BUSI 3170: Auditing Standards and Applications
Course outline for Fall 2013
Course Details & Important Dates*
Last Day to Drop Course Without
Final Exam Per
Audit Final Notes
Balance Related Audit Objectives
Rights and obligations
Detail tie in
Presentation and disclosure
Transaction Related Audit Objectives
Auditing Midterm Review
Chapter one and two:
Auditing can reduce information risk associated with financial statements (the risk that the financial
statements are inaccurate)
Assurance service: an independent professional service that improves the quality
Materiality and Risk
Risk in Auditing
The auditor accepts some level of uncertainty when performing an audit
There is always a small likelihood remaining that the financial statements may
be in error
The audit risk model is used as part of a strategic
The most common type of audit report.
It is used when all auditing conditions have been met, no significant
misstatements have been discovered and left uncorrected, and the auditor
believes that the financial stateme
6 types of product development:
New to world product
New product line
New product added to additional line
Lower priced version of an existing product.
Key: Cradle to Cradle vs. Cradle to grave
Major Accounting Statements
Balance Sheet: AKA Statement of Financial Position. (Snapshot)
o It is a snapshot of a companys financial position at a point in time
o What are its resources and claims against resources at a certain point of time
Promotion (All 4 must be integrated)
1) Advertising: Non-personal (mass), long-term promotional method paid for by an
2) Personal Selling: Personal, long-term promotional method paid for by an identifiable
3) Sales Promotion:
Key Points for the Marketing Advantage New Venture Presentation:
No set formula: your own judgment separates success from failure
Sales projections based on research and logic; this is an educated guess that you can defend.
Top-down Forecasting: Market po
Income Statement, Cash vs. Profit
Sales Revenue Accounts Receivable
Expenses Accounts Payable
Owners Equity Cash to use for business
- Profit goes into owners equity, but cash is not profit. Owners equity is not actually
cash, but an account
Importance of Price
3 GENERAL ways to approach price (You must look at all 3 to come up with your price)
o Cost-based, target profit, mark-up
Mark-up = (retail price cost) / retail rice
o Competitive-based (achieve market share)
Demographics vs. Psychographics
- Psychographics are very important, and companies will pay other companies a lot of
money to obtain an accurate psychographic profile. This is because demographics are easier to
do then psychographics.
Theory in Use:
Current Liabilities: Due within 1 year, no specific order necessary.
Example: Wages Payable.
- pay $10,000 in bi-weekly wages for work done during the pay period, year-end falls at
end of one week into pay period.
- Current liability Dec 31, 08
How do you
Critical Success Factors: Indicators of Business Success
Achieving financial performance
Meeting Customer Needs
Providing Quality Goods and Services
Encouraging innovation and creativity
Gaining employee commitment
Accounting: the process of gatherin
Contribution Margin Approach:
What is left over after covering the variable costs that contributes toward covering fixed
costs? This is the most important piece of information to know!
o Unit Contribution Margin = Price - VC
How many units do we have to s
What if Management is Bad? Shareholder Recourse
1. Attend the Annual Meeting
2. Proxy Battle * (this is very interesting, makes big financial news)
- Recall that every year youre going to get a packet in the mail, with your proxy card.
What happens in the
Traditional Forms of Business Ownership:
Which is most common?
Sole Proprietorship = 74%
Partnership = 9%
Corporation = 17%
Which has the largest sales?
Sole Proprietorship = 9%
Partnership = 4%
Corporation = 87%
Sole Proprietor Advantages
Theories of Motivation:
Victor Vroom: Expectancy Theory
There are four basic questions that we all ask ourselves whenever we decide how
motivated we should be in regards to a specific task. Every time that we get a NO answer,
motivation drops to near zero
Steps in the Planning Process
1) Establish Goals and Objectives
2) Develop an Action Plan to achieve objectives
3) Implement the plan
4) Monitor results (control)
5) Make necessary modifications (control)
Defining Goals and Objectives:
- What we hope to a
What is an organizational structure?
o The specification of jobs to be done within a business and how those jobs relate to
o Organizational structure is different for each type of business
How are organizational st
New Forms of Organization
Boundary less Organization: One in which traditional boundaries and structures are minimized.
(Example: as firms partner with their suppliers, sometimes they dont even need to put in an
order for their products to be replenished)
Legal Forms of Business Ownership
* Important for: People starting businesses, (entrepreneurs). People thinking they may
want to change their form of business ownership. There are two types:
- Sole Proprietorships
How do we Determine What is Ethical Behaviour?
1. Gather relevant factual information
2. Determine appropriate moral values
3. Make and ethical judgment based on the rightness or wrongness of the proposed activity or
Differing ways of Determining
Consumerism ~ is a form of social activism dedicated to protecting the rights of consumers in
their dealings with businesses.
Consumers have the following rights:
1) The right to safe products.
2) The right to be informed about all relevan
Ideology on Management: Theory X & Theory Y
Theory X Assumptions:
The average human being has an inherent dislike for work and will avoid it if he can. Due to
this dislike, most people must be threatened and controlled before they will do work.
Articles of Incorporation:
All Canadians have the legal right to incorporate their business
Only requirement is that the articles of incorporation must be completed and filed and the
incorporation fees paid.
Proposed corporate name