THE UNIVERSITY OF HONG KONG

FACULTY OF BUSINESS AND ECONOMICS

MACC7007 Auditing and Corporate Services

GENERAL INFORMATION

Instructor: Dr. Jasmine Kwong

Email: jstkwong@hku.hk
Office: Room 1311, K.K. Leung Building
Phone: 3917-4219
Consultation times: TBA

Tutor: Ms. Shuling CHEN (shulingc@hku.hk)& Ms. Lin Lin (linlin06@hku.hk)

COURSE DESCRIPTION

The objective of this course is to develop students’ understanding of the decisions made and methods used by auditors
when verifying management's assertions in corporate financial statements. Auditing does not take place in a vacuum, but
rather in a complex economic, regulatory, and institutional environment that is evolving and changing. In addition, this
environment varies across countries, and auditing is very much a global business. Thus, a second objective is to develop
students’ understanding of the forces that have shaped and continue to shape auditing practices in Hong Kong (China),
mainland China, the US, and elsewhere (e.g., major corporate bankruptcies and frauds, changing government regulations
here and abroad).

The course will emphasize the fundamental principles, concepts, and methods of auditing. This course introduces the key
concepts in quantitative business analysis to help you gain a clear understanding of the key elements in the decision-
making process. We discuss methods that are used extensively in business organizations. These methods provide you with
the tools and the skills to approach, analyse, and solve problems of varying scales. Furthermore, this course aims at
improving a decision-maker’s overall problem-solving ability by stressing approaches to 1) understand and question
assumptions, 2) consider a richer set of solution alternatives, and 3) consider diverse measures of performance.

COURSE OBJECTIVES

1. Provide students with basic concepts of auditing theory, concepts, methodology and practice;

2. Provide students with the capability to apply knowledge in gathering audit evidence and in evaluating the financial

statement assertions;

3. Inculcate professional judgment in various auditing and ethical scenarios;

4. Develop students’ communication and decision-making skills.

PROGRAMME LEARNING OUTCOMES

PLO1: Acquiring and internalizing accounting and business knowledge and skills

PLO2: Applying and integrating accounting and business knowledge

PLO3: Inculcating professionalism and leadership

PLO4: Developing a global outlook

PLO5: Mastering communication skills

COURSE LEARNING OUTCOMES

Aligned Programme Learning
Course Learning Outcomes
Outcomes

CLO1: Describe and explain the financial statement auditing process PLO1

CLO2: Use relevant information for making decisions of client acceptance, risk PLO1, PLO2, PLO3
assessment, as well as extent of audit work

CLO3: Apply Code of Ethics for Professional Accountants to resolve an ethical PLO2, PLO3
situation and improve decision making skills;

CLO4: Demonstrate effective verbal and writing communication skills. PLO2, PLO4

COURSE TEACHING AND LEARNING ACTIVITIES

Study Load
Course Teaching and Learning Activities Expected Contact Hours
(% of study)

T&L1. Interactive lectures and in-class quiz 33 27.50%

T&L2. Tutorials 12 10.00%
T&L3. Case analysis and outside-classroom activities 30 25.00%
T&L4 Self-study 45 37.50%
Total 120 100%

Aligned
Course
Assessment Methods Brief Description (Optional) Weight
Learning
Outcomes
Students are required to attend and participate actively in two
mandatory tutorials. Being absent from class will negatively affect
students’ participation performance. Each student will be evaluated
on the QUANTITY and QUALITY of their participation by the tutorial
instructor individually. Written assignments and exercises will be
Assignments assigned for each topic to access the students’ ability to comprehend CLO1,
CLO2,
and tutorial in-class the concepts discussed during lectures. Students are also required to 12% CLO3,
participation attempt selected assignments before commencement of the tutorials. CLO4
Part of the coursework assessment will be allocated to individual
performance in the class discussions of the homework assignments.
Participation and assignments are evaluated per student by the
tutorial instructor. The objective of the tutorials is to help students
digest and apply the knowledge they have learned from the classes.
Students will have the flexibility to form their own group of 6 students.
Each group will be assigned a section from the Code of Ethics to
analyse. The contents, the requirements and the due date of the
group presentation will be published in due course. Written feedback CLO2,
CLO3,
Group Presentation will be available after grading. 12% CLO4
It is necessary for each group to participate in the group activities,
e.g., keeping attendance record, participating in question/answering
sessions. Therefore, please be well-prepared in the reading of each
section from the Code of Ethics prior to the classes.
There will be knowledge check questions during the mass lectures to
CLO1,
ensure students have grasped the concepts of each chapter. Students
Lecture participation 6% CLO2,
are required to work in small groups and participate actively in the CLO3
exercises.
A closed book term test will be used to gauge students’ CLO1,
Midterm Test 20% CLO2,
understanding of the auditing principles on a continuous basis and to
CLO3
 test students’ problem-solving skills.

