Text: Conceptual Blockbusting (CB) by Adams
Think: Better, Faster, Cheaper
January 21 - Class No. 2
The operational audit function
Read Chapter 1 in CB
From the KPMG website (www.us.kpmg.com) under New Strategies
and Best Practices in Internal Audit, read "Bridging the
'Expectations Gap': A New Vision" and "The Emerging Model.".
January 24 - Class No. 3
The operational auditing function
Access The Institute of Internal Auditors web site (www.theiia.org)
and (1) read "About the IIA," "About the Profession," and "About the
Profession - All in a Day's Work" and (2) read and
print out (and highlight) a description of an operational auditing
job opportunity. Specifically identify the operational auditing
aspect of the job opportunity.
Read, print out, and bring to class case "Cs07.05" from the t-drive.
Don't forget to work on participation points.
January 26 - Class No. 4
Professional standards
At the IIA website read the following sections of the
Standards for the Professional Practice of Internal Auditing:
100 Independence, 200 Professional Proficiency, 300 Scope of
work, and 400 Performance of Audit Work.
Read, print out, and bring to class the GAO audit case (class4a) from the
t-drive.
January 28 - Class No. 5
Professional ethics
Prepare your own personal (not professional) code of ethics.
Read, print out, and bring to class cases "class 5.1" and "class5.2" from
the t-drive.
Oral progress report on team organization and leadership.
January 31 - Class No. 6
Professional ethics
Read Chapter 8 in CB.
Perform an ethical analysis of the "bygone" case from the
t-drive.
Read, print out, and bring to class the "Charity" case from the
t-drive.
February 2 - Class No. 7
Professional ethics
From the IIA website under standards, read the IIA Code of
Ethics.
Read, print out, and bring to class the "IIA Standards" and
the "atlantic" cases from the t-drive.
February 4 - Class No. 8
Internal control - Integrated framework
Read "The Major Elements of an Internal Control Process"and the five
sublinks at http://risk.ifci.ch/143280.htm. This site illustrates
the COSO version of internal control within the context of an
international bank, but applies to all situations.
February 7 - Class No. 9
Internal control - Integrated framework
Read "Observations from the COSO Front" by William Jennings in the
August 1995 issue of Management Accounting, p. 56. Use
ProQuest to obtain the article under Strategic Finance.
Read Chapter 2 in CB.
Print out, read, and bring to class the "ICQ" case from the
t-drive.
February 9 - Class No.10
Internal control - Integrated framework
From the IIA website under Professional Practice Pamphlets, read
Pamphlet 97-2, "Assessing and Reporting on Internal Control."
From ProQuest, read "Just Do It" by Christy Chapman in the June 1998
issue of the Internal Auditor.
Read, print out, and bring to class the InternalControlI and
InternalControlII cases from the t-drive.
February 11 - Class No. 11
Internal control and information technology
From the IIA website under Professional Practice Pamphlets, read
Pamphlet 97-1, "Electronic Commerce and the Internet."
Oral progress report on project planning by teams.
February 14 - Class No. 12
Internal control and information technology
Guest speaker - EDI audit managers from Walmart and Ernst & Young
From ProQuest read "Electronic Commerce" in the December 1997 issue
of Internal Auditor and prepare three thoughtful questions for
speakers.
February 16 - Class No. 13
Exam No. 1
February 18 - Class No. 14
The operational audit process
Read Chapter 3 in CB
February 21 - Class No. 15
Evaluation of efficiency and effectiveness
Access the Pinstripe Clothing Company case at
www.uark.edu/depts/opaudit/project6/project6.htm and list your ideas
for improving efficiency and effectiveness.
Be sure you are adding ideas to your toolbox.
February 23 - Class No. 16
Audit evidence and documentation
From the IIA website under Standards read SIAS No. 6,"Audit
Working Papers" and under Professional Practice Pamphlets read
Chapters 2 and 7 in Pamphlet 98-3, "Automating the Audit
Workpaper Process."
Work on those participation points.
February 25 - Class No. 17
Operational auditing tools - Performance measures and benchmarks
Read " Assurance on Business Performance Measures" on the AICPA web site
(www.aicpa.org).
