Auditing Seminar & Cases

BUSINESS ASSURANCE ACC 8033 Summer 2010-2th Term

Instructor: John T. Rigsby Office Hours: 9:00-9:50 am (M-F) Office: 300T McCool Hall Class Room: 203 McCool Hall Office Phone: 325-1640 Class Hours: 10:00-11:50 am (M-F)

E-Mail: [email protected] Please give me your e-mail number, so that I can keep in touch with you concerning assignments, etc.

Required Texts: 1. Practitioner’s Guide to GAAS, 2010, Wiley 2. CPA Ready—Auditing & Attestation, Bisk, 2010. 39th Ed, NIT.

Optional Texts: 3. Comtemporary Auditing: Real Issues and Cases, Michel Knapp, West Publishing Co.

Recommended A recent auditing textbook is also useful for certain parts of the course, Texts: e.g., ethics, legal liabilities, and audit report modifications and special reports. A copy of a recent textbook will be made available in the reserve room of the library if you don’t have one.

Course This course is designed to be an in-depth study of the auditor’s Objectives: professional responsibilities, ethics, audit reporting, and other current topics in the practice of auditing. Its purpose is to expose you to current issues and developments in the auditing profession and in the process enhance your understanding of the technical, ethical, social, and political issues with which you will be dealing and also develop oral and written communication skills. Over the course of the term we will have an two outside speakers dealing with external auditing.

Students should develop and exhibit a working knowledge of the professional auditing standards, which will be applied in several cases. The cases, class room discussions, and oral and written exercises are used to allow you to develop your professional judgment, critical thinking, and communication skills. Areas that we spend additional time on are ethics, internal controls, statistics, analytical review, effects of globalization and diversity on accounting, and audit reports. In addition, current events affecting the auditing profession are emphasized in understanding the social and economic role that audits play and the significant pressures and expectations that are placed on auditors, both within the larger society by users, regulators and others, and within the CPA firm. Also in completing the cases you will be doing a number of audit simulations where you will be required to access the professional literature in researching particular aspects of the cases.

Course 1. The level of difficulty and rigor of the course material covered in Requirements: class will require you to be present. There is a direct correlation between class attendance and performance on exams. You are preparing for a professional career; therefore, you should view this class as a professional job assignment. Attendance is expected, especially as fast as the summer term goes! 2. A key ingredient for success is self-study. Classroom lectures and activities are designed to guide you and direct your learning experience. Much of your learning occurs outside the classroom; therefore it is your responsibility to diligently study the assigned course materials. Considerable effort on your part is required and is a long-term investment in yourself. 3. You need to apply concepts, not just memorize them, as this course is aimed at developing and internalizing a model for making audit judgments. 4. You are encouraged to work with others in your study group to go over the course material, as auditing is a process of developing judgment. The more you can verbalize the concepts, the better prepared you are for concept application. It is important to develop the professional habit of both developing your own mind and listening to and learning from those around you. You should value the views and perceptions of others and also remember that you have the right and freedom to challenge their thinking as well. Everyone should be dealt with in a professional manner.

Assumptions: I am operating on the assumption that you want to gain the most you can from your studies and will therefore invest yourself in readings and assignments and come to every class prepared to engage fully. Therefore, learning is student-centered, active, integrated, cumulative, and connected. I assume you will take responsibility for your own learning and will also contribute to the learning of others. What you gain from this experience is in direct correlation to what you invest in it. You may assume that I care about your success—personally, academically, and professionally. I trust you will work to balance effectively your personal, academic, and professional commitments. I want you to gain the most possible from this experience and I am committed to my facilitator role in this venture. I want to hear your experiences, ideas, and feedback; and will hold you accountable to high academic standards.

Grades: Grades will be assigned on the following basis: Activity Maximum Points

Knapp Case Write-ups (4)...... 20 SAS Case Write-ups (1)……………………….….. 5 Database Search…………………………………. 15 Current Topic Presentation(1)…………………… 3 Current Topic Write-ups (2)………………….… 6 Quizzes(2)………………………………………. 20 Debate(1)………….…………………………… 10 Journals(3)……………………………………… 9 Paper…………………………………………….. 22 Participation……………………………………… 10 Test 1……………………………..……………. 100 Test 2…………………………………………. 100 Final...... 15 0 TOTAL...... 470 pts. The 90-80-70-60 grade scale will be used.

