SCHOOL OF BUSINESS AND ACCOUNTANCY

COURSE SYLLABUS

Course Code : AUDTHE

Course Title : Auditing Theory
Credit : 3.0
Pre-requisite/s : FINACR1, FINACR2, & FINACR3
Instructor : Cristy Allauigan / Jennica Torno
Class Days and Time : _________________________
Classroom : _________________________

Course Description:

The focus of the course is on the conceptual knowledge and understanding of assurance and related services
performed by professional accountants. It discusses the nature of assurance and related services particularly the
independent audit of financial statements, the responsibilities of professional accountants; audit process; audit
objectives, evidence, procedures, auditing standards and the elements of the independent auditors report. It also
introduces the AASC Pronouncements (PSA, PSRE, PSAE & PSRS), Philippine Accountancy Act of 2004 and 2008
Code of Ethics for professional accountants.

Course Objectives:

At the end of the course, the students should be able to:

Know and understand the auditing standards affecting the practice of accountancy.
Identify related audit methods/ procedures that are necessary in performing an independent audit of financial
statements.
Recognize various audit tools and techniques available to the auditor in performing the audit.
Analyze audit related cases and apply the concepts and principles learned from the course.
Demonstrate the 5Cs: critical thinking, commercial ethics, computer literacy, communication skills and
community services.
Strengthen and practice the values of honesty, integrity, diligence and perseverance in the practice of auditing.

Course Requirements and Grading System:

Midterm Grade (MTG) Final Grade

Quizzes (Q) 25% Quizzes 50%
Midterm Exam (MTE) 20% Midterm Exam 20%
(Q * 25%) + (MTE *20%) Final Exam 30%
MTG =
45% Final Grade 100%
Schedule of Lectures and Class Activities:
Inclusive
Week Topic/s
Dates
1 June 27 Auditing Concepts
to July 2 o Introduction to Audit
o Nature of Audit and
Attestation Services
o Audit Standard Setting
Bodies
o Types of Audits and
Auditors
2 July 4 Professional Standards and
to July 16 Auditors Responsibility
o Attestation Standards and
Auditing Standards
o Philippine Standards on
Auditing
3 o Quality Control System
o Auditors Responsibility
to Detect & Report Fraud
o Error and Fraud
o Non-compliance with
Laws and Regulations
4 July 18 Audit Planning
to July 30 o Understanding of the
Clients Business and
Industry
o Client Strategies
o Decision to Accept an
Engagement
o Establishing an
Understanding with
5 Management
o Planning Interim and
Year-end Audit Work
o Audit Risk
o Materiality in a Financial
Statement Audit
o Analytical Procedures
o Planning Documentation
6 Aug 1 Internal Control and Risk
to Aug 13 Assessment
o COSO Reports
Framework for Evaluating
Internal Control
o Control Environment
o Risk Assessment
o Control Activities
o Information and
7 7
Communication
o Monitoring
o Consideration of Internal
Control and Assessment
of Control Risk
o Audit of Internal Control
Class Activities
Lecture & Discussion
Quizzes & Recitation
Situational / Case Analysis
Suggested Readings:
o Cabrera, Chapter 1
o Salosagcol, Tiu, &
Hermosilla, Chapters 1 &
12
Lecture & Discussion
Quizzes & Recitation
Situational / Case Analysis
Suggested Readings:
o Rittenberg, Chapters 1 &
2 considerations in audit.
o Salosagcol, Tiu, &
Hermosilla, Chapters 2 &
3
Lecture & Discussion
Quizzes & Recitation
Situational / Case Analysis
Suggested Readings:
o Rittenberg, Chapter 4
o Salosagcol, Tiu, &
Hermosilla, Chapter 5
Lecture & Discussion
Quizzes & Recitation
Situational / Case Analysis
Suggested Readings:
o Rittenberg, Chapter 5
o Salosagcol, Tiu, &
Hermosilla, Chapters 6 &
Learning Outcomes
Understand what audit is
about.
Know the standard setting
bodies for auditing.
Differentiate the types of
audits and auditors.
Understand the standards
used in the audit.
Learn and understand the
ethical requirements and
Learn and appreciate the
importance of
understanding the client in
the completion of the audit
process.
Ability to understand risk
involved in audit,
materiality levels to
consider, and the procedures
in documenting audit
procedures.
Identify the weaknesses in
the clients internal control.
Identify the weaknesses in
the clients internal control.
Suggest ways to improve
internal control in
compliance with required
standards.
 Inclusive
Week Topic/s Class Activities Learning Outcomes
Dates
Over Financial Reporting
as Mandated
o Sarbanes-Oxley Act
o SECs rule on
Management Report
o PCAOBs Standards
8 Aug 15 Audit Evidence Lecture & Discussion Gather accurate and
to Aug 20 o Acquisition and Quizzes & Recitation sufficient evidence to
Evaluation of Audit Situational / Case Analysis support clients assertions.
Evidence
o Financial Statements Suggested Readings:
Assertions, Audit o Rittenberg, Chapter 7
Objectives and Audit o Salosagcol, Tiu, &
Procedures Hermosilla, Chapter 8
o Test of Controls,
Substantive Test of
Details, Analytical
Procedures and Non-
financial Measures
o Purpose, Content and
Form of audit
Documentation.
9 Aug 22 Midterm Exams
to Aug 27
10 Aug 29 Audit Evidence Lecture & Discussion Document the audit
to Sept 3 o Working Papers Quizzes & Recitation activities completed and the
o Related Parties Situational / Case Analysis supports availed of.
o Using the Work of an
Expert Suggested Readings:
o Considering the Work of o Rittenberg,
Internal Auditing o Chapters 7 & 8
o Auditing Accounting o Salosagcol, Tiu, &
Estimates Hermosilla, Chapter 8
11 Sept 5 Audit Sampling Lecture & Discussion Understand audit sampling
to Sept 17 o Use of Sampling in Audit Quizzes & Recitation techniques.
Engagement Situational / Case Analysis Apply sampling in audit
o Role of Sampling and engagements.
Non-Sampling Risk Suggested Readings:
o Statistical and Non- o Rittenberg, Chapter 8
Statistical Sampling o Salosagcol, Tiu, &
o Sampling for Test of Hermosilla, Chapter 9
Controls and Substantive
Tests
o Attribute Estimation
o Sequential (stop or go)
Sampling
12 o Probability-proportional-
to-size (PPS) Sampling.
o Sampling for Test of
Controls and Substantive
Tests
o Attribute Estimation
o Sequential (stop or go)
Sampling
o Probability-proportional-
to-size (PPS) Sampling.
 Inclusive
Week Topic/s
Dates
13 Sept 19 Completing the Audit
to Oct 1 o Subsequent Events
o Going Concern
o Litigation, Claims and
14 Assessment
o Management
Representation letter
o Wrap-up Procedures
15 Oct 3 Audit Reports on FS
to Oct15 o Reports on Financial
Statements
o Unqualified, Qualified,
Adverse Opinion, and
Disclaimer of Opinion
o Explanatory paragraphs
and Modification to Audit
16 Reports
o Reports on Comparatives
and Consolidated
Financial Statements
o Reports on Attestation
Services and Other
Assurance Services
17 Oct 17 to Code of Ethics and
Oct 22 Republic Act 9298
o The Code of Ethics for
Professional Accountants
o The Philippine
Accountancy Act of 2004
Class Activities Learning Outcomes
Lecture & Discussion Identify the subsequent
Quizzes & Recitation events in audit for proper
Situational / Case Analysis disclosure in the report.
Know the other information
Suggested Readings: that needs disclosure in the
o Rittenberg, Chapter 15 final report.
o Salosagcol, Tiu, &
Hermosilla, Chapter 10
Lecture & Discussion Be able to express the right
Quizzes & Recitation type of opinion.
Situational / Case Analysis Be able to write an
appropriate audit report.
Suggested Readings:
o Rittenberg, Chapter 16
o Salosagcol, Tiu, &
Hermosilla, Chapter 11
Lecture & Discussion Learn and understand what
Quizzes & Recitation it takes to be an ethical
Situational / Case Analysis CPA.
Suggested Readings:
o Rittenberg, Chapter 3
o Salosagcol, Tiu, &
Hermosilla, Chapter 13

