SEMINAR IN AUDITING
INSTRUCTOR: Dr. Douglas E. Ziegenfuss
OFFICE: Hughes Hall Room 2028
T.Th. 10:00 - 11:00;
T. 3:20 - 4:20;
F. 3:20 - 4:20
Or By Appointment
OFFICE PHONE NUMBER: 683-3514
A. CATALOG DESCRIPTION:
Lecture and Discussion -- 3 hours; 3 credits. Prerequisites: Accounting 411 or 423 equivalent and graduate standing. Advanced concepts associated with the public accounting profession generally accepted auditing standards and public accounting reporting are emphasized.
B. OBJECTIVES OF COURSE:
To expand on the basic knowledge of auditing and the nature and importance of auditing. Understanding of and regard for the use of the computer and statistical sampling techniques in the application of generally accepted auditing standards is emphasized.
C. METHOD OF INSTRUCTION:
Cases are the primary teaching method. Lectures are given to the extent necessary to facilitate the completion of cases. Likewise, the final exam focuses on specific concepts covered by cases.
MILLER AND BAILEY (GAAS GUIDE), HBJ Miller GAAS Guide, 1998 or 1999, (required).
APPLE BLOSSOM COLOGNE COMPANY AUDIT CASE, By Jack W. Paul, 1996 (required but may be shared by team members).
The separate assignment sheet indicates text materials, term schedule (including examination dates) required readings and homework, grades will be assigned based on numerical scores on examinations, and projects weighted as identified below:
STANDARDS PRESENTATION 50
MIDTERM EXAM 100
FINAL EXAM 100
AUDIT WORKPAPER PROJECT 100
AUDIT LITERATURE PROJECT 50
AUDIT RESEARCH PROJECT 50
TOTAL POINTS 500
E. GRADING SYSTEM: GRADES OF A,B, and C, + OR -, WILL BE ASSIGNED BASED ON RELATIVE STANDING, GRADE DISTRIBUTION WILL CORRESPOND TO OTHER GRADUATE ACCOUNTING CLASSES.
NOTE! NOTE! NOTE!
ASSIGNMENTS ARE DUE AT THE START OF THE SCHEDULE CLASS. STUDENTS HANDING IN LATE ASSIGNMENTS WILL BE PENALIZED 10% INITIALLY AND AN ADDITIONAL 10% FOR EACH CLASS MEETING WHICH ELAPSES UNTIL THE ASSIGNMENT IS TURNED IN. IF YOU ARE GOING TO BE LATE HAVE A FRIEND TURN IN THE ASSIGNMENT.
F. LECTURE SCHEDULE
THE ENVIRONMENT OF AUDITING
1/11 Introduction to the Course and the Case Method
Background on the Public Accounting Profession
1/18 Professional Standards (Read Miller Introduction, Sections 1-4)
1/25 Cases in Ethics (Read Miller Section 24)(SASs 60-61,83-84)
2/1 Background Lecture on Audit Planning (Read Miller Sections 5-8)(SASs 65, 73, 78, 80)
2/8 Audit Planning Workshop
2/15 Audit Planning Workshop (SASs 56-57)
2/22 Cash and Accounts Receivable Accounts (SAS 67)
2/29 Inventories, Prepaid Assets, and Property, Plant and Equipment Accounts (SAS 81)
3/7 SPRING BREAK - NO CLASS
3/14 Liabilities, Owners Equity and Income Statement Accounts
3/21 Audit Wrap-up and Reporting (Read Miller Sections 10-12)(SASs 87,85, 50-51)
3/28 MIDTERM EXAM
4/4 Integrating Sampling into Auditing (Read Miller Section 9)
4/11 IT and the Auditor
4/18 Presentations and Review of Auditing Literature
4/25 Presentations and Review of Auditing Literature
5/2 FINAL EXAM AND ALL PROJECTS DUE
NOTE! NOTE! CLASS WILL BE FROM 3:45 - 6:45!
Fraud and the Auditor
PURPOSE: To give the seminar participant an understanding of the issues confronting auditors in today's complex business environment.