The final examination will be held in the normal exam period. It is an

closed-book examination, comprehensive and covers all the
chapters on the course syllabus. With the exception of extremely CLO1,
CLO2,
Final Exam special cases, NO MAKEUP exam will be allowed if students fail to 50% CLO3,
seek ADVANCE permission from the instructor. The objective of the CLO4
final exam is to further enhance students’ understanding of the course
and their application of judgmental skills on various auditing issues.
Total 100%

STANDARDS FOR ASSESSMENT

Course Grade Descriptors

A+ A A- Demonstrate evidence of original thought, strong analytical and critical abilities as well as a thorough
grasp of the topic from background reading and analysis; should demonstrate excellent organizational
and presentational skills.
B+ B B- Demonstrate evidence of critical and analytical thinking but not necessarily original in their thinking;
show adequate grasp of the topic from background reading and analysis; should demonstrate strong
organizational and presentational skills.
C+ C C- Demonstrate evidence of a reasonable grasp of their subject but most of their information is derivative,
with rather little evidence of critical thinking; should demonstrate fair organizational and presentational
skills.
D+ D Demonstrate evidence of being able to assemble the bare minimum of information, poorly digested and
not very well organized in presentation. There is no evidence of critical thinking.
F Demonstrate evidence of poor knowledge and understanding of the subject, a lack of coherence and
organization, and answers are largely irrelevant. Work fails to reach degree level.
Assessment Rubrics for Each Assessment

Assignments and tutorial in-class participation

A+ A A- B+ B B- C+ C C- D+ D F
Extremely well Partially prepared for Not well prepared for Not well prepared for Never prepared for
prepared for class class discussion, quite class discussion, class discussion, no class discussion and
discussion, active in active in sharing views limited active in sharing of views and no sharing of views
sharing views and and attended at least sharing views and attended at least and experience and
attended at least 90% 80% of classes. attended at least 70% 60% of classes. attend less than 60%
of classes. Submitted at least 80% of classes. Submitted at least of classes.
Submitted all of homework with 80% Submitted at least 60% of homework Submitted less than
homework with 90% accuracy. 70% of homework with 60% accuracy. 60% of homework with
accuracy. with 70% accuracy. less than 60%
accuracy.
Group Presentation
A+ A A- B+ B B- C+ C C- D+ D F
• Very good to • Good to very • Fair to good. • Fair. • Fail to
excellent. good. • Some • Rarely prepare and
• Extremely • Quite active participation participation present the
active participation in group in group case.
participation in group activities. activities. • No
in group activities. participation
activities. in group
activities.
Lecture participation

A+ A A- B+ B B- C+ C C- D+ D F

Active participation Good participation and Adequate Little participation and No participation and
and complete all complete 90% of the participation and complete 70% of the complete less than
required tasks. required tasks. complete 80% of the required tasks. 60% of the required
required tasks. tasks.
Midterm Test

A+ A A- B+ B B- C+ C C- D+ D F

Provided accurate Provided accurate Provided accurate Provided inaccurate Skipped some
solutions to all solutions to some solutions to a few solutions to a few problems or provided
problems, gave detailed problems, gave problems, gave problems, gave inaccurate solutions
and insightful detailed responses to limited responses to unclear responses to to most problems,
responses to essay some essay some essay most essay questions gave poor responses
questions and scored questions and scored questions and scored and scored correctly to most essay
correctly on more than correctly on less than correctly on less than on less than 70% of questions and scored
90% of the multiple 90% of the multiple 80% of the multiple the multiple choice correctly on less than
choice questions. choice questions. choice questions. questions. 60% of the multiple
choice questions.

