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COURSE INFORMATION
Course Title: AUDITING
Code Course Type Regular Semester Theory Practice Lab Credits ECTS
BUS 434 B 2 3 0 0 3 7.5
Academic staff member responsible for the design of the course syllabus (name, surname, academic title/scientific degree, email address and signature) NA
Main Course Lecturer (name, surname, academic title/scientific degree, email address and signature) and Office Hours: Assoc.Prof.Dr. Nargiza Alymkulova nalymkulova@epoka.edu.al , Monday, 13:00-16:00
Second Course Lecturer(s) (name, surname, academic title/scientific degree, email address and signature) and Office Hours: NA
Language: English
Compulsory/Elective: Compulsory
Study program: (the study for which this course is offered) Master of Science in Banking and Finance
Classroom and Meeting Time: E-212, Thursdays, 18:00-20:45
Teaching Assistant(s) and Office Hours: NA
Code of Ethics: Code of Ethics of EPOKA University
Regulation of EPOKA University "On Student Discipline"
Attendance Requirement: 75 %
Course Description: This course concentrates mainly on external auditing and includes topics as: Definition of auditing, auditing standards, ethics in auditing, independence issues, types of audit reports, the study and evaluation of internal controls including the EDP environment, audit risks, no statistical and statistical sampling in audit, audit of balance sheet and income statement items.
Course Objectives: The course aims to encompass insights of the auditing process, reporting, and ethics. By the end of the course students will be able to distinguish management’s responsibility for the financial statements from the auditor’s responsibility for verifying those statements;Make client acceptance decisions and perform initial audit planning; Distinguish the different types of risk assessment procedures; use the five types of audit tests to determine whether financial statements are fairly stated.
BASIC CONCEPTS OF THE COURSE
1 Audit and Other Assurance Services. Professional Ethics.
2 Audit Evidence.
3 Audit Planning and Materiality
4 Risk of Material Misstatement
5 Fraud Risks
6 Audit Strategy and Audit Program
7 Audit Reports
COURSE OUTLINE
Week Topics
1 Introduction and Syllabus Review
2 The Demand for Audit and Other Assurance Services. Professional Ethics. In this lecture, we will describe auditing; Distinguish between auditing and accounting; Explain the importance of auditing in reducing information risk; List the causes of information risk, and explain how this risk can be reduced; Describe assurance services and distinguish audit services from other assurance and nonassurance services provided by CPAs; Differentiate the three main types of audits; Identify the primary types of auditors; Describe the requirements for becoming a CPA. Distinguish ethical from unethical behavior in personal and professional contexts; Resolve ethical dilemmas using an ethical framework. Chapter 1, pp. 29-44; Chapter 25, pp. 786-815. Cases 3.1-3.5
3 Auditing Responsibilities and Objectives. This lecture provides the insights on the objective of conducting an audit of financial statements and an audit of internal controls; Distinguishing management’s responsibility for the financial statements from the auditor’s responsibility for verifying those statements; Explaining the auditor’s responsibility for discovering material misstatements due to fraud or error; Describing the need to maintain professional skepticism when conducting an audit; Describing the key elements of an effective professional judgment process; Identifying the benefits of a cycle approach to segmenting the audit; Describing why the auditor obtains assurance by auditing transactions and ending balances, including presentation and disclosure; Explain the relationship between audit objectives and the accumulation of audit evidence. Chapter 5, pp. 118-145.Cases 4.1-4.7.
4 Audit Evidence. This lecture will cover the followings: Contrast audit evidence with evidence used by other professions; Identify the four audit evidence decisions that are needed to create an audit program; Specify the characteristics that determine the persuasiveness of evidence; Identify and apply the eight types of evidence used in auditing; Know the types of analytical procedures and their purposes; Identify how auditors incorporate data analytics and other advanced technologies in an audit; Compute common financial ratios; Understand the purposes of audit documentation; Prepare organized audit documentation. Chapter 6, pp. 153-186.Cases 8.1-8.3.
5 Audit Planning and Materiality. This lecture will discuss why adequate audit planning is essential; Make client acceptance decisions and perform initial audit planning; Gain an understanding of the client’s business and industry; Perform preliminary analytical procedures; Apply the concept of materiality to the audit; Make a preliminary judgment about what amounts to consider material; Determine performance materiality during audit planning; Use materiality to evaluate audit findings. Chapter 7, pp. 195-221.Cases 1.1, 7.1
6 Assessing the risk of Material Misstatement. In this lecture, we will define risk in auditing; Distinguish the different types of risk assessment procedures; Understand important auditor considerations related to the risk of material misstatement due to fraud; Describe the auditor’s responsibility to identify significant risks; Describe the audit risk model and its components; Assess acceptable audit risk; Consider the impact of several factors on the assessment of inherent risk; Discuss the relationship of risks to audit evidence; Discuss how materiality and risk are related and integrated into the audit process. Chapter 8, pp. 234-258.Cases 9.1-9.7.
7 Assessing and Responding to Fraud Risks. In this lecture, we will define fraud and distinguish between fraudulent financial reporting and misappropriation of assets; Describe the fraud triangle and identify conditions for fraud; Understand the auditor’s responsibility for assessing the risk of fraud and detecting material misstatements due to fraud; Identify corporate governance and other control environment factors that reduce fraud risks; Develop responses to identified fraud risks; Recognize specific fraud risk areas and develop procedures to detect fraud; Understand interview techniques and other activities after fraud is suspected; Describe information about the fraud risk assessment that must be documented in the working papers. Chapter 9, pp. 267-295.Cases 9.1-9.7.
