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Syllabus Fall04


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									ACCT 497: AUDITING I
Iowa State University
Fall 2004
Prof. Dilla

Class Meeting Time: 9:00-10:00 MWF 0119 Gerdin Business Building
Office: 3342 Gerdin Business Building
Office Phone: 4-1685 (voice mail answers 24 hours. per day!)
e-mail: Class home page:
Office Hours: TTh 1:30-3:00; other times by appointment
Texts--required: Messier, Auditing and Assurance Services 3rd Edition
                Readings Packet from Copyworks
Prerequisite: ACCT 384 and ACCT 386

Course Objectives
** To learn what auditing and assurance services are.
** To learn why auditing and assurance services are important in today's economy.
** To become familiar with the economic and regulatory environment affecting financial reporting,
auditing, and assurance services.
** To learn about changes in this environment, in light of recent cases where regulatory oversight over
accounting and auditing has failed.
** To become familiar with the financial auditing process, as follows:
       assessing the inherent risk of errors or fraud
       evaluating controls
       gathering audit evidence
       evaluating audit evidence
       reporting audit results

Course Grading and Activities
Course grades will be based upon the following allocation of points:

                                          Plan A          Plan B
        Four exams at 100 points         400 points       400 points
        Written Assignments              100 points       100 points
        Quizzes (taken in small           50 points
        Fraud research report            100 points       100 points
          TOTAL                          650 points       600 points

Semester grades will be based on the percentage of total points earned. Your grade will be based on the
plan that yields a higher percentage; you do not need to choose a grading plan in advance. Tentative
grade cutoffs (in percentages of available points) are shown below. These cutoffs may be revised at the
discretion of the professor.

         Grade       Percentage          Grade        Percentage
          A           >=93.0%             C+          77.0 – 79.9
          A-         90.0 – 92.9          C           73.0 – 76.9
          B+         87.0 – 89.9          C-          70.0 – 72.9
          B          83.0 – 86.9          D           60.0 – 69.9
          B-         80.0 – 82.9          F            <60.0%
Exams: Four exams will be given. The first three will occur during the course of the semester. The
fourth exam will be given during the final exam period, but will not be cumulative. Exam coverage will
be announced in class in advance of each exam. Students will only be allowed to reschedule exams for
the following reasons:

       1) unavoidable work or interviewing conflicts
       2) urgent personal emergencies (i.e., illness, death in the family, unable to get to campus because
       of weather)
       3) conflicts with religious holidays
       4) participation in University intercollegiate athletic teams

Makeup exams for non-emergency reasons (1, 3, and 4 above) must be arranged in advance. Makeup
exams should be taken before the scheduled exam, if possible. All makeup exams must be taken before
the exam is handed back to the class. If a student is unable to make up an exam, points will be
reallocated so that the remaining exams are worth a total of 400 points.

Re-scheduling the last exam is allowed only for one of the four reasons listed above. If an urgent
personal emergency occurs, and a student is unable to take the last exam by the end of the final exam
period (December 17), he or she will receive an incomplete for the semester.

Quizzes: A number of unannounced quizzes will be given during the semester. Students must complete
these working in small groups (2 to 4 students). Students’ two lowest quiz grades will be dropped. If a
student misses a class where a quiz is given, that counts as a drop. Makeup quizzes will not be given for
any reason. The dual grading plan should compensate for students with low quiz scores.

Quizzes will be graded on a scale of 0 to 10. Total quiz scores will be re-weighted to 50 points, by taking
each student’s total quiz score and dividing it by the total number of available quiz points. For example,
suppose that 9 quizzes were given during the semester, and that, after dropping the two lowest scores,
your total quiz grade is 63. Your quiz grade would be 63 divided by the maximum available number of
points (70) times .50, or 45 (quiz grades are rounded to the nearest whole number).

Homework: There will be four homework assignments during the semester. Assignments and due dates
are listed on the syllabus. These must be typed. Assignments 1 and 2 are worth 10 points each.
Assignments 3 and 4 are worth 40 points each. Assignments 1 and 2 are individual assignments.
Students will have the option of completing assignments 3 and 4 in groups (2 to 4 people) if they wish.

Fraud report: Students will write a short (no more than five page) paper on a recent case of financial
statement fraud. Detailed instructions for writing the report will be given on a separate handout.

Late assignments: Homework assignments and the fraud report are due at the beginning of class on the
date assigned. Assignments handed in later, but on the same day, are considered one day late, those
handed in 24 to 48 hours late are two days late. Assignments more than two days late will not be
accepted. Penalties for late assignments are 10 percent of possible points per day. For example, if an
assignment is worth 40 points, the late penalty will be 4 points per day.

If you are unable to come to campus on a day that an assignment is due, you may submit your
assignment as an e-mail attachment ( The time the assignment is sent from your e-
mail account is considered the submission time for determining whether an assignment is on time or not.
Research project participation: Students may have the opportunity to participate in one or more
research projects during the semester for course credit. Credit will be applied to either the quiz grade or
homework grade. The type and amount of credit to be given will be announced before the research
project is conducted.

Course Organization and Resources

Scope of Course and Learning Objectives
Class time will be divided between lectures and discussion of assignments. You are expected and
encouraged to participate in the classroom discussions. Because of the large amount of material covered
in the course, we will not always be able to discuss all readings and written assignments in class. The
textbook for this course covers a wide range of material in fairly extensive detail. There is a list of
learning objectives at the beginning of each chapter. The learning objectives that you are responsible for
are listed on the syllabus. Note that you are responsible for all material assigned, whether covered
in class or not.

