BA 123Public Accounting Practice

COURSE OUTLINE2nd Semester, AY 2013-2014

D. C. Salazar B. Dela CruzConsultation Hours: M-F 1-4 TTh 9 – 12; W-F 1-5Consultation Room CBA 201 D / 204 CBA 201 C

INTRODUCTION

Financial statements are the main source of financial information to persons external to the business organization, and also are of great importance to management. Information provided by the financial statements is the basis for many business and economic decisions. Specifically, external users rely on these financial statements as they make a variety of decisions such as whether or not to invest their resources on a certain business organization. Resources that are very much needed as these organizations compete for market share and earnings growth within their domestic as well as in the global market.

Thus, the reliability of these financial statements is crucial to its users. These users demand that an unbiased monitor report on whether the assertions embodied within the financial statements are reliable. This creates the need for a financial statement audit.

A financial statement audit lends credibility to the financial statements. Without a financial statement audit, companies would be encountering restrictions in obtaining capital through the securities market and from financial institutions. Oftentimes, these restrictions manifest in the form of higher interest rates premiums. Therefore, financial statement audits may reduce the cost of capital.

Consequently, the public accountant must be ever responsive to the needs of these users in order to provide the economic benefits society demands from the profession. As the rapidly changing world creates more complex and challenging business situations, the profession must keep abreast and ensure that its attest function continually be more relevant to the users of financial statements. This course prepares future public accountants to meet the challenges of the profession.

COURSE DESCRIPTION

The course deals with the practical application of theories and concepts of auditing in public accounting practice. The course will expose the students to contemporary audit methods and techniques involved in the complex decisions and judgment processes inherent in audit practice. Discussions on the application of auditing standards, preparation of working papers and completion of an engagement will prepare the students in the eventual practice of their profession. The students will assume the role of a member of an engagement team during the informative discussions and exercises throughout the conduct of the course.

GENERAL OBJECTIVESAfter taking this course, the students are expected:1) To be able to conduct a financial statement audit as a member of an audit engagement team.2) To be familiar with basic audit engagement related issues and conditions3) To be able to prepare a complete set of financial statements.

SPECIFIC OBJECTIVES1. To integrate the concepts and procedures learned in the basic auditing course by simulating the environment and process of an

audit engagement.2. To integrate the concepts and procedures learned in auditing and accounting courses by simulating the environment and process

of an audit engagement.3. To be able to identify general and specific audit objectives and the related audit procedures.4. To be able to determine audit procedures addressing possible errors related to financial statement accounts.5. To enhance the learning process and interpersonal skills of the students by utilizing the cooperative (group) learning method.6. To sharpen the oral and written communication, including listening skills of the students.7. To improve the understanding of the audit process from inception to completion.

BASIC REFERENCES

1. International Accounting Standards / International Financial Reporting Standards2. Auditing, Gramling, Rittenberg, and Johnstone3. Intermediate Accounting, Ronald Kieso

COURSE OUTLINE

BA 123 Practical Accounting 1 Audit Problem Theory of Accounts Ref1. Fundamental

concepts of error correction.(1.5 sessions)

2.0 Accounting for Income and Expenses

2.1 Net incomea. Transaction approachb. Capital maintenance approach

2.2 Accounting changes2.3 Prior-period errors2.4 Interim reporting2.5 Segment reporting2.6 Development-stage enterprise

10.0 Other Topics10.1 Accounting changes and prior-period errors

a. Change in estimatesb. Change in accounting policiesc. Prior-period errors

Module 1: Current assets and current liabilities

2. Cash and cash equivalents(1.5 sessions)

3. Receivables(1.5 sessions)

3.0 Accounting for Assets3.1 Cash and cash equivalents3.2 Trade and other receivables

2.1 Audit of the revenue and receipt cycle

a. Audit of sales and revenue transactionsb. Audit of receivable balancesc. Audit of cash receipt

2.2 Audit of expenditure and disbursement cycle transactions / cash balance

c. Audit of cash disbursement transactions / cash balance

2.6 Audit of cash balances

6.0 Accounting for Assets (nature, recognition, measurement, valuation, classification, derecognition, and disclosure)

6.1 Concept of financial and non-financial assets6.2 Current assets

a. Cash and cash equivalentsc. Trade and non-trade receivables (including receivable financing)

Readings

IAS 39

BA 123 Practical Accounting 1 Audit Problem Theory of Accounts Ref4. Inventories

(1 session)3.3 Inventories 2.2 Audit of expenditure and

disbursement cyclea. Audit of acquisitions and purchasesd. Audit of inventory balances

2.3 Audit of production cyclea. Audit of conversion activitiesb. Audit of inventory balances: work-in-process and finished goodsc. Audit of cost of goods sold balance

