Principles of Auditing (2)

Course Objectives

     This two-semester course is designed to provide a conceptual background of the audit environment as well as adequate procedural coverage as to be sufficient for those intending to take positions in public accounting or internal auditing. In last semester, you have learned basic audit concepts such as audit standards, audit report, professional ethics, audit planning, audit evidence, materiality and audit risk assessment, and internal controls. In this second semester, I will focus on three main topics: (1) special audit techniques (e.g., audit sampling), (2) how to apply these techniques to various transaction cycles and related accounts, and (3) special-purpose attestation services. Note that this course is not a CPA exam preparation course. However, understanding the concepts in this course will assist you when you prepare for the CPA exam .

      Auditing is different from most of the accounting courses you have taken. While the required information is generally in our textbook, students often find it difficult to follow the textbook discussion and identify important information. I have prepared a Course Topics Outline, an Overall Auditing Process, the Framework of International Standards on Auditing, and a Types of Auditor’s Professional Services. Please note that these outlines are not meant to serve as a complete set of lecture notes for auditing. Rather, they are to help you to have a comprehensive view of the overall auditing process.

       Because we have to finish 7 lectures within 12 weeks (excluding introduction and exams days), we suffer extremely high time pressure. Therefore, we will not have enough time to cover everything that is important in the class. So, you must take the initiatives to raise questions on materials you do not understand. In addition, it is your responsibility to review the chapter materials before you come to the class. In the class, I will simply outline the key concepts and answer your questions. If you don’t review the materials, you may not be able to understand what I say.

Grade Determination

The final grade will depend on your performance in exams, quizzes, and ACL Case assignments. The point allocations for the various components of the final grade are as follows (detailed descriptions of these components will be provided in the syllabus to be distributed in the first class):

                                             Exam #1 (Lectures #10 ~ #12)                                                               400 points

                                             Exam #2 (Lectures #13 ~ #14)                                                               400 points

                                             Final Exam (Lectures #15 ~ #16)                                                          400 points

                                             Quizzes (100 points x 4)                                                                          400 points          

                                             ACL Case Assignments                                                                            300 points

                                                                                                                                                                    ------------

                                             Total Points                                                                                               1,900 points

Class Performance 

It is your responsibility to attend and actively participate in each lecture. I will ask you questions on a surprise basis and your responses will be considered as an important part of your overall performance in this course. No talking, eating, sleeping, randomly walking, passing private notes, or doing anything unrelated to the lectures are allowed; or you will be kicked out of the classroom. Please turn off your mobile phone while you are in classes. If your mobile phone beeps during any class, I will confisticate it and give it to the Department staff for one week. Also, you are NOT allowed to bring and use mobile phones in the exams and quizzes.

Honor Code

"NO PAIN, NO GAIN" is an appropriate motto for this course because struggling with the textbook exercises and problems and ACL cases assignments is absolutely necessary to understand the material. Therefore, you are strongly encouraged to work in groups in solving the problems. You are also welcomed to discuss problems with the instructor and your TA.

There are a lot of practice questions and problems at the end of each chapter. You are expected to do all of them. These exercises and problems are the basis for class discussion and are very important to your learning process. Students who attempt and complete these assignments generally perform significantly better in this course.

Solution Manual Problem

In solving the questions and problems at the end of each chapter, most of you may want to have a solution manual on hand so that you can check the answer every time when you cannot come up with one. This practice may be appropriate for your financial and managerial accounting courses in which you need to do extensive calculations. For our auditing course, however, this practice is infeasible and even harmful because almost all auditing problems are essay questions which require you to write down the answers verbally rather than mathematically. Looking at the solution manual will restrict your “imagination” to the answers listed in the manual and lead you to ignore the fundamental auditing issues behind each problem. If you simply memorize the problems and the corresponding answers in the solution manual, you will not be able to pass this course because the exam problems will be totally different from the ones in the textbook.

Please do not ask your TA or me to give you a personal copy of the solution manual. I’ll prepare several copies of the solution manual and give them to your TA. You should try to solve each problem by yourself and then go to your TA for checking the answers. Take full advantage of the office hours from your TA and me to make sure that you have understood the most important auditing concepts. 

English Proficiency

Being an NCCU student, you should not suffer serious problem in English reading and writing. However, students always complain that they have fully understood the textbook materials, but cannot perform well in the exams simply because they are unable to comprehend what the exam questions mean. My suggestions are: (a) never use a Chinese-translated version of the textbook, and (b) do the exercises and problems at the end of each chapter as many as possible to get used to professional accounting terms.

English is very important not only because it will help you survive and succeed in your future career. There is no shortcut to polishing your English proficiency. You should take every chance and try very hard to learn it. I will not accept any English-related complaints about the exams (e.g., vocabulary, grammar, length of questions and problems). It is your responsibility to be well-prepared for all the English-written exams and quizzes. Please note that you are NOT allowed to bring and use dictionary (either paper- or electronic-based) in the exams and quizzes.

Length of Class Time

Even though this is a 3-credit course, I usually spend 6 ~ 6.5 hours in each week for my lectures. Some students always complain that the length of time is too long because: (a) they cannot concentrate during the last two hours, (b) they have to take another course at 18:00, and (c) they just don’t like overly-long classes. In response to these complaints, I want to emphasize that the auditing profession has evolved dramatically during the past few years due to the passage of the Sarbanes-Oxley Act and our adoption of the International Standards on Auditing (ISAs). In other words, we DO need at least six hours per week to finish the lecture materials. It really makes me tired to stand in front of you and keep talking for six hours. However, I never complain about this because I strongly believe that it is my responsibility to teach all you have to know so that you can build up a solid foundation for your professional career.