DIRECTIONS: Each participant in the course will read the case, prepare a list of questions to discuss during class, and the outline of a solution. A one-page summary of each case will be prepared and handed in at the beginning of the next class. The summary will take the following format:
Summary of Facts:
See Examples for Additional Details on preparing cases
H. STANDARDS PRESENTATION
Students will form teams of two to three members. Each team will be assigned a SAS or other professional standard. The team will read the standard and prepare a written summary of the standard. The team will distribute a copy of the summary to each student and give a powerpoint presentation to the class. The presentations will take place throughout the semester (see lecture schedule for dates).
I. MIDTERM EXAM
This will consist of 50 multiple-choice questions randomly selected from a CPA review database as yet unidentified.
J. FINAL EXAM
This will be a take home exam consisting requiring the student to answer three out of six questions. The exam is due the final meeting of class.
K. AUDIT WORKPAPER PROJECT
Students will form teams of four to five members. Each team will prepare a complete set of workpapers. Grades will be based on (1) financial statement presentation, (2) memo writing, and (3) workpaper preparation.
L. AUDIT LITERATURE PROJECT
PURPOSE: This project is designed to give the auditing student an understanding of issues confronting the profession.
DIRECTIONS: The student will choose a topic from the list below. The student will then research the topic, and summarize this research in a class presentation and report. The class presentation will occur during the class period listed in the class syllabus. The written report should be submitted on the date of the class presentation with copies made for each member of the class using the following format (see attached samples):
Grades for the project will be based on writing ability and other communication skills as well on content.
M. AUDIT RESEARCH PROJECT
PURPOSE: This project is designed to give the auditing student experience in researching a topic of interest to practitioners.
DIRECTIONS: The student will choose a topic of interest to Virginia accountants who work in public accounting firms, government, or in industry. The student will then research the topic, and prepare a typed double-spaced manuscript, eight to 10 pages in length. The project is to be submitted during the start of the final exam. A class presentation is not required.
Grades for the project will be based on writing ability, content and expression of ideas. The manuscript should include a title page listing the paper's title, author, class, and date submitted.
CONTENT: Papers should be of interest to practitioners. Papers may offer guidance in complex situations, help in resolving questions that arise in practice, advice in implementing published standards and guides, insight to hidden problems or updates of developing issues.
WRITING: Voluminous footnotes and citations are not welcome. necessary citations should be placed at the end of the paper. Originality and logic are what is important.
FORMAT AND LENGTH: Papers should be typed on plain 8.5" X 11" paper, with one-inch margins all around. A good length to try for is 1800-2000 words.
TABLES AND FIGURES: Tables and figures should be included if they assist the reader in understanding the point being made. Volumes of data included to substantiate a point is not needed or desired. Each table and figure should have a number and title placed in an appropriate place within the article or referenced appropriately. Each figure must be on a separate sheet and must be camera ready.
AUTHOR: All papers should have a cover sheet with the following information: title of article, author's name, academic or professional degrees, professional affiliation, business telephone, and complete mailing address.
SEMINAR IN AUDITING
THE CASE METHOD
The case method is recognized as the most effective way to allow student to learn complex thoughts or concepts. The following five fundamental principles of the case method of teaching were developed by C. Roland Christensen in Teaching and the Case Method:
1. The primacy of situational analysis. Analyzing a specific situation forces the student to deal with the "as is," not the "might be." He or she must confront the intractability of reality: an absence of needed information, the ever-present conflict of objectives, and the imbalance between needs and resources. The auditor must and can act effectively under those circumstances.
This situational orientation reminds the student of the vast gap between simplistic, global prescriptions and what can be said to a specific auditor, at a specific time, on a specific issue. The goal of the case discussion is to help students develop the capacity to deal with the situation-specific, not to deliver commentaries on the general. From experience garnered in many case discussions, the student will in fact derive generalizations, but they are stated tentatively, tested frequently, and always used with care.
2. The imperative of relating analysis and action. The traditional academic accomplishment has been to know; the practitioner's necessity has been to act. The case method of instruction seeks to combine these two activities, to the complexities of an administrative problem, never capable of complete solution, the auditor's primary task.
A case discussion is a crude mirror of that reality. The class considers action in tandem with analysis whenever possible. The minimum end product of a case discussion is an understanding of what needs to be done and how it can be accomplished. At its best, the case discussion will include an exploration of how a plan can be translated into the committed behavior of a group of auditors.
The importance of action influences the entire case discussion, which focuses on the practical and doable, the partial but accomplishable, and the necessity of dealing with first-step accommodations rather than waiting for complete solutions.