First Day of Final Exams

Oct 21
18 Oct 24 Last Day of Final Exams
to Oct 27 Oct 27

Textbooks:

Rittenberg, Gramling, Johnstone. (2010). Auditing (8th ed.). Cengage Learning Asia Pte Ltd
Salosagcol, J., Tiu, M., Hermosilla, R. (2011). Auditing theory: A guide to understanding PSA. Conanan
Educational Supply

References:

Bobadilla, A. D., & Ocampo, R. (latest ed.). Reviewer in auditing theory. Lares Bookstore..
Cabrera, M. (2011). Comprehensive reviewer in auditing theory. CGI Publishing.
Evangelista, R. D. (latest ed.) Auditing theory for students and practice guide for auditors. GIC Enterprises
Ireneo, J. M., Ireneo, S. C., & James, G. (2014). Auditing and assurance principles. Conanan Educational Supply.
Roque, G. (2012). CPA Examination reviewer: Auditing theory. Conanan Educational Supply.
______. Philippine Standards on Auditing (PSAs). Auditing and Assurance Standards Council.
______. Philippine Standards on Assurance Engagements (PSAEs). Auditing and Assurance Standards Council.
______. Philippine Standards on Related Services (PSRSs). Auditing and Assurance Standards Council.
 ______. Philippine Standards on Review Engagements (PSREs). Auditing and Assurance Standards Council.
______. Philippine Standards on Quality Control (PSQCs). Auditing and Assurance Standards Council.
______. Practice Statements. Auditing and Assurance Standards Council.