Class Preparation and Discussion Assignments

You should complete class reading assignments before coming to class. We will usually complete one or
two discussion assignments in each class. These will not be collected, except as noted. Some will not
even require advance preparation (other than completing the assigned reading). However, when
discussion assignments do require advance preparation, you should come to class prepared. Being
prepared for class and willing to participate will make the classroom experience more interesting
and stimulating for everyone.

Textbook Questions / Problems

There are a number of assignments from the textbook indicated on the syllabus. These are of three types:
review questions (R), multiple choice questions (M), and problems / discussion cases (P). Review and
multiple-choice questions are all for self-study; we will not review these in class. We will cover some of
the cases and problems in class, but the majority of these will also be for self-study. You will have
access to the answers for assigned textbook questions / problems from the course web site.

Course Web Site

There are extensive class materials available on the course web site (see home page URL above). These
include a summary of web links for use in research projects, articles on topics of current interest, class
notes, problem solutions, and old exams. The majority of these materials are in a password-protected
section. The user name and password for these materials will be given out the first day of class.
Course Schedule

We will cover the course material as indicated below. Listed learning objectives indicate the material
that you are responsible for. H in the assignment list indicates a class handout; P refers to the readings
packet from Copyworks. Important dates (assignment due dates, exams) are in bold type.

              Topic and                                              Assignments
Dates         Learning Objectives                Reading          Discussion and Written        Self-Study

8/23, 8/25    Introduction to Auditing Chapter 1                                           Review Questions
              and Assurance Services                                                       (R): all
              (all except 3 on p. 3)                                                       Multiple-Choice
                                                                                           (M): all
                                                                                           Problems (P): 1-23

8/27          The Public Accounting      Chapter 2 (to p. 45)    Assignment #1: 8/27
              (1, 2 on p. 37)

8/30, 9/1, 9/3 Audit Process Overview Chapter 2 (p. 45 to end)   Assignment #3: 9/3        R: all M: all P: 2-26
               (remaining objectives
               on p. 37)

9/6 No class—Labor Day holiday

9/8, 9/10,    Ethics and the Code of Chapter 19 (to p. 689)      Leigh Ann Walker (P)      R: 19-1 to 19-10
9/13          Professional Conduct (1                                                      M: 19-12 to 19-22
              to 3, 5 to 12 on p. 659)                                                     P: 19-26, 19-32

9/15          Evidential Matter (1 to    Chapter 4               Audit Planning            R: all M: all P: 4-
              4 on p. 138)                                       Worksheet (H)             22, 4-23, 4-24

9/17 (Friday) Exam One

9/20, 9/22    Evidential Matter (5 to    Chapter 4               Audit Planning            R: all M: all P: 4-
              9 on p. 138)                                       Worksheet (H)             26, 4-29

9/24, 9/27,   Materiality and Audit      Chapter 3                                         R: all M: all P: 3-
9/29, 10/1    Risk (all except 3 on p.   “Cooking the Books”                               26, 3-27, 3-28, 3-29,
              81)                        outline (P)                                       3-30

10/4, 10/6    Audit Planning (1 to 8     Chapter 5 (to p. 184)   Assignment #3: 10/4       R: all M: all P: 5-
              on p. 171)                                         Murphy Tymshare (P)       23, 5-24, 5-27, 5-29

10/8, 10/11   Analytical Procedures      Chapter 5 (from p. 184), Regina Co. (P)           P: 5-31, 5-32
              (9 to 11 on p. 171)        Analytical Procedures
                                         Reading (P)

10/13 (Wednesday) Exam Two

10/15 (Friday) NO CLASS

10/18, 10/20, Internal Control (all on   Chapter 6               Assignment #4: 10/20      R: all M: all P: 6-
10/22, 10/25 p.210 except 13)                                    Trolley Dodgers (P)       24, 6-28, 6-30, 6-33
               Topic and                                            Assignments
Dates          Learning Objectives              Reading          Discussion and Written        Self-Study

10/27, 10/29   Internal Auditing         Readings from packet    Cinema Paradisio (H)     Problems from

11/1, 11/3     Information Technology Chapter 7                  IT fraud case (H)        R: all M: all
               and Auditing (all on                                                       P: 7-25, 7-26, 7-31,
               p.257)                                                                     7-32, 7-33, 7-35

11/5, 11/8,    Audit Sampling: Tests     Chapter 8               Attribute Sampling       R: all M: all P: 8-
11/10          of Controls (1 to 7 on p.                         Case (H)                 21, 8-22, 8-25, 8-26,
               297)                                                                       8-27, 8-28

11/12 (Fri.) Exam Three

11/15, 11/17, Revenue Process (all on Chapter 10,                Accts. Receivable        R: all M: all P: 10-
11/19         p.369)                  Dermaceutics Revenue       Cases (H)                24, 10-27, 10-28, 10-
                                      Cycle Narrative (P)                                 29, 10-33

11/22-11/26 Thanksgiving Break

11/29, 12/1    Purchasing Process (all   Chapter 11              Jack’s Appliances (H)    R: all except 11-1
               on p. 423)                                                                 M: all
                                                                                          P: 11-25, 11-27, 11-
                                                                                          28, 11-29

12/1 (Wed.) Fraud papers due.

12/3, 12/6     Completing the            Chapter 17                                       R: all M: all P: 17-
               Engagement (all on p.                                                      22, 17-23, 17-25, 17-
               591)                                                                       28, 17-30

12/8, 12/10    Audit Reports (1 to 8 on Chapter 18 (to p. 642)                            R: all except 18-9 M:
               p. 623)                                                                    all P: 18-23, 18-24

Exam 4: During assigned final exam time. Dates to be announced.

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