3. The necessity of student involvement. The active intellectual and emotional involvement of the student is a hallmark of case teaching. That involvement offers the most dramatic visible contrast with a stereotypical lecture class.
One does not learn how to play golf by reading a book, but by taking a club in hand and actually hitting a golf ball - preferably under a pro's watchful eye. A practice green is not a golf game, and a case is not real life. Fortunes, reputations, and careers are not made or lost in the classroom. But case discussion is a useful subset of reality; it presents a microcosm of actual conditions. It also allows students to practice the application of real-life administrative skills; observing, listening, diagnosing, deciding, and intervening in-group processes to achieve desired objectives.
Case discussion demands total participant involvement in a variety of ways, first and foremost in the give-and-take of class discussion - with mind as well as vocal cords. It insists that students practice auditing skills both in class and in all other academic activities, taking responsibility for their own self-education and for the development of their colleagues. Managers are, after all, both teachers and students in their everyday work.
4. A nontraditional instructor role. The instructor's role in this kind of learning process differs in several respects from traditional practice. First, the task is not so much to teach students as to encourage learning. Second, The teacher must be willing to forgo the role and status of a center-stage, intellectually superior authority figure. As a discussion leader, he or she is simply a member of a learning group, albeit one with a unique position. In addition to providing information and monitoring the quality of student analysis and presentation, the instructor must facilitate a process of joint inquiry. A primary responsibility therefor, is the maintenance of the quality of those paths of inquiry. Third, the instructor must be both teacher and practitioner. Students will accept that one can legitimately discuss the battle of Waterloo without having the capacity to command a brigade of infantry.
5. A balance of substantive and process teaching objectives: the development of an administrative point of view. When successful, the case method produces an auditor grounded in theory and abstract knowledge and, more important, able to apply those elements. This accomplishment has been called summed up as the development of an administrative point of view. The administrative point of view is a composite of many elements whose successful application depends on the skill with which they are combined. The following list of element in that fusion may clarify the kinds of in-class experiences we hope to create for our students:
- A focus on understanding the specific context.
- A sense for appropriate boundaries.
- Sensitivity to interrelationships: the connectedness of all organizational functions and processes.
- Examining and understanding any auditing situation from a multidimensional point of view.
- Accepting personal responsibility for the solution of organizational problems.
- An action orientation.
The auditor's primary contribution is to obtain information, process it, and report to users the results of that processing. We can identify some important ingredients of this action orientation:
- A sense for the possible.
- A willingness to make firm decisions on the basis of imperfect and limited data and, despite omnipresent risk and uncertainty, to have the courage and self-confidence to carry out the proposed action.
- A sense for the critical, the jugular.
- The ability - marrying analytical discipline with personal creativity - to create a vision of what the undertaking is all about.
- The skill of converting targets into accomplishments.
- An understanding that almost all management challenges are grounded in the human and organizational context.
- An appreciation of the major limits of auditor action.
The following are some characteristics of a successful case discussion class and course. First, the section functions as a group. Productive case discussions typically developed only after that agglomeration of individuals had been converted into a cohesive learning group. Second, high levels of student involvement are present. Involvement is the hallmark of any case discussion, but in certain class sessions extraordinary levels of involvement develops.
Discussion dialogue can develop at three levels. At the first level, students explore a problem by sorting out relevant facts, developing logical conclusions, and presenting them to fellow students and the instructor. The second level of discussion may be achieved by assigning students roles in the case under discussion. Their comments then tend to reflect a sense for the organizational and personal circumstances of the auditors whose robes they wear. The class has moved away from the external observer's role toward that of an involved insider. The third discussion level is reached when students, on their own initiative, project themselves into the situation. The classroom and case meld together, with the students vicariously acting as auditor's. Problems are not discussed as abstract topics, but as issues inextricably bound up in an auditor's career. Student comments reflect a personal commitment to the arguments advanced. This level of discussion comes as close to real life as can be achieved in an academic situation. Learning opportunities and risk, however, are high for all.
Third, the instructor directs not dominates the discussion. Instructional direction, as opposed to control, of the class is critical. This "directional" style of leadership was fostered by a complex of factors, of which two seemed most important. First, the instructor provides the students with a path of inquiry - a conceptual framework for understanding the complexities of the problems being studied. Second, he or she develops a teaching plan that considers both what is to be taught and how the discussion may unfold.
