AUDITING & ATTESTATION - X422.2 (4 SEMESTER UNITS) - EDP No. 316505UNIVERSITY OF CALIFORNIA, BERKELEY EXTENSION

SAN FRANCISCO D OWNTOWN CENTER CAMPUS

COURSE SYLLABUS - CORRECTED

Dates & Time: Thursdays: 6:30 p.m. to 9:30 p.m., January 10 – May 23, 2013Instructor: Harry F. Lorsbach, CPA, CIA, MBAOffice Hours: Thursdays 6:00 p.m. to 6:30 p.m. (in classroom)Day Phone No.: (510)566-0973 (cell)E-mail: hflorsbach@gmail.comClass Home Page: http:\\proflorsbach.tripod.com (no www)

1. Course Description

This course primarily covers the examination of an organization’s financial statements to determine if they fairly present the current financial position and results of operations, and are free of significant errors. Professional ethics and auditing and attestation standards are also covered.

2. Prerequisites

Intermediate Accounting I or II, or equivalent accounting knowledge (with instructor consent).

3. Learning Objectives

After completing this course, students should be able to evaluate an organization’s system of internal controls and plan and perform an audit of a small company’s financial statements, in accordance with generally accepted auditing standards, and render an appropriate opinion thereon. In addition, students will learn about standards for other types of attestation engagements and those for conducting an integrated audit of internal controls over financial reporting required at most public companies. Research and case-type assignments are used to enhance understanding of how to research professional auditing standards and to apply those standards in real-life situations. Course also provides substantial preparation for the Auditing & Attestation section of the uniform CPA exam.

4. Texts

Required: Principles of Auditing and Other Assurance Services, 18th Edition,by Whittington & Pany, Irwin/McGraw-Hill, 2012(ISBN: Hardcover: 978-0-07-811103-7 or 978-0-07-748627-3 with ACL CDLoose-leaf: 978-0-07-748567-2 or 978-0-07-748731-7 with ACL CD)

Optional: Study Guide for the above text (ISBN: 978-0-07-732850-4)

5. Course Calendar

The attached schedule provides details on each class, but is subject to change as we progress through the semester.

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6. Course Grading

Your course grade will consist of the following components and be computed as follows:

Composition of Grade Value Grade Scale Grade

Class Contribution/Homework 150 Points 98 - 100% A+Video Analyses (3 each mandatory) 30 Points 93 - 97% AGraded Homework (60 pts each) 120 Points 90 - 92% A-Midterm Exam #1 130 Points 88 - 89% B+Midterm Exam #2 210 Points 83 – 87% BFinal Exam 360 Points 80 – 82% B- Total 1,000 Points 78 – 79% C+

73 – 77% C70 – 72% C-68 – 69% D+63 – 67% D60 – 62% D-

Below 60% FNote: During the second to the last class, students are given grading options of “credit letter grade” (default), "credit pass (CP)/not pass (NP)", or "not for credit (NC)". To achieve a credit pass (CP) grade, student must earn a C- (700 points) or better. A student who decides to stop attending class, and does not take the final exam, must formally withdraw from the course by filing a Petition to Withdraw to avoid being assigned a grade of F. For the course to count towards a Certificate, a grade of C or better is required so students must choose “credit letter grade”.

Except for graded homework assignments (4 video analyses (only 3 required) and 2 case study-type problems), homework will not be collected or graded. However, students will be called upon in class to discuss their homework solutions and this will become a factor in their class contribution grade. To receive maximum points for class contribution, students must attend class, come prepared and on time, ask questions, answer questions asked (including homework) and otherwise share subject-related experiences. Just answering homework questions when called on or attending class will NOT result in earning maximum points for class contribution. Active contribution is required. Except for the 3 video analyses, which can be handwritten, ALL graded homework assignments must be done and printed using word processing or spreadsheet software. Unless unusual circumstances exist, and you make prior arrangements with me, any late graded assignment or exam will lose 10 percent of the available points, or one full letter grade, for each class session it is late.