February 28 - Class No. 18
Operational auditing tools - Interviewing
Go to www.dac.neu.edu/coop.careerservices, select "Graad,UC,Alums" and
then "Helpful Handouts." Then select and read
"Successful Interviewing" and "Behavioral Interview." (Download
the pre-formatted handout on behavioral interviewing.)
Read, print out, and bring to class the "maddog" case from the
t-drive.
Remember - Better, Faster, Cheaper!
March 1 - Class No. 19
Operational auditing tools - Analytical techniques.
Read, print out, and bring to class the "ratio" case from the t-drive.
From ProQuest read "Analytical Auditing Procedures" in the
February 1997 issue of the Internal Auditor.
From the IIA website under "Standards" select SIAS. Read SIAS No.
8,"Analytical Auditing Procedures."
March 3 - Class No. 20
Operational auditing tools - Risk assessment
Read Chapter 4 in CB.
From IIA website under Standards, read SIAS No. 9 "Risk
Assessment."
From ProQuest, read "How Risky Is Your Company?" in the May-June 1999
issue ofHarvard Business Review.
Read, print out, and bring to class the "Bank" and "Computer" cases from
the t-drive.
March 6 - Class No. 21
Operational auditing tools - Sampling
Read "Attribute Sampling" from the t-drive.
March 8 - Class No. 22
Operational auditing tools - Sampling
Read "Mean Estimation Sampling" from the t-drive.
March 10 - Class No. 23
Operational auditing tools - TQM and ISO 9000
From ProQuest, read "ISO 9000 Series Quality Standards" in the
January 1997 issue of Business Credit
Oral progress reports on project teams' performance.
Remember your toolbox.
March 13 - Class No. 24
Operational auditing tools - Business process reengineering
Search the web for information on business process reengineering. Read,
print out, and bring to class what you find.
Read, print out, and bring to class the "travel" case from the
t-drive.
Rack up some participation points.
March 15 - Class No. 25
Exam No. 2
March 17 - Class No. 26
Operational auditing tools - Report writing
Read Chapter 5 in CB.
Read, print out, and bring to class the "AuditReport" and "Practice"
cases from the t-drive.
Read Chapter 6 in A Plain English Handbook at
www.sec.gov/consumer/plaine.htm
March 27 - Class No. 27
Conducting operational audits - Purchasing
From ProQuest, read "Auditing the Purchasing Function"in the
December 1997 issue of Internal Auditor.
Read, print out, and bring to class the overheads at Purch.oh and the case
at "purch.veh" from the t-drive.
March 29 - Class No. 28
Conducting operational audits - Purchasing
Access the Carbide Tools case at
www.uark.edu/depts/opaudit/project4/project4.htm and perform an
operational audit of purchasing. Word process your answer.
Read, print out, and bring to class the overheads at pur.oh and the case
"Alco" from the t-drive,
From ProQuest, read "Charge It" from the July 1997 issue of
Journal of Accountancy.
Can you do it better, faster, or cheaper?
March 31 - Class No. 29
Conducting operational audits - Purchasing
Read, print out, and bring to class the "Job01" case from the t-drive.
Read Chapter 6 in CB.
April 3 - Class No. 30
Conducting operational audits - Marketing
From ProQuest, read "Advocating the Sales Audit" in the May 1998
issue of Best's Review.
Read, print out, and bring to class the "Midwest" case from the
t-drive.
April 5 - Class No. 31
Conducting operational audits
Guest speakers - Internal auditors from Beverly Enterprises.
Read information at www.beverlynet.com.
Have some good questions ready for the guest speakers.
April 7 - Class No. 32
Conducting operational audits - Environmental issues
From ProQuest, read "Pressures for Change in Environmental
Auditing and in the Role of the Internal Auditor" in the Fall
1998 issue of Journal of Managerial Issues.
Access the website of the International Federation of
Accountants, www.ifac.org, and select "Publications and Guidance". Then
select "Auditing and Related Services." Next select the discussion
paper "The Audit Profession and the Environment." Now select and read
"Appendix B - Questionnaire on Environmental Risks."
Read, print out, and bring to class the "Lehigh" and "Hanford" cases from
the t-drive.
Oral team progress reports on finalization of projects.
April 10 - Class No. 33
Conducting operational audits - Logistics
From ProQuest, read "Auditing Material Transportation Costs" in the
December 1995 issue of Internal Auditor.