6.0 Accounting for Assets (nature, recognition, measurement, valuation, classification, derecognition, and disclosure)

6.2 Current assetsd. Inventories (except LIFO, peso value-LIFO, retail LIFO, and conventional retail method)

10. Other Topics10.8 Cost accumulation for product costing

IAS 2

5. Prepayments(0.5 session)

3.4 Prepaid expenses 2.2 Audit of expenditure and disbursement cycle

f. Audit of prepaid expenses and accrued liabilities

6.0 Accounting for Assets (nature, recognition, measurement, valuation, classification,derecognition, and disclosure)

6.2 Current assetse. Prepaid expenses

6. Current Liabilities(0.5 session)

4.0 Accounting for Liabilities4.1 Trade and other payables4.2 Provisions; Contingent liabilities

2.2 Audit of expenditure and disbursement cycle

b. Audit of payroll transactionse. Audit of trade payable balancesf. Audit of accrued liabilities

7.0 Accounting for Liabilities (nature, recognition, measurement, valuation, classification,disposition, and disclosure)

7.1 Concepts of financial vs. non-financial liabilities7.2 Current liabilities (including provisions)

Module 1 Audit Exam: December 16, 2013Module 2: Non-current assets

BA 123 Practical Accounting 1 Audit Problem Theory of Accounts Ref7. Investments

(2 sessions)3.5 Investments (excluding investment in subsidiaries and joint ventures)

2.5 Audit of investing cyclea. Audit of investing transactionsb. Audit of investment account balances

6.0 Accounting for Assets (nature, recognition, measurement, valuation, classification, derecognition, and disclosure)

6.2. Current assetsb. Short-term investments (including financial assets at fair value through profit or loss, available-for-sale securities, derivatives)f. Other financial assets

6.3 Noncurrent assetsa. Noncurrent investments (including held-to-maturity securities, available-for sale securities)

IAS 39

8. Property, plant and equipment(2.5 sessions)

9. Intangible assets(0.5 session)

3.6 Property, plant and equipment3.7 Intangibles3.8 Other assets3.9 Impairment of assets

c. Audit of property, plant and equipment account balancesd. Audit of intangible account balances

6.0 Accounting for Assets (nature, recognition, measurement, valuation, classification, derecognition, and disclosure)

6.3 Noncurrent assetsb. Property, plant, and equipmentc. Intangibles and other noncurrent assets (including noncurrent assets held for sale)

6.4 Impairment of assets

10. Other Topics10.3 Research and development10.4 Borrowing costs

IAS 16

IAS 23

IAS 36

IAS 38

BA 123 Practical Accounting 1 Audit Problem Theory of Accounts Ref10. Biological assets

(0.5 session)6.5 Accounting for biological assets, agricultural produce at the point of harvest and government grants related to agricultural activity

10.0 Other Topics10.13 Accounting for agricultural activity

IAS 41

11. Government Grants (0.5 session)

6.6 Accounting for government grants and disclosure of government assistance

10.0 Other Topics10.11 Accounting for government grants and disclosure of government assistance

IAS 20

( 6.3 Accounting for non-current assets held for sale and discontinued operations

IFRS 5

12. Investment Property(0.5 session)

IAS 40

Pre-mockboards 1 (January 31, 2013) / Module 2 Audit Exam (February 3, 2014)Module 3: Long term liabilities and stockholders’ equity

13. Bonds payable(1 session)

4.0 Accounting for Liabilities4.3 Income taxes payable4.4 Bonds payable4.5 Notes payable4.6 Debt restructuring (except dacion en pago)

2.4 Audit of the financing cycle

a. Audit of financing cycle transactionsb. Audit of non-trade liability balancesc. Audit of interest expense and finance cost balances

7.0 Accounting for Liabilities (nature, recognition, measurement, valuation, classification,disposition, and disclosure)

7.3 Noncurrent liabilities7.4 Debt restructuring7.5 Other financial liabilities

IAS 32IAS 39IFRIC 19

BA 123 Practical Accounting 1 Audit Problem Theory of Accounts Ref14. Pension

(1 session)4.7 Employee benefits4.8 Other liabilities

10. Other Topics10.5 Employee benefits, including retirement benefit costs

IAS 19

15. Stockholders’ Equity(2 session)

16. EPS / BVPS(1 session)

5.0 Accounting for Equity5.1 Preference shares5.2 Ordinary shares5.3 Additional paid-in capital / share premium / other sources5.4 Reserves (e.g., revaluation surplus, translation adjustments, and unrealized gain orloss on assets available for sale)5.5 Retained earnings / accumulated profit or loss5.6 Treasury shares5.7 Earnings per share5.8 Book value per share5.9 Capital restructuring