7. Student Success

There is a lot of material to cover and most of it will be unfamiliar to you. As such, in order to successfully accomplish the course objectives, each student is strongly encouraged to:

Complete all reading and homework assignments on time.

Make a firm commitment to complete of the course.

Develop an appropriate study plan, which includes a sufficient time budget to complete reading and homework assignments in a timely manner.

Be an active learner.

Take Responsibility for their learning. Education is a combination of working independently on assignments and interaction with classmates.

Ask questions when you do not understand the material. Be assertive in seeking out help.

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8. Teaching Style

Homework will be discussed at the beginning of most classes and will generally consist of questions, problems and cases at the end of each chapter in the required text. Then, we will discuss one or more new chapters in the text. Classes will also include discussions of real life auditing situations and current events, as well as videos.

9. Course Requirements

Access to, and use of, word processing software is mandatory for this course. Access to the Internet will be needed to do some homework assignments and to obtain some course material. Access can be obtained at most UC Berkeley Extension campuses and at public libraries. Instructor has made arrangements for students to have access to the “Open Computer Lab” at the UCB Extension Downtown Center (Northwest corner of the 8th floor). Students without Internet access must make special arrangements in advance with the instructor.

10. Exams

All three exams are a combination of multiple choice and short answer/short answer essay-type questions and are subject to time limits. Exams are not graded on a curve and are “closed books and without notes or electronic devices”. Points awarded for short answer and essay questions will be based on the student’s ability to demonstrate sufficient understanding of the subject matter. Students, for whom English is their second language, may, with advance instructor approval, use a hard copy English translation dictionary during exams.

11. Class CancellationShould class be canceled for any reason the information will be disseminated in the following manner: A notice posted on the yahoo group. An e-mail sent to your e-mail address of record (provided by you the first day of class). A call to your phone number on record.

12. Academic Integrity and Student Conduct

All students must be familiar and comply with the UC Berkeley Extension Code of Student Conduct (see http://www.unex.berkeley.edu/info/policies.html#conduct and http://extension.berkeley.edu/info/studentconduct.pdf. At all times, an atmosphere of openness, non-judgmental and academic creative thought should be maintained. Students should feel free to express relevant honest opinions and approach the material in a way that respects the rights and feelings of others in the classroom. Diversity of thought is not only encouraged, but also expected. Students should come to class with an open mind and heart, and with an inquisitive learning spirit. Professional respect for fellow students is expected in the classroom, including keeping cell phones in the off position.

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CLASS SCHEDULEAUDITING & ATTESTATION X422.2 – SPRING SEMESTER 2013

Class Date Lecture/Discussion ofJan 10 AICPA Video: The System of Investor Protection

Ch 1 - Role of the Public Accountant in the American EconomyCh 21 - Internal, Operational and Compliance AuditingVideo – Cooking the Books

Jan 17 Homework: Chapters 1 & 21, Video Analysis #1 (Cooking the Books) Ch 2 - Professional Standards

Jan 24 Homework: Chapter 2Ch 20 - Additional Assurance Services: Other Information

Jan 31 Homework: Chapter 20 Ch 3 - Professional Ethics

Feb 7 Homework: Chapter 3Ch 4 - Legal Liability of CPAs

Feb 14 Homework: Chapters 4Midterm Exam #1 Review (Chapters 1 – 4 & 20 & 21)

Feb 21 *************Midterm Exam #1 (Chapters 1 – 4 & 20, 21)****************Video: Dermaceutics Inc.: Risk Assessment & Planning

Feb 28 Homework: Video Analysis #2 (Dermaceutics) Ch 5 - Audit Evidence and DocumentationIn Class Team Analytical Procedures Problem 5-56

Mar 7 Homework: Chapter 5Ch 6 – Audit Planning; Understanding the Client, Assessing Risk & Responding

Mar 14 Homework: Chapter 6Ch 7 - Internal ControlCh 8 - Consideration of Internal Control in an IT Environment