Read, print out, and bring to class the "Ajax" case from the t-drive.
Also, wordprocess a description of five logistics matters to be
investigated in an operational audit of Ajax.
Read, print out, and bring to class the "Traffic" case from the
t-drive.
April 12 - Class No. 34
Conducting operational audits - Services
Read Chapter 7 in CB.
Read "Calf Paths of the Mind" (Calf) on the t-drive.
Read, print out, and bring to class the "Institu" and" FCA" cases
from the t-drive.
Last few opportunities to get those particiption points.
April 14 - Class No. 35
Conducting operational audits - Construction projects
From ProQuest, read "Construction Contract Auditing" in the February
1999 issue of Internal Auditor.
Read, print out, and bring to class the "Flexrod" case from the
t-drive.
Describe and wordprocess five operational risks on construction
projects.
Put the finishing touches on your toolbox.
April 17 - Class No. 36
Conducting operational audits - Government services
Read, print out, and bring to class the "mun.veh" case on the t-drive.
Read, print out, and bring to class the "Parking" case on the
t-drive. Prepare and wordprocess a list of five risks in operating a
municipal parking lot.
April 19 - Class No. 37
Conducting operational audits - Security and Safety
From ProQuest, read "Open Sesame" in the August 1998 issue of
Buildings.
Read, print out, and bring to class the "Woods" case from the t-drive.
Think better, faster, and cheaper!
April 21 - Class No. 38
Exam No. 3
April 24 - Class No. 39
Fraud Auditing
From ProQuest, read "An Unholy Trinty" in the April 1998 issue
of the Internal Auditor.
Read, print out, and bring to class the "Farmer" case from the t-drive.
April 26 - Class No. 40
Fraud auditing
From ProQuest, read "Wanting to Find Fraud" in the February 1998
issue of the Internal Auditor.
Read, print out, and bring to class the "Spyglass" case from the
t-drive.
Read, print out, and bring to class the "National" case from the
t-drive.
April 28 - Class No. 41
Student presentations
May 1 - Class No. 42
Student presentations
May 3 - Class No. 43
Student presentations.
The purpose of this course is to provide you an opportunity to learn basic operational auditing tools (Better, Faster, Cheaper) and to introduce you to the process of using the tools to identify opportunities to improve operational efficiency and effectiveness. The emphasis will be on identifying and solving problems in an unstructured environment.
This course will be important to your career because
* if you accept a position in industry or government your advancement will depend on your ability to think like a business person and suggest improvements to both business and accounting processes.
*if you enter public accounting your advancement will depend on your ability to think like a business person and suggest improvements to your clients' business and accounting processes (often referred to as value-added auditing).
Although you may feel safer in a lecture course, one purpose of this course is to disrupt that false sense of security and to draw you into an intellectual dialogue in which there may be no completely right or wrong answers. The problem identification and reasoning process must take place in your mind in a uniquely individual way. I can aid and abet that process, I can nuture that process, but I can't teach it per se. Rather, you must create it inside your own mind. When that happens, it's the most exciting thing I can imagine.
The reasoning process, as opposed to the technical material, you learn in this class will be of value to you indefinitely. However, much of the technical material that you learn in this course (and all other courses) will be obsolete in 3 to 5 years, so it is important that you learn to learn new technical materials. You will be expected to learn much of the material in this course by studying the homework assignments. Some of this material will only be discussed in class to the extent you ask questions about it. You will, of course, be responsible for it on exams and quizzes.
As a student and future professional accountant, I agree to:
*respect the ideas of others.
*contribute ideas to the class.
*be enthusiastic about this class.
*be prepared for class.
*be on time for class.
*take advantage of this learning opportunity.
I agree to fulfill the instructor provisions of this contract. Please send me an e-mail message by Class No. 3 indicating if you agree to fulfill the student provisions of this contract.