Knapp Case Each student will be assigned to a team which is responsible for a typed write-up Write-ups: of the four Knapp cases assigned, which are due on the day the cases are to be presented. Points will be deducted for each day the case write-up is late. All team members will receive the same grade, which will be based upon whether (1) the answers address the questions asked and (2) the clearness and correctness with which ideas are presented. The questions for the Knapp cases are posted to my website and each Knapp case will require the AICPA professional standards database be accessed and the solution printed out in that format.

SAS Case Each individual is responsible to type a solution to one of the SAS cases and to Write-ups: e-mail it to me when it is due. To find the SAS cases go the School’s website, look for my name under the faculty, and then go to the courses that I teach. You can access my syllabus and all handouts through my website, including all solutions to the SAS cases (after we have covered the cases), plus your grades will be posted there. You also may want to access the AICPA standards database for some answers to SAS cases. The database is available to you in the Seale Computer lab and we will go over how to use it the first week of class. For example, if the answer to your SAS question is largely cut and paste you can go to the database, use a key word to find the section you are interested in, and cut and paste it in your write-up. I will go over how to use the AICPA professional literature database early in the term.

AICPA Professional Each student is to research three sets of assigned questions dealing with the Database Search professional standards. Early in the semester I will go over how to access and use the database, which is located both in the Seale Computer lab and also can be accessed on the computer in our classroom.

Current Each student is to make a current topic presentation during the summer term. Topics: You are also to prepare two one-page summaries of current events occurring in the auditing profession or the business world. The one-page summaries are to be typed, single space, with a single blank line between paragraphs. They may discuss multiple events or a single event. Your name, the course title, and current event 1 or 2 is to be indicated on the back of the page, which is to be folded when turn in. The first summary is due by July 13 and the second summary is due by July 21.

Quizzes We have two quizzes, one covering ethics and the other the audit report.

Debates: Each student is to sign up from a list of topics for a short presentation of five to seven minutes on one or another side of matters of current interest in the auditing profession., e.g., whether auditors audit firms should be required to rotate from their clients periodically or if SARBOX goes too far. Its purpose is to expose you to several areas of controversy and continuing change in auditing and the elements that make up a persuasive argument. The presentations will be made at the beginning of class, normally a pro and a con will be presented, and the class will indicate which side they thought marshaled the most persuasive facts. You are to dress nicely when you give your presentation but it does not have to be professionally, e.g., khakis and polo shirt is ok, shorts or tank top is not.

Journals: You are to turn in a journal write-up each Thursday for the first three weeks. Its purpose is for me to get to know you. It is to be one page, typed and may be e-mailed in if that is more convenient.

Paper: You are to prepare and turn in a five-page (excluding title and reference pages), double-spaced, typed paper on some aspect of the development of the auditing profession incorporating the two articles that we covered in class and at least three other sources. The topic of the paper is the development of the auditing profession All sources are to be properly referenced, and a minimum of five sources are required. Possible points will be equally allocated by me between the development of the topic and its presentation and format. The due date is July 28. The paper is to include a title and reference page and each page of the text is to be appropriately footnoted. I will provide you with an example of a properly formatted paper the first week of class.

Participation Participation and attendance in class is critical to your success in this class.

Exams/ The exams consists of a combination of multiple-choice questions and Final: essays/exercises. The final is comprehensive, with the material covered by the multiple choice questions equally weighted. It also includes essays/exercises on material covered since the last test.

ADA Statement: If you need academic accommodations based on a disability, contact the office of Student Support Services in Room 01, Montgomery Hall (325- 3335) or email Julie Betty at [email protected]

Academic Accounting is a profession, the basis of which is our character and Integrity: integrity. Since you are training to be professionals, you are expected to act as such. Also all MSU students are to abide by the honor code of the University: “As a Mississippi State University student I will conduct myself with honor and integrity at all times. I will not lie, cheat, or steal, nor will I accept the actions of those who do.” All occurrences of academic misconduct will be handled in accordance with the Academic Misconduct Policy (www.msstate.edu/web/security.html).

Cellular Phones: To avoid class disruptions, cellular phones and pagers must be placed in the mute or off mode during class. Cellular phones and pages must be turned off during all examinations and are not to be used. If I see a cell phone during a test then the exam will be confiscated and you will get zero points.

