Program(s): Accounting
Program Coordinator(s): Multiple Coordinators
Course Leader or Contact: Multiple Course Leaders
Version: 1.01
Status: Approved (APPR)

Section I Notes: A minimum grade of B (70%) in each of ACCG70026 and ACCG70027 qualify the student to apply for a partial exemption from the Certified General Accountants of Ontario (CGA) course AU1. The CGA challenge exam for AU1 is required.

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%
2 Reports at 5 Marks each
    
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


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

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

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

Test 2: (Chapters 4,5) 20% 

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

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.
 - Calculate and explain materiality amount for an audit.
 - 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
 
Comprehensive Final Exam:  (Chapters 1 to 8)  40%

Retain during the course and for future use when applying for credit 
at other educational institutions