discussed as well as the role of Canadian and International accounting organizations, the Institute of Internal Auditors and the International Federation of Accountants. Topics include assurance engagements, quality control standards, types of audit reports, internal control, professional ethics, legal liability, understanding the client's business, materiality, audit risk model and audit planning. Learning strategies will include assignments, research reports, computer applications and group work.

Program Context

 Critical Performance
By the end of this course, students will have demonstrated the 
ability to describe the basic concepts of financial statement audits. 


Learning Outcomes
To achieve the critical performance, students will have demonstrated 
the ability to:
1. Explain the role of the accounting organizations, Institute of 
   Internal Auditors, and International Federation of Accountants.
2. Discuss the requirements and qualifications of auditors.
3. Distinguish the various types of audits, who performs the audits, 
   and reasons for each type of audit.
4. Apply the Generally Accepted Auditing Standards (GAAS).
5. Explain the Quality Control Standards for public accounting firms.
6. Apply the three levels of assurance for audits, reviews, and 
   compilations.
7. Prepare the four types of audit reports for Financial Statements 
   Audits: Standard, Qualified, Denial of Opinion, and Adverse 
   Opinion.
8. Apply the rules of professional ethics and legal liability for the 
   accounting/auditing profession.
9. Explain clients' business and related audit risks.
10.Distinguish and calculate the materiality risk levels for an audit.
11.Explain the role of computers and software in performing audits.
12.Describe the planning required to perform audits.

Students demonstrate their learning in the following ways:

Tests (2 @ 20% each)                   40%
Comprehensive final exam               40%
(multiple choice, short answers
and detailed written answers).

Weekly individual assignments          10%
6 Assignments (Best 5 of 6 at 2 marks)
Short individual reports               10%
    
Total                                 100%

Smieliauskas & Bewley, Auditing: An International Approach, 6th 
Edition, McGraw Hill Ryerson

Module 1: (LO #1,2) Introduction to Auditing and Auditors'
Professional Roles and Responsibilities

- Distinguish auditing from accounting
- Describe the role of the accounting & auditing organizations
- Describe the qualifications and licensing of public accountants in 
  Ontario

Text Reference: Chapter 1 and 2
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Module 2: (LO# 3,4,5,8,9) Auditors' Professional Ethics and Legal 
Responsibilities

- Describe and distinguish the 5 types of audits, auditors, 
  and purpose of each.
- Explain and apply GAAS in detail
- Describe the quality control standards for public accounting 
  firms
- Describe the process for accepting/rejecting audit engagement
- Describe the information necessary to understanding the 
  client's business and industry
- Explain and apply rules of professional conduct and code of ethics
- Explain the concept of independence and describe examples 
  when independence is violated
- Describe the post-Enron legal environment and new laws to 
  protect the public
- Explain the auditor's legal liability based on common law, 
  statutory, and contract law

Text Reference: Chapter 3

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Test 1 (Chapters 1,2 & 3)  20% 

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Module 3: (LO# 6,7) Reports on Audited Financial Statements
- Explain and apply the 3 levels of assurance
- Explain at least 3 reasons / demand for financial statements
  audits
- Distinguish and prepare the 4 types of audit reports 
  resulting from a financial statement audit
- Describe the essence of the risk reduction concept in auditing 

Text Reference: Chapter 4
________________________________________

Module 4:  (LO# 9, 10) Understanding the Client's Business & Risks

- Describe the pre-engagement arrangements performed by auditors
- Explain the steps and sources of information to understand the   
  client's business
- Explain and apply 4 types of risk to plan the audit
- Describe the significance and importance of the 5 management 
  assertions
- Identify and apply the 9 general audit objectives
- Describe the 5 phases of an audit

Text Reference: Chapter 5

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Test 2: (Chapters 4,5) 20% 
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Module 5: (LO# 11) Assessing Risks and Internal Control

- Describe the basic elements of an information system.
- Analyze and describe the basic components of a system of internal  
  control.
- Explain the relationship of control environment, information 
  systems, and general & application controls.
- Identify and briefly describe the characteristics and 
  control risks of a basic LAN-based computer system.
- Describe the characteristics and control risks of a personal 
  computers system.
- Describe the effects of e-business on auditing.
- Describe and apply the audit risk model.

Text Reference:  Chapter 6 & 7
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Module 6: (LO# 10,11, 12) - Audit Evidence and Assurance

- Describe an overview and examples of control activities.
- Explain the purpose of preliminary analytical procedures.
- Perform analytical procedures to identify potential errors.
- Explain the 5 levels of appropriateness of audit evidence.
- Describe the content and purpose of audit programs.
- Explain the importance, form & content of audit working 
  papers.


Text Reference: Chapter 8
     
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Comprehensive Final Exam:  (Chapters 1 to 8)  40%
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