22908 Economics of Auditing and Assurance Services

Subject level: Undergraduate

Handbook description

This subject exposes students to research literature with an economics-based approach in the field of auditing and assurance services. Further it complements studies in other honours subjects and makes explicit the linkages between the different fields of study through the economics-based approach to corporate governance.

Subject objectives/outcomes

On successful completion of this subject students should be able to:

1. understand key developments in theories of auditing and assurance
2. understand the application of the theories to practice
3. understand the key methodological issues in empirical analyses of the theories
4. undertake independent empirical research into auditing and assurance issues
5. understand the role of auditing and assurance in governance of the firm.

Contribution to graduate profile

This subject exposes students to research literature with an economics based approach in the field of Auditing and Assurance Services. Further it complements studies in other honours subjects and makes explicit the linkages between the different fields of study through the economics based approach to corporate governance. The subject teaches students about specific theories and methodologies that are not emphasised in other fields of study in the honours program and equips students with skills to make contributions to government policy and corporate governance by reviewing literature that investigates their impacts on financial accounting, corporate finance, and the market for auditing and assurance services.

Teaching and learning strategies

Students will attend a 3-hour seminar which will be a mix of formal presentations by the instructor, presentations by students on allocated papers and discussion of a selected research problem/key questions distributed in advance on the topic.

Formal presentations by students on papers in the reading lists will be used to gauge student understanding of the research ideas and the research process used in the studies and the implications of the research for practice and further research. Discussion among the student group will be used to gauge the ability of the students to defend their interpretation of the readings and to challenge alternative views. Key questions will be set for each topic and the students will use the questions to guide their reading.

Content

• Overview of the Economics-Based Empirical Research in Auditing
• Value of Auditing Services
• Auditing and the Firm
• Quality Differentiated Audits
• Audit Pricing
• Auditor-Client Alignments
• Audit Market Restructuring
• Earnings Management and Audit Quality
• Equity Valuation and Audit Quality
• Auditor Independence.

Assessment