Important Dates: July 6 – Last day for dropping a course without a grade. July 7 – Last day for registration or adding a course. July 23 – Last day to drop a course with a “W”.

Date Assignments Other July 6(Tu) Introduction/Code of Professional Conduct ET 101, 102, 201, 203, 301, 302

7(W) Current topic presentation: Chris Taylor, Devon Boykin Code of Professional Conduct ET 501, 502, 503, 505 Working Papers/Reporting Standards AU 339, 341, 380, 390, 410, 411, 420, 431 Cases 16, 17, 18

8(Th) Current topic presentation: Mary M. Cockroft, Galyna Melnychuk “How the U.S. Accounting Profession Got Where It Is Today: Part I” –S. Zeff Speaker: David Hopkins, KPMG

9(F) Current topic presentation: Patty Commarato, Joshua Legg “How the U.S. Accounting Profession Got Where It Is Today: Part II” –S. Zeff Fourth Reporting Standard AU 504, 508 Case 19, 20

12(M) Current topic presentation: Brandon Jones, Angel Wu Debate: Tiffany Pickens Kroger Properties, Inc. Fourth Reporting Standard Ethics quiz AU 508, 530, 532, 534, 543, 544 Cases 20, 21, 22

13(Tu) Current topic presentation: Judy Lynn Shackelford, Josh Smith Debate: Devon Boykin, Mandy Slawson Fourth Reporting Standard 1st Current topic write-up due AU 550, 551, 552, 558, 560, 561 Cases 23, 24, 25

14(W) Current topic presentation: Matthew Chisholm Debate: Allison Hill, Drew Crawley Audit Responsibilities AU 110-230, 311, 316, 317 Cases 1, 2, 6, 7

15(Th) Test I (ETs, AU 339-561)

16(F) Current topic presentation: Tony Roe, Kalana Malimage Debate: Kalana Malimage, Chris Taylor Fieldwork Standards AU 312,314, 315, 318, 322, 324 Case 3, 4, 5, 8, 9 I will start discussing Audit Sampling

19(M) Current topic presentation: Jessica Sawyer, Katy Morgan Audit report quiz Registered Auditors, South Africa Audit Sampling AU 350

20(Tu) Current topic presentation: Will Mendrop, Allison Hill Debate: Matthew Chisholm, Jessica Jones, Leslie Little Debate: Anna Sharp, Catherine Carty Audit Sampling AU350 21(W) Current topic presentation: Sarah Young, Tiffany Pickens Debate: Nirmalee R., Katy Morgan Internal Control 2th Current topic write-up due AU 325, 326,328, 329, 330, 331 Cases 10, 11, 12 Speaker: Keith Winfield, WWS

22(Th) Current topic presentation: Catherine Carty, Drew Crawley Debate: Angel Wu, Brandon Jones

Australian Wheat Board

Evidential Matter/Analytical Procedures AU 329, 330, 331, 332, 333, 334, 336, 337, 342 Cases 11, 12, 13, 14, 15

26(M) Current topic presentation: Jessica Jones, Les Triplett, Emily Baughman Debate: Josh Smith, Les Triplett, Will Mendrop, Mary M. Cockroft

Review for Test 2

Agreed-Upon Procedures AU 623, 625, 634 Cases 26, 27 Federal Securities Statutes AU711, 722, 801, 901 Cases 28, 29

27(Tu) Test 2(AU110-350)

28(W) Current topic presentation: Anna Sharp Debate: Judy Lynn Shackelford, Tony Roe Debate: Galyna Melnychuk, Patty Commarato Tata Finance Limited Attestation Standards AT 2101, 2201, 2301, 2401 Case 30, 31

29(Th) Current topic presentation: Leslie Little, Mandy Slawson Debate: Joshua Legg Debate: Jessica Sawyer, Sarah Young Database # 2 & 3 Due Attestation Standards AT 2501, 2601, 2701, 3100 Cases 32,33

30(F) Current topic presentation: Jon Legner Debate: Emily Baughman, Jon Legner Paper Due AT 3200, 3300, 3400, 3600 Cases 34, 35

2(M) Final Exam

Note: Assigned exercises are subject to change.