22522 Assurance Services and Audit

UTS: Business: Accounting
Credit points: 6 cp

Subject level: Undergraduate

Result Type: Grade and marks

Requisite(s): 22320 Accounting for Business Combinations AND 22420 Accounting Standards and Regulations
These requisites may not apply to students in certain courses.
There are also course requisites for this subject. See access conditions.

Handbook description

This subject addresses the provision of assurance services. It focuses mainly on the attest services offered by auditors to provide credibility of information in company and other organisation financial statements. It also considers the expansion of assurance services beyond the traditional financial statement audit into such areas as risk assessment, information system reliability, asset protection, detection and prevention of fraud and electronic commerce and deals with the methodology necessary to complete a financial statement audit or to provide other assurance services, and the criteria and professional standards used to measure information quality and integrity. The subject studies the audit process of understanding client's operations and risk, analytical review and the pivotal importance of evaluation of the quality of client internal control and evaluates internal control in a COSO framework. While internal control systems are evaluated assuming a business environment where information systems are an integral part of control systems and client operations, a variety of information technology environments (including the use of enterprise resource planning (ERP) systems such as SAP e-commerce applications) are introduced. The subject provides an understanding of professional, ethical and legal requirements and responsibilities in completing and reporting on assurance tasks. It is accredited by the accounting professional bodies.

Subject objectives/outcomes

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

understand the role of auditors and auditing in providing financial statement audits on the quality of information in firms' annual financial reports
demonstrate an understanding of the methodologies necessary to provide assurance and audit services in conjunction with the criteria used to measure information quality and authenticity, especially in the areas of risk assessment, audit planning, audit execution and the formulation of opinions
understanding professional legal and ethical requirements and responsibilities in completing and reporting on assurance and audit tasks
working as a member of an assurance/auditing team and in communicating assurance/auditing findings to appropriate users.

Contribution to graduate profile

This subject imparts the analytical and disciplinary skills necessary to provide assurance and auditing services. It gives students an understanding of the essential role that assurance services, such as auditing, play in business in achieving good corporate governance by ensuring the integrity of information and internal control systems.

Teaching and learning strategies

The concepts of assurance and auditing together with the methodology used by auditors in both IT and manual environments will be presented in the lecture. The tutorials will enable the further development of these concepts through questions, discussion and case studies. The workshops will enable students to discuss and debate issues that may arise in the audit simulation that is the basis of the audit team assignment. Students will be expected to present reviews of case studies and key points emerging from assigned hard copy and online readings for rigorous class discussion. Presenting of case studies will develop verbal communication skills. The homework requirements of students are described in more detail in Section 8: Weekly Study Programme.

Students should use the tutorial/workshop leader as an audit 'senior' or 'manager' to supervise and direct their work, when preparing the Audit Team Assignment, but not to providing a solution for the assignment. The structure of the subject conforms to UTS Flexible Learning Guidelines.

UTS Online is used in this subject for the dissemination of subject materials such as lecture notes and general information. The Discussion Board is unmoderated, i.e. teaching staff will not be responding to questions on UTS Online. The Discussion Board exists purely for discussion amongst students enrolled in the subject. If you have any questions for the teaching staff, please raise them in your tutorial.

Content

Purpose of assurance services
The framework for conducting assurance services
The criteria to determine the quality and reliability of financial statement information
Practical auditing experience
Formulation of audit opinion on the level of truth and fairness in financial statements
Legal and ethical responsibilities of auditors to their clients, the general public, and stakeholders of the firm.

Assessment

Assessment item 1: Midsemester Exam (Individual)

Objective(s):	1-3
Weighting:	15%
Task:	This addresses objectives 1, 2 and 3.

Assessment item 2: Audit Team Assignment (Group of 4 students)

Objective(s):	2, 4
Weighting:	25%
Task:	This addresses objectives 2 and 4.

Assessment item 3: Final Exam (Individual)

Objective(s):	1-4
Weighting:	60%
Task:	This addresses objectives 1-4.

Required text(s)

Eikner and Robertson (2009) Cloud 9 Pty Ltd: An audit case study, Wiley

ICAA (2009) Auditing and Assurance Handbook 2009, Wiley

Recommended text(s)

Gay and Simnett (2007) Auditing and Assurance Services, 3rd edn REVISED, McGraw Hill.

Indicative references

This subject deals with professional issues that require understanding of the technical aspects of completing an audit and how audits are used in the marketplace. Part of the process of gaining a proper understanding of auditing is to develop a habit of reading widely in the professional and academic literature.

This subject does not require a textbook — only the handbook and the case book. However, students may wish to purchase a textbook. If you wish to practise multiple choice questions, purchasing the textbook is advised — you will be given a unique access code to the textbook's online study centre.

You must purchase the two prescribed books listed — they will be required for homework. Please note that purchasing photocopied versions of textbooks is illegal. Students found to be in possession of such material may face criminal charges.

Bell TF Marrs I Solomon H Thomas, 1997, Auditing Organisations Through a Strategic-Systems Lens KPMG Peat Marwick LLP

Committee of Sponsoring Organisations of the Treadway Commission, 1992, Internal Control — An Integrated Framework

CPA Australia Quality Control Management in Accounting Practices: Guidance Manual for Practitioners

Greenstein M and M Vasarhelyi, 2002, Electronic Commerce: Security Risk Management, and Control 2nd McGraw-Hill

Hall JA, 2000, Information Systems Auditing and Assurance South-Western College Publishing Cincinnati Ohio

Watts R and Z Zimmerman, 1986, Positive Accounting Theory Prentice Hall (Chapter 13)

Weber R, 1999, Information Systems Control and Audit Prentice Hall Sydney

Wilkinson JW and MJ Cerullo, 1997, Accounting Information Systems Wiley 3rd edition

Wright M, 1999, Auditing in an IT Systems Environment Audit Guide No 5 Australian Accounting Research Foundation Melbourne

Articles

Getting Technical, 1996, Auditing Issues: Auditing Investments under CHESS Charter pp 62 & 63

Fargher NL and AA Gramling, 1996, A New Market for Attestation Services: The Performance Presentation Standards of the Association for Investment Management and Research Auditing: A Journal of Practice and Theory 15 Supplement

Greinke A and G Shailer, 1997, Auditing the Auditors — The Esanda Case Australian Accountant (Now Australian CPA) 67 7 August pp 16–18

Watts R and Z Zimmerman, 1983, Agency Problems Auditing and the Theory of the Firm Journal of Law and Economics 26 pp 613–634