Auditing
2nd Semester, Course Code: ΜΕΧΡΗ325
Credits: 6
Learning Outcomes
The course aims at developing students’ understanding of the critical aspects of managing an assurance and audit engagements: acceptance, planning, managing, concluding and reporting.
By the end of this module, students should be able to:
- Understand and advise on the regulatory, professional and ethical issues relevant to those carrying out an assurance/audit engagement
- Understand the processes involved in accepting and managing assurance/audit engagements, and how quality assurance/audit processes mitigate the risks to those conducting the engagement
- Plan assurance/audit engagements in accordance with the terms of the engagements and appropriate standards
- Conclude and report on assurance/audit engagements in accordance with the terms of the engagements and appropriate standards.
General Competences
General Abilities
- Search, analysis and synthesis of financial data and relevant information.
- Critical thinking on scientific topics related to the content of the module, relevant decision-making.
- Development of analytical and synthetic thinking, ability for autonomous work.
- Working in an international environment, understanding the challenges of applying accounting rules in an international environment.
- Working in a multidisciplinary environment, collaborating with scholars of closely related scientific fields.
- Production of creative and deductive thinking and critical reasoning.
Course Content
Module content
1.Introduction
- Types of Assurance engagements conditional on: timeframe, parties involved (external, internal, government-oriented), subject – purpose
- Users of reliable financial and accounting information – Providers of reliable financial and accounting information
- Inherent weaknesses of financial statements
- Assurance/ audit purpose
- Auditors’ role – Greece’s governing Law (L. 3604/2007 and L. 3693/2008)
- Basic concepts relating to auditing
- Services provided by auditing firms (assurance, related services, consulting)
- Assurance providers’ responsibilities (requirements of any legislation or regulation, terms of engagement for the assignment, ethical and professional standards, quality control standards)
- Assurance service’s description (scope, necessity, basic elements)
- Auditor’s opinion
- Small recap on firms’ financial statements
- Related services’ description
- Consulting services’ description
3.Corporate Governance and Audit
- Corporate Governance’s purpose
- Corporate Governance’s tools
- Relevant legislation (USA SOX 2002, Directive 2006/43/EC, L 3016/02 and L 3091)
- Audit Expectations Gap
- Auditor’s responsibilities (social, legal liabilities)
- Degrees of legal liability under the Greek legislation
- Fraud definition (types and examples)
- Red flags
4.Professional Judgment and the auditing process
- Decision-making process
- Errors in decision-making processes
- Heuristics
- Ethics
- Auditor’s objectiveness and independence (along with the relevant regulatory framework in Greece)
- Adopting the IFAC Code of Ethics in Greece
- Threats to objectivity and independence
- Safeguards against the threats
5.True and fair view of financial statements and the auditing process
- Management assertions
- Audit evidence (trustworthiness, process of collecting audit evidence, inherent weaknesses in gathering audit services)
- Comparing the reliability of different types of assurance evidence
- Audit working papers and Audit file
6.Audit process and relevant analytical processes
- Selection, Planning, Execution, Reporting, and Follow-Up.
- Materiality
- Analytical processes defined
- Application of analytical processes
- Types of analytical processes
7.Internal audit – Internal auditing systems defined – Control risk in internal auditing systems
- Parties affecting internal auditing systems
- Key elements of internal auditing systems
- Internal auditing in SMEs
- Weakness of internal auditing systems
- Assessing the effectiveness of internal auditing systems
8.Residual audit risk
- Audit risk Model
- Planning (tests) for errors
- Planning and developing an audit process
9.Audit sampling
- Risks related to audit sampling
- Types of audit sampling and types of samples
- Errors in audit sampling
10.Audit report defined (its importance)
- Written opinions (what type of questions are addressed) and auditors’ responsibilities
- Types of written opinions
- Audit reports when there is a disagreement between the auditor and firm’s management
- Main components of an auditing report
A number of case studies conditional on specific accounting data (eg. sales, inventory etc) will be covered during the conduction of this module.
Student Performance Evaluation
- Compulsory written exam at the end of the semester. This involves providing answers to exercises and problems, using numerical data or discursive descriptions, and a critical evaluation and discussion of the results, and also possible answers to multiple choice questions and theoretical questions, as well as short cases.
- Individual assignment – case study, for <20% of the grade of the module.
Bibliography
Suggested Bibliography
- Module material uploaded on Eclass
- Modern Auditing, Theory and Practice according to the International Auditing Standards, Karamanis Konstantinos, 2008.
- “Auditing Cases (translated)”, Beasley Mark, Buckless Frank, Glover Steven, Prawitt, Broken Hill Publishers LTD
Related Academic Journals
- Porter, B., Hatherly, D. and Simon, J. (2014), Principles of external auditing. Wiley, Hoboken, NJ.
- Eilifsen, A., Messier, W. and Prawitt, D. (2014), Auditing and assurance services. McGrawHill, London
- Handbook of International Auditing, Assurance, and Ethics Pronouncements, International Federation of Accountants, New York. (available at http://www.ifac.org).
M.Sc in «Financial Management of Public Organizations and Units»