BA 427 – Assurance and Attestation Services
Winter 2007

[Syllabus]

Class Schedule

Class	Date	Topic	Readings
Module 1: Corporate governance, internal controls and internal auditing
1	1/8	Introduction
2	1/10	Corporate governance, tone at the top, and audit committees Speaker: James Parkin, Partner, Deloitte & Touche	Treadway: Introduction and Summary of Recommendations Turner: Audit Committees: A Call to Action Report and Recommendations of the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees: pp 2 – 19 Sarbanes-Oxley Act: Title III, sections 301 – 304, pp. 41 – 45 Sarbanes-Oxley Act: Title IV, sections 406 – 407, pp. 58 – 60 NYSE: Items 1 through 10 (pp 4 – 16)
3	1/12	Internal controls: background and concepts	Gleim: Chapter 4: read 4.1, 4.2, 4.4, and 4.5. Neumann: Corporate Audit Committees and the FCPA Journal of Accountancy: Internal Accounting Control: A Matter of Law COSO: Internal Control – Integrated Framework, Executive Summary
4	1/17	Internal controls: sales and receivables	Gleim: Chapter 5
5	1/19	Internal controls: purchases, inventory, and payroll	Gleim: Chapters 6 and 7 (7.1 and 7.2)
6	1/22	The internal auditing profession Speaker: Russell Price, Internal Audit Manager, Intel	Gleim: Chapter 9 GAO: Chapter 3 (pp. 67 – 73, 75 – 80) FDIC: sections 363.2 and 363.3 (pp 459 – 460) Sarbanes-Oxley Act: Title IV, section 404, p. 58 Strategic Finance: Use of COSO 1992 in Management Reporting on Internal Control PCAOB: Auditing Standard #2, sections 1 – 27 and 162 – 167
7	1/24	Reporting on internal controls	IIA: “Key Messages,” answers to 12 questions IIA: International Standards for the Professional Practice of Internal Auditing IIA: Professional Ethics NYSE: Item No. 7(d) on p. 13
8	1/26	Exam 1
Module 2: The public accounting profession
9	1/29	Overview of the profession	Metcalf: Letter of Transmittal and pp. 112 – 120, 1976 Business Week Editorial: A rebuttal to Metcalf, 1977 GAO: Executive Summary, pp. 2 – 6 Panel: Introduction (pp. 1 – 3), Chapter 8, and Appendix B U.S. Chamber of Commerce: Auditing: A Profession at Risk
10	1/31	The legal environment	Montgomery’s Auditing, 12^th ed.: Chapter 5 JOA: News Report: Washington Update, 1996
11	2/2	Evolution of the regulatory and self-regulatory environment	Treadway: Chapter 4, pp. 63-78 Public Oversight Board: Final Annual Report 2001, pp. 1 – 5 POB White Paper: pp. 36 – 50 Panel: Chapter 6 (pp. 135 – 138) and Appendix C AICPA – AAQCSSA: Appendix A
12	2/5	The new regulatory environment	Sarbanes-Oxley Act: Title I, pp. 9 – 35 PCAOB: 2005 Annual Report, pp. 2 – 17 Gleim: Chapter 1: 1.8
13	2/7	Professional ethics and the Code of Conduct	AICPA Code of Conduct: Read the introduction, Section 50, Rules 101, 102, 201 – 203, 301, 302, 501 – 503, Interpretations under 501, and 505: http://www.aicpa.org/about/code/index.html
14	2/9	Tales of fraud that keep auditors awake at night	Wikipedia: corporate fraud summaries Healy and Palepu: The Fall of Enron, 2003
15	2/12	The accounting profession’s response to fraud	Treadway: Chapter 3 GAO: Chapter 3 (pp. 60 – 67) Fraudulent Financial Reporting: 1987 – 1997: Sections I and V Panel: Chapter 3
16	2/14	The current environment for fraud risk and detection Speaker: Darrell Dorrell, Principal, Financial Forensics	Statement of Auditing Standards No. 99: sections .01 through .84 (pp 277 – 300-5) KPMG Forensic: Integrity Survey 2005 – 2006, pp. 1 – 22 http://www.404institute.com/docs/050362_ForIntegritySurvNEW.pdf
Module 3: The components and objectives of an independent audit
17	2/16	The types of services offered by public accounting firms	Gleim: Chapters 1 (1.1 – 1.7), 18, 19 (19.1 – 19.3, 19.8 – 19.11), and 20
18	2/19	Client acceptance, engagement planning, risk assessment and materiality Speaker: Larry Brown, OSU accounting faculty; and Partner (retired), PricewaterhouseCoopers	Gleim: Chapters 2, 3 (3.1 and 3.2) and 14 (14.1) Panel: Appendix A KPMG: The 21^st Century Public Company Audit, Chapters 1 – 3
19	2/21	Exam 2	Covers material through 2/16.
20	2/23	The nature of audit evidence	Gleim: Chapter 10
21	2/26	Tests of controls	Gleim: Chapter 8
22	2/28	Substantive testing Speaker: Glenn Lovett, Partner, Geffen Mesher & Company	Gleim: Chapters 11, 12, and 13 (13.1, 13.3 and 13.5)
23	3/2	Audit sampling	Gleim: Chapter 15
24	3/5	Completing the audit Speaker: Rob Moody, Senior Audit Manager, Talbot, Korvola & Warwick	Gleim: Chapters 3 (3.3, 3.4 and 3.5) and 14 (14.2 – 14.7)
25	3/7	The auditor’s report	Gleim: Chapters 16, 17, and 19 (19.4 – 19.7)
26	3/9	Exam 3	Version A; Version B; Version C; Version D (the letter for the correct answer to each question is in parentheses)
Module 4: Auditor Independence
27	3/12	Auditor independence: background (this material is included in the hyperlink for lecture 28)	Panel: Chapter 5 on Auditor Independence, and Appendix D GAO: Chapter 2, Auditor Independence Earnscliffe: Introduction; pp. 13 – 18; and pp. 19 – 22
28	3/14	Auditor independence: events from 2000 through 2002	Business Week: Accounting Wars, September 25, 2000 IIA: The IIA’s Perspective on Outsourcing Internal Auditing IIA Today: The Institute Consolidates its Evolving View of Outsourcing The CPA Letter: Sept. 2000, Dec. 2000, Jan. 2001 Kenneth Lay: letter to SEC Chairman Arthur Levitt, 2000 U.S. Senate Testimony: (see below for web addresses) The CPA Journal: “Three Voices, One Message Business Week: “The Worst Managers,” January 13, 2003
29	3/16	Auditor independence: current standards	Sarbanes-Oxley Act: Title II, pp. 36-41 SEC Rules: Final Rule: Strengthening the Commission’s Requirements Regarding Auditor Independence AICPA: A Conceptual Framework for AICPA Independence Standards AICPA: AICPA – SEC Independence Rules Comparison, pp. 13 – 25; and AICPA – GAO Independence Rules Comparison (see web addresses below) Spacek: Professional accountants and their public responsibility, 1957