Mar 21 Homework: Chapters 7 & 8Ch 9 - Audit SamplingCh 10 - Cash and Financial Investments

Mar 28 Homework: Chapters 9 & 10 Midterm Exam #2 Review (Chapters 5 – 10)Video: Red Flags of Fraud

Apr 4 Homework: Video Analysis #3 ( Red Flags of Fraud ) ************Midterm Exam #2 (Chapters 5 through 10)********************

Apr 11 Video: How to Steal $500 MillionCh 11 - Accounts Receivable, Notes Receivable and Revenue

Apr 18 Homework: Chapter 11Ch 12 - Inventories, Cost of Goods SoldCh 13 - Property, Plant & Equipment; Depreciation and Depletion

Apr 25 Homework: Chapters 12 & 13Ch 14 - Accounts Payable & Other Liabilities Ch 15 - Debt & Equity Capital

May 2 Homework: Chapters 14 & 15Ch 16 - Auditing Operations & Completing the AuditCh 17 - Auditors’ Reports

May 9 Homework: Chapters 16 & 17, Problem 14-44Ch 18 – Integrated Audits of Public CompaniesCh 19 - Additional Assurance Services: Historical Financial Information

May 16 Homework: Chapters 18 & 19, Problem 16-49 Final Exam Review (Chapters 11 – 19)

May 23 **************Final Exam (Chapters 11 through 19)************************

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HOMEWORK SCHEDULE - CORRECTEDAUDITING & ATTESTATION X422.2 - SPRING SEMESTER 2013

Due Date Text Question or Problem NumberJan 17 Principles of Auditing

Principles of AuditingCooking the Books Video

Ch 1: 1-28, 35Ch 21: 21-41Video Analysis #1 (10 Points)

Jan 24 Principles of Auditing Ch 2: 2-28, 30, 34, 35, 38Jan 31 Principles of Auditing Ch 20: 20-28, 29, 35Feb 7 Principles of Auditing Ch 3: 3-18, 32, 35, 38 (see note 1 below)Feb 14 Principles of Auditing Ch 4: 4- 28, 29, 30Feb 21 NoneFeb 28 Dermaceutics Video Video Analysis #2 (10 Points)Mar 7 Principles of Auditing Ch 5: 5-45, 47, 58Mar 14 Principles of Auditing Ch 6: 6-28, 35 (see note 2 below), 38Mar 21 Principles of Auditing

Principles of AuditingCh 7: 7-25, 34, 44 (complete table on page 293)Ch 8: 8-30, 35

Mar 28 Principles of AuditingPrinciples of Auditing

Ch 9: 9-37, 38, 40Ch 10: 10-37, 39, 48, 49

Apr 4 Red Flags of Fraud Video Video Analysis #3 (10 Points)Apr 11 NONEApr 18 Principles of Auditing Ch 11: 11-36, 38, 39, 48Apr 25 Principles of Auditing

Principles of AuditingCh 12: 12-23, 31, 32, 33, 34Ch 13: 13-32, 33

May 2 Principles of AuditingPrinciples of Auditing

Ch 14: 14-31, 34, 36, 39Ch 15: 15-32, 35

May 9 Principles of AuditingPrinciples of Auditing

Ch 16: 16-34, 36, Plus 14-44 (60 points)Ch 17: 17-25, 26, 27

May 16 Principles of AuditingPrinciples of Auditing

Ch 18: 18-32, 34, 35, Plus 16-49 (60 points)Ch 19: 19-29, 34

Notes: 1. Problems 3-35 and 38 – First decide if the individual CPA firm employee lacks independence. If so, then determine if this also causes the CPA firm to lack independence?

2. Problem 6-35 – You can pick any company from any industry. Instead of business risks, concentrate on identifying 3 to 5 items which provide: (i) information or accounting practices which might be important to planning the audit and/or (ii) facts which might be important to know when performing tests of particular account balances or transactions on a F.S. audit. Avoid indicators only affecting company future performance or profitability.

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