Final Exam

A+ A A- B+ B B- C+ C C- D+ D F

Provided accurate Provided accurate Provided accurate Provided inaccurate Skipped some
solutions to all solutions to some solutions to a few solutions to a few problems or provide
problems, gave problems, gave problems, gave problems, gave inaccurate solutions
detailed and insightful detailed responses to limited responses to unclear responses to to most problems,
responses to essay some essay questions some essay most essay questions gave poor responses
questions and scored and scored correctly questions and scored and scored correctly to most essay
correctly on more than on less than 90% of correctly on less than on less than 70% of questions and
90% of the multiple the multiple choice 80% of the multiple the multiple choice scored correctly on
choice questions. questions. choice questions. questions. less than 60% of the
multiple choice
questions.

COURSE CONTENT AND TENTATIVE TEACHING SCHEDULE

Date Case Analysis & Topic Chapter Topic excluded

Presentation
Auditing: Integral to the Economy
Class A, B: 5 Dec 2022 - What is auditing
(Mon) - Independence and scepticism Ch. 1
Class C: 7 Dec 2022 In-class discussion - Expectations of the profession --
(Wed)
Class D: 10 Dec 2022
(Sat)
Class A, B: 8 Dec 2022 The Risk of Fraud and Mechanisms
(Thu) to Address Fraud: Regulation,
Class C: 7 Dec 2022 Corporate Governance, and Audit Exhibit 2.4
Warm-up Case Ch. 2
(Wed) Quality (P. 45-48)
Class D: 10 Dec 2022
(Sat)
Class A, B: 12 Dec 2022 Audit Reports on Financial
(Mon) Statements
Class C: 14 Dec 2022 Demonstrating Case - Different types of audit
Ch. 15 --
(Wed) & COE Review opinions
Class D: 17 Dec 2022 - Reporting on the work of other
(Sat) auditors involved
Class A, B: 15 Dec 2022 Internal Control over Financial
(Thu) Reporting: Management’s
Class C: 14 Dec 2022 Responsibilities and Importance to
(Wed) the External Auditors
Class D: 17 Dec 2022 In-class discussion - Auditors’ use and evaluation of
Ch. 3 --
(Sat) case 1 clients’ internal controls
- Tests of controls
- Communication on internal
controls between auditors &
clients
Contemporary audit cases discussion
Class A, B: 19 Dec 2022 In-class discussion Professional Auditing Standards Ch. 5
(Mon) case 2 and the Audit Opinion Formulation
Class C: 21 Dec 2022 Process
(Wed)
Class D: 17 Dec 2022
(Sat)
Holiday Break

A Framework for Audit Evidence --

- Different types of audit
evidence
Class A, B: 29 Dec 2022 - Using work from other
(Thu) experts/specialists Ch. 6
Class C: 04 Jan 2022 - The concept of sufficiency and
(Wed) appropriateness
Class D: 07 Jan 2022 - Evidence from non-profit
(Sat) organizations
In-class discussion Planning the Audit: Identifying and --
case 3 Responding to the Risks of Material
Misstatement
- Objectives and general
principles of audit planning
- The importance of
Ch. 7
understanding clients’ entity
and environment
- Audit planning and
documentation

Class A, B: 05 Jan 2022 Auditing the Revenue & Payment --

(Thu) Cycle
Class C: 04 Jan 2022 In-class discussion
Ch. 9
(Wed) case 4
Class D: 07 Jan 2022
(Sat)
Class A, B: 09 Jan 2022 Activities Required in Completing a Learning Objective
(Mon) Quality Audit 2
Class C: 11 Jan 2022 - Review of subsequent events (P. 625-627)
In-class discussion
(Wed) - Analysis of going concern Ch. 14
case 5
Class D: 14 Jan 2022 - Forming the final opinion
(Sat) - Final review process and
activities
Class A, B: 12 Jan 2022 Substantive Testing –Inventory, --
(Thu) PPE and Intangible Assets
Class C: 11 Jan 2022 In-class discussion - Audit testing on inventory Ch. 11,
(Wed) case 6 - Audit testing on PPE 12
Class D: 14 Jan 2022 - Audit testing on intangibles
(Sat)
Substantive Testing – Accounts --
Receivable, cash and Marketable
Class A, B: 16 Jan 2022 securities
(Mon) - Audit testing on accounts
In-class discussion
Class C: 18 Jan 2022 receivable Ch. 10
case 7
(Wed) - Audit testing on cash
Class D: 28 Jan 2022 - Audit testing on marketable
(Sat) securities
 Specialized Audit Tools: Sampling --
Class A, B: 19 Jan 2022 and Generalized Audit Software
(Mon) - Computer- assisted audit
Class C: 18 Jan 2022 techniques
(Wed)
In-class discussion
Class D: 28 Jan 2022 Ch. 8
case 8
(Sat)