8 Midterm
9 Internal Control and COSO Framework. In this lecture we will describe the three primary objectives of effective internal control; Contrast management’s responsibilities for maintaining internal control with the auditor’s responsibilities for evaluating and reporting on internal control; Explain the five components of the COSO internal control framework; Explain how general controls and application controls reduce information technology risks; Identify types of information technology systems and their impact on internal controls. Chapter 10, pp. 303-328.Cases 6.1-6.2, 10.1-10.5
10 Overall Audit Strategy and Audit Program. In this lecture we will use the five types of audit tests to determine whether financial statements are fairly stated; Select the appropriate types of audit tests; Understand the concept of evidence mix and how it should be varied in different circumstances; Design an audit program; Compare and contrast transaction-related audit objectives with balance-related audit objectives, including those related to presentation and disclosure; Understand key evidence-related terms; Integrate the four phases of the audit process. Chapter 12, pp. 374- 401. Cases 11.1.
11 Completing the Audit. In this lecture we will design and perform audit tests related to presentation audit objectives; Conduct a review for contingent liabilities and commitments; Obtain and evaluate letters from the client’s attorneys; Conduct a post- balance sheet review for subsequent events; Design and perform the final steps in the evidence-accumulation segment of the audit; Integrate the audit evidence gathered and evaluate the overall audit results; Communicate effectively with the audit committee and management; Identify the auditor’s responsibilities when facts affecting the audit report are discovered after its issuance. Chapter 23, pp. 721-746. Cases 12.1-12.6.
12 Audit Reports. In this lecture, we will describe the parts of the standard unmodified opinion audit report for nonpublic entities under AICPA auditing standards; Specify the conditions required to issue the standard unmodified opinion audit report; Understand reporting on financial statements and internal control under PCAOB auditing standards; Describe the five circumstances when an emphasis-of matter explanatory paragraph or nonstandard wording is appropriate to include in an unmodified opinion audit report; Identify the types of audit reports that can be issued when an unmodified opinion is not justified; Explain how materiality affects audit reporting decisions; Draft appropriately modified opinion audit reports under a variety of circumstances; Determine the appropriate audit report for a given audit situation. Chapter 24, pp. 752-779.Cases 12.1-12.6.
13 Individual Project Presentations
14 Individual Project Presentations
Prerequisite(s): -
Textbook(s): Elder, J.R., Beasley, M.S., Hogan, E., Arens, A.A. (2020). Auditing and Assurance Services, Global Edition, 17th edition, Pearson.
Additional Literature: Beasley, S.M., Buckless, F. A., Prawitt, D.F. (2021). Auditing Cases: An Interactive Learning Approach, 7th edition, Pearson.
Laboratory Work: -
Computer Usage: Internet during class
Others: No
COURSE LEARNING OUTCOMES
1 The aim of this course is to help students to learn the basic concepts of auditing and understand the auditing applications.
2 Understanding of basic concepts of auditing, understanding auditing standards, understanding of asset, equity and result accounts auditing.
COURSE CONTRIBUTION TO... PROGRAM COMPETENCIES
(Blank : no contribution, 1: least contribution ... 5: highest contribution)
No Program Competencies Cont.
Master of Science in Banking and Finance Program
1 The students gain the ability to look at the problems of daily life from a broader perspective with an increased awareness of the importance of moral/ethical considerations and professional integrity in the workplace.
2 They develop a broader understanding of banking and finance including concepts, theories, and analytical tools that serve both in national and international markets.
3 They are able to apply advanced valuation models to estimate the price of different financial assets as well as evaluate multinational business firms.
4 They are able to apply different investment techniques and form portfolios that would generate higher returns by decreasing the unsystematic risk level.
5 They have advanced knowledge of the regulatory framework and functioning of the banking system, international banking, central banking and the conduct of monetary policy.
6 They are able to conduct advanced financial analysis and use the results in the decision-making process of business firms.
7 They are able to understand and use advanced economic theories and tools to solve economic problems in banking and financial services industry.
8 They have the ability to utilize accounting, financial and economic data as well as other information to solve complex and unstructured business problems by using advanced econometric and statistical models.
9 They develop their ability to think critically, do advanced and independent research, analyze, interpret results, draw conclusions, and communicate effectively, both individually and as part of a team.
10 They are provided with opportunities to acquire the necessary skills and competencies to move on to further study within the discipline.
COURSE EVALUATION METHOD
Method Quantity Percentage
Midterm Exam(s)
1
20
Presentation
1
10
Project
1
15
Case Study
1
20
Final Exam
1
30
Attendance
5
Total Percent: 100%
ECTS (ALLOCATED BASED ON STUDENT WORKLOAD)
Activities Quantity Duration(Hours) Total Workload(Hours)
Course Duration (Including the exam week: 16x Total course hours) 16 3 48
Hours for off-the-classroom study (Pre-study, practice) 16 3 48
Mid-terms 1 14 14
Assignments 1 40 40
Final examination 1 30 30
Other 1 7.5 7.5
Total Work Load:
187.5
Total Work Load/25(h):
7.5
ECTS Credit of the Course:
7.5
CONCLUDING REMARKS BY THE COURSE LECTURER

Guidelines on Research project and on Case studies are uploaded on the Google Classroom. For Research project submission deadline is June 22, 2023 and for case studies report (group work) submission shall be prior to the next class. All assignments to be prepared within APA. For detailed information, refer to the Publication Manual of the American Psychological Association (7th ed.), http://www.apastyle.org/. Those assignments which will be sent as e-mail attachments or sent to the system after deadline will not be accepted.
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