1.Major tests,including the final exam which will be comprehensive. Do not miss a major test; the makeup is optional to the instructor and is always harder. (450 points)
2.Project This project will be performed by teams. Each team member is expected to contribute equally to the work on the project. All team members will have an opportunity to report to me inadequate contributions by other team members. A team member who fails to make an appropriate contribution will have his or her grade lowered. A description of the project is provided below. (100 points)
3.Quizzes These quizzes will test your preparation for class and will be taken from the homework assignments. Students who are absent will receive a zero unless he or she is making an office recruiting visit and has notified me in writing before the visit. I will throw out each student's lowest quiz score at the end of the semester. This is to allow for illness, car breakdowns, over-sleeping, extended weekends, hangovers, etc. If you wish to appeal a quiz grade you may do so by explaining in writing within 24 hours of the return of your quiz the detailed reason why you think your answer is correct. Students who arrive late for class are not permitted to take these quizzes. (100 points)
4.Homework I will scale your total homework score to 50 points. If you have questions about your graded homework you may ask them during class, during office hours, or by appointment. If your homework is not good enough to give to your boss on the job you expect to obtain, it's not good enough for this class. If you wish to appeal a homework grade you may do so by explaining in writing within 24 hours of the return of your homework the detailed reasons why you believe your answer is correct. (50 points)
5. Class participation (80 points) This is a very interactive
class. Much of your learning will occur during class and group
discussions. Both quality and quantity of class participation will be
considered in determining your class participation grade. We will follow
the Harvard Business School approach. When the instructor poses a
question to the class, all students who believe they know the answer
should raise their hands. Raising your hand does not mean that you wish
to be called on (although you might be), but that you are reasonably sure
that you know the answer. Failure to raise your hand will be taken to
mean that you do not know the answer.
After each class I will record my impression of who indicated by raising
their hand that they knew the answers to a substantial portion of the
questions and who did not. Also, because answers to some in-class
questions will be developed in groups, each student will be asked to
evaluate each member of their group using the following criteria:
Initiative - gets the group going on the topic; helps group reach
consensus by summarizing various positions suggested.
Participation - suggests questions to stimulate the thoughts of
other group members; suggests alternative positions or solutions.
Preparation - gives appearance of having completed homework
assignment that serves as the basis of the group discussion.
Attitude - takes the task of the group seriously; does not waste
time; goes to work quickly on the group problem; does not offer frivolous
solutions.
Remember, acknowledging that you don't understand is not a failure on your
part; it is a failure on my part that I want to correct. However, your
failure to ask questions about material you don't understand is a
failure on your part.
Near the end of the semester I will ask all students to list the three
students in the class whose class participation contributed the most to
clarification or expansion of course materials. Those students will
receive extra credit as determined by the instructor.
6.Operational auditing toolbox. This project involves developing a set of ideas that you can take from this course which may be useful in evaluating the efficiency and effectiveness of an organization after you start your career. Specifically, it should provide you some ideas for makeing efficiency and effectiveness recommendations on your first job. To the extent you are able to do this, you will get off to a quicker start than students from other schools. Examples of some basic ideas are shown at "Toolbox" on the t-drive. (Because these are not your ideas, you will not receive credit for them although you should include them in your toolbox.) As we cover material in this course, record on a diskette using a database, spreadsheet, or word processing program, procedures, inquiries, analyses, etc. that could identify inefficient or ineffective actions. You will find some in reading assignments and many in the cases we will analyze. Develop a format for categorizing these ideas by type of transaction (purchase, sale, payroll, etc.), function (marketing, finance, engineering, etc.), or other categories. A print out of these ideas will be collected in Class 39 and graded. (25 points).
The following factors will NOT be considered in determining an individual's grade, so please do not raise them with me:
1. Need of a certain grade to graduate.
2. Need of a certain grade to sit for the CPA exam.
3. Need of a certain grade to maintain eligibility for scholarships,
sports participation, etc.
4. Participation in campus activities.
5. Outside job requirements. While I appreciate the time a job can take
away from a student's studies, a very high percentage of students are
employed on a part or full time basis in various capacities, and I have
no basis for adjusting one student's grade for outside work.
"On my honor, I have neither given or received any assistance on this exam (quiz), nor have I observed anyone give or receive assistance."
Any student who feels that he or she cannot in good conscience sign the honor statement should see me immediately. Inadvertent failure to write or sign the honor statement will result in a grade reduction. The honor code is not applied to the project or homework assignments so that you can discuss concepts and approaches to the work with other students. However, in these situations you are expected to do your own work. Evidence that one student has appropriated the work of another student will subject both