TIPS FOR THE DISCUSSION LEADERS
Because we have much to learn from each other, encourage all students to participate.
Devise ways in which each student has something to say, especially early in the discussion.
Students are expected to do some (often highly structured) thinking about a text or issue before the discussion in class begins.
Students should know and feel comfortable with each other and with the discussion leader.
Those relationships are enhanced by a climate of trust, support, acceptance, and respect: even "wrong" answers are legitimate.
A students self-image is always affected by his or her participation in discussions: feedback, therefore, is crucial for self-esteem.
The primary goal in any discussion is to enhance the understanding of some common topic or "text" (in the broadest sense).
Different kinds of texts, purposes, and faculty teaching styles suggest using different kinds of discussion schemes.
SEMINAR IN AUDITING
ELECTRONIC ACCOUNTANT ASSIGNMENT
PURPOSE: This assignment will allow the student to become familiar with technologies affecting the auditing profession.
ASSIGNMENT: The student will visit the Education Building Lab or similar graduate center facility and obtain an e-mail account. The student will then e-mail the instructor who will acknowledge receipt of the message. The student will then log onto a computer in the lab and access the internet. The student will conduct a search for accounting web sites. The student will list and describe the web sites visited in an e-mail message to the instructor.
CASES IN ETHICS
PURPOSE: To enable the student to develop a methodology to resolve ethical dilemmas.
DIRECTIONS: The student will be shown a series of video vignettes involving an ethical dilemma. The student will then participate in a class discussion on these vignettes and then using the methodology presented below will write up a one-page summary of the student's resolution of the dilemma. The summaries are due at the start of the next class period.
Decision Model for Resolving Ethical Issues
1. Determine the facts - What, Who, Where, When, How.
2. Identify the ethical issues and stakeholders involved.
3. Define the norms, principles and values related to the situation.
4. Identify various courses of action.
5. Decide the best course of action consistent with the norms, principles, and values.
6. Identify the consequences of each possible course of action.
7. If appropriate, discuss the choices with a trusted person to help gain greater perspective regarding the choices.
8. Make a decision.
9. Document the above.
1. The Accounting Profession Major Issues: Progress and Concerns, The United States General Accounting Office, September 1996.
2. The Cohen Commission Report or "The Commission on Auditors' Responsibilities: Report, Conclusions, and Recommendations", The Commission on Auditors' Responsibilities, 1978.
3. The Treadway Commission Report or "Report of the National Commission on Fraudulent Financial Reporting", The National Commission on Fraudulent Financial Reporting, 1987.
4. A Statement of Basic Auditing Concepts, AAA., and The Philosophy of Auditing by Mautz and Sharaf
5. Accounting for Success A History of Price Waterhouse in America 1890-1990, David Grayson Allen, and Kathleen McDermott, 1993. The Auditors Guide of 1869, by Pete McMickle and Paul Jensen; and Duties of the Junior Accountant, ed., by Richard P. Brief, 1988.
6. Auditors Liability and Tort Reform, 1995.
7. When Two Plus Two Equals Five, by Mark Stevens.
8. The Future of Assurance Services, by Robert Elliott, 1995; Licensure and Regulation: A Time for Change, Robert Mednick, 1996; and The Value of Information and Audits, Coopers and Lybrand, 1996.
9. Comparative International Auditing Standards, by Belverd E. Needles, Jr., and Felix Pomeranz, 1985.
The Sociology of Accountancy: A Study of Academic and Practice Community Schisms, by Robert J. Bricker and Gary J. Previts, 1990.
Improving Business Reporting-A Customer Focus, by The Special Committee on Financial Reporting, AICPA, 1994.
Overview of Assurance Services, by the AICPA, 1997.
Arthur, Arthur , David Whitford, 1997.
Mergers among accounting firms.
SAMPLE TITLE PAGE
SEMINAR IN AUDITING
AUDIT LITERATURE PROJECT
A SUMMARY OF
"TITLE OF WORK BEING REPORTED"
DATE: (date submitted)
This section should contain a more detailed summary of the work being reported (5-6 pages).
The student should list the issues affecting the profession which the student found in this piece of literature and which the student intends to discuss in class.