REQUIRED/RECOMMENDED READINGS & ONLINE MATERIALS

Textbooks:

(1) Karla M. Johnstone, Audrey A. Gramling and Larry E. Rittenberg. 2019. Auditing: A Risk-Based Approach to
Conducting a Quality Audit, 11th Edition, International Edition South-Western Cengage Learning.

(2) Code of Ethics for Professional Accountants (COE) issued by the Hong Kong Institute of Certified Public Accountants
(HKICPA).

MEANS/PROCESSES FOR STUDENT FEEDBACK ON COURSE

x Conducting mid-term survey in additional to SFTL at the end of the course

Others: ________________________ (please specify)

COURSE POLICY

ACADEMIC CONDUCT

a) Plagiarism and copying of copyright materials are serious offences and may lead to disciplinary actions. Students
should read the chapters on “Plagiarism” and “Copyright” in the Undergraduate/Postgraduate Handbook for details.
Students are strongly advised to read the booklet entitled “What is Plagiarism” which was distributed to them upon their
admission into the University, a copy of which can be found at www.hku.hk/plagiarism. A booklet entitled “Plagiarism
and How to Avoid it” is also available from the Main Library.
b) Students are required to attend all the lectures and tutorials on time. In case they cannot attend, they should inform the
instructor beforehand.

ADDITIONAL COURSE INFORMATION

This course will utilize MOODLE.

The course syllabus is tentative and subject to revisions.

TLA1. Situation: Interactive lectures and in-class quiz

⚫ Lectures: basic knowledge of auditing is presented with PowerPoint slides.

⚫ In-class exercises: basic concepts and techniques are illustrated using examples. Students work through in-class
exercises along with the lecturer. These exercises help students follow the lectures closely and actively.

⚫ In-class discussions: students are encouraged to raise questions, participate in discussions and share opinions with
their peers. These discussions encourage students to think more for certain arguable topics.

⚫ Case analysis: Students are required to form groups to analyze and present small cases that they create to illustrate
a certain section of the Code of Ethics for accountants. Students should design cases that demonstrate applications
of auditing knowledge to real-life situations, discussions of controversial issues in auditing and ethics. These practices
 help students improve critical thinking abilities and research skills.

⚫ In-class quiz: Students are required to complete a number of in-class multiple-choice quizzes that cover the topics
taught in lectures. These quizzes aid the students to better understand the underlying learning objectives of each
topic and to ensure they have grasped the necessary concepts and theories of auditing.

TLA2. Situation: Tutorials

Practice questions and selective assignments are covered.

⚫ Weekly tutorial assignments: students are required to complete assigned homework that reflects concepts and
techniques learned before each tutorial session on an individual basis.

⚫ In-class interactive activities: students are required to interact with the tutorial instructor, and participate in the in-class
exercises and discussions actively.

TLA3. Situation: Case analysis and outside-classroom activities

⚫ Group discussions: students are divided into groups to complete a cases analysis in the small group lecture. Each
group of students will be assigned a section from the Code of Ethics to analyze and present to assess their abilities
to apply the auditing knowledge they acquired to real life practical scenarios. Students’ participation and discussions
(as a group) are also required during the case presentation session. Once the topic is assigned, each group should
work as a team and contribute jointly to discuss and analyze the topic, assign responsibility for the topic and present
the topic in class.

⚫ Lecturer consultations: the lecturer provides 6 hours of consultation weekly to address students’ questions and doubts
related to the course.