2.4 Audit of the financing cycle

d. Audit of equity accounts

8.0 Accounting for Equity (nature, recognition, measurement, retirement, and disclosure)

8.1 Preference and ordinary shares8.2 Additional paid-in capital8.3 Revaluation surplus8.4 Retained earnings (including dividends and appropriations/accumulated profit or loss)8.5 Capital restructuring (quasi-reorganization, recapitalization)8.6 Treasury stock8.7 Other reserves8.8 Book value per share

IAS 32

IAS 33

IFRIC 17

17. Income taxes(1 session)

6.0 Other Topics6.1 Accounting for deferred taxes

10.0 Other Topics10.2 Accounting for income taxes

IAS 12

18. Income taxes(1 session)

6.2 Accounting for leases 10.0 Other Topics10.6 Leases (operating leases, finance leases, sale and leaseback)

IAS 17

19. Income taxes(1 session)

6.4 Accounting for share-based payments

10.0 Other Topics10.10 Accounting for share-based payments

IFRS 2

Module 3 Audit Exam - March 3, 2014

BA 123 Practical Accounting 1 Audit Problem Theory of Accounts Ref

20. Comprehensive Financial Statements(1 sessions)

21. Statement of Cash Flows(1 sessions)

22. Segment reporting; Interim reporting; Subsequent events; Accounting policies and Accounting estimates(1. sessions)

1.0 Preparation of Financial Statements

1.1 Accounting process1.2 Components of financial statements

a. Balance sheetb. Income statementc. Statement of changes in equityd. Cash flow statemente. Notes to financial statements

1. Contingencies2. Events after balance sheet date3. Accounting policies4. Related party disclosure5. Segment reporting6. Earnings per share7. Other disclosures

1.3 Cash basis to accrual basis and single entry1.4 Financial reporting and changing prices (including hyperinflationary economies)

3.0 Completing the Audit3.1 Evaluation of related party transactions, going concern, and contingencies3.2 Evaluation of events after the balance sheet date3.3 Drafting the audited financial statements3.4 Application of analytical procedures in the overall review3.5 Drafting the audit report

9.0 Financial Statements9.1 Form and content

a. Balance sheetb. Income statementc. Statement of changes in equityd. Cash flows statement

9.2 Interim financial statements: Presentation & disclosure requirements9.3 Segment reporting: Presentation & disclosure requirements9.4 Accounting for/Disclosure requirements

a. Events after the balance sheet dateb. Earnings per sharec. Contingenciesd. Related partye. Accounting policiesf. Others

10. Other Topics10.12 Financial reporting and changing prices (including hyperinflationary economies)

IAS 1

IAS 7

IAS 10

IAS 34

IAS 29

IFRS 8

23. Small and Medium Enterprises(1 session)

Pre-mockboards 2 – March 19, 2014 / Module 4 Audit Exam (March 21, 2014) Mockboards (March 28, 29, April 4 and 5, 2014)

GRADING SCHEME:

Stress Quizzes 10%Long Quizzes 15%Module Examinations (4) 60%Final Examination 15%

100%

GRADING SCALE:96.5 – 100 ………… 1.00 81.5-84.49 ………… 2.00 65-68.49 ………… 3.0092.5-96.49 ………… 1.25 76.5-80.49 ………… 2.25 60 – 64.99 ………… 4.0088.5-92.49 ………… 1.50 72.5-76.49 ………… 2.50 Below 60 .0084.5-88.49 ………… 1.75 68.5-72.49 ………… 2.75

Reminders

1. There will be 2 pre-mockboards examination. Each pre-mockboard will be composed of 3 examinations (Practical Accounting 1, Theory of Accounts and Audit Theory) of 30-50 multiple choice questions.

2. Final Examination will taken from the Mock CPA Board Examination. Grade on the final examination will be composed of Audit Problem (55%), Audit Theory (15%), Practical Accounting 1 (15%) and Theory of Accounts (15%).

3. You will be given a grade of ”Incomplete” if you fail to take the final examination provided your standing is “3.0” or better, otherwise you will be given a grade of “5.00”.

4. Take note of the release of grades and the period for objections/corrections. After the lapse of the “objections” period, submitted grades become FINAL and IRREVOCABLE.

5. Important dates:

a. December 18, 2013 – Last day of class in 2013

b. January 6, 2014 – Resumption of classes

c. February 20, 2014 – Last day for dropping

d. March 7, 2014 – Deadline for filing LOA

e. March 22, 2014 – End of classes

f. April 8, 2014 – Deadline for submission of grades for graduating students;

A student is not officially dropped until the instructor's copy of the dropping form is duly submitted.