Abbreviations:

AICPA: American Institute of Certified Public Accountants

AICPA – SEC Independence Rules Comparison, available at: http://www.aicpa.org/download/ethics/11_2003_AICPA_SEC_IndependenceRulesComparison.pdf

AICPA – GAO Independence Rules Comparison, available at: http://www.aicpa.org/download/ethics/2004_02AICPA-GAO_rules_comparison.pdf

AAQCSSA: Auditing, Attestation and Quality Control Standards Setting Activities: Operating Policies

ASB: Auditing Standards Board

Blue Ribbon Committee: Report and Recommendations of the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees

COSO: Committee of Sponsoring Organizations of the Treadway Commission

Earnscliffe: Report to the United States Independence Standards Board: Research into Perceptions of Auditor Independence and Objectivity, November 1999

FCPA: Foreign Corrupt Practices Act

FDIC: Code of Federal Regulations, 1-1-94 Edition (enacted by the Federal Deposit Insurance Corporation Improvement Act of 1991)

GAO: The Accounting Profession; Major Issues: Progress and Concerns, General Accounting Office, September, 1996, available at: http://www.gao.gov/archive/1996/ai96098.pdf

IIA: Institute of Internal Auditors

Metcalf: “The Accounting Establishment: A Staff Study,” a report prepared by the Subcommittee on Reports, Accounting and Management, of the U.S. Senate Committee on Government Operations, chaired by Lee Metcalf, Senator from Montana.

NYSE: New York Stock Exchange: Final NYSE Corporate Governance Rules, 2003

Panel: The Panel on Audit Effectiveness: Report and Recommendations, August 31, 2000

PCAOB: Public Company Accounting Oversight Board

POB White Paper: The Road to Reform: A White Paper from the Public Oversight Board on Legislation to Create a New Private Sector Regulatory Structure for the Accounting Profession

SEC: Securities and Exchange Commission

Treadway: Report of the National Commission on Fraudulent Financial Reporting, October 1987

U.S. Senate Testimony: 2002 testimony to the U.S. Senate Committee on Banking, Housing, and Urban Affairs, available at:

http://banking.senate.gov/02_02hrg/021202/sarbanes.htm

http://banking.senate.gov/02_02hrg/021202/breeden.htm

http://banking.senate.gov/02_02hrg/021202/levitt.htm

http://banking.senate.gov/02_03hrg/030602/longstr.htm