The objective of the auditing course is to help each student obtain the skill, knowledge, and personal characteristics necessary to practice successfully as an auditor. This course is an intensive conceptual and applied introduction to assurance services in society. Topics include assurance services provided by Certified Public Accountants (CPA’s) and non-CPAs. This course is organized around a framework of providing you with a foundation in the requirements for providing high quality assurance. This course emphasizes not only acquiring knowledge, but also skills and attitudes required for success in the accounting profession. Two key attitudes required for this course are: 1) Intellectual curiosity and 2) Taking responsibility for your own learning. You should know the macro-level learning objectives embedded within the course’s three modules:
• Module 1 should help you come to understand that:
(1) Assurance services are judgment-driven services provided by independent professionals that improve the quality of information for decision makers. The demand for and supply of assurance are influenced by cultural, economic (e.g., industry-specific), regulatory, and technological factors.
(2) When information asymmetry, conflicting interests, and profit motives exist, assurance demand endogenously arises. Properties of such demand depends in part on both assurer and assuree characteristics and on properties of alternative mechanisms that could improve information quality.
(3) A key assurance service is attestation, which involves examining and reporting on the veracity of assertions. Organizations make different types of assertions. The extent to which assertee and asserter organizations demand third-party attestation depends, in part, on attributes of assertions. One form of attestation is financial-statement audits.
• Module 2 should help you come to understand a conceptual framework by which assurance professionals can assess, evaluate, and manage assurance-related risks and evidence. More specifically, you should come to understand:
(1) that inferential concepts and practical tools exist and can facilitate your reasoning about properties of risk (e.g., likelihood and significance) and evidence (e.g., persuasiveness, diagnosticity, predictive validity)
(2) that evolving standards-based risk models exist within generally accepted auditing standards (GAAS). These well-known models attempt to decompose audit risk with an underlying goal to help CPA assurers plan and perform financial statement audits, and
(3) that many assurance professionals use broad strategic-system risk models embellish and arguably correct some deficiencies of standards-based risk models. Strategic-systems models help assurers identify organizationz’ strategic and business risks, which stem from cultural, economic (e.g., industry-specific), regulatory, and technological factors. These risks, and organizations' responses to them, influence the quality (i.e., the relevance and reliability) of organizations' performance measures and attendant assertions. Assurance providers must assess the implications of such risks and organizational responses to determine the nature and extent of evidence needed when delivering specific kinds of assurance services.
• Module 3 reinforces previously introduced concepts. It requires you to design and execute a series of evidence-gathering procedures and to assess the implications of obtained evidence for an organization’s assertions. Within module 3 you should come to understand that:
(1) Attesters draw upon frameworks to assess and attest to organizations' internal control strengths and weaknesses. Even when assertions about controls are not the primary topic of an attest engagement, evidence about their design and operational integrity can provide indirect verification of assertions. Weak controls can elevate the risk of materially misstated assertions. Such risk must be reduced to an acceptably low level via the use of direct "substantive" verification procedures;
(2) The nature and benefits of different kinds of risk-assessment procedures (e.g., analytical procedures, confirmations, tracing, and vouching) affects the degree to which different kinds of misstatements are susceptible to detection (non-existence, incompleteness, mis-valuation, inadequate disclosure, etc.), and
(3) The art and science of interpreting evidence and aggregating likely/possible amounts (or degrees) of misstatement requires much professional judgment. Professional judgment also guides the assessment of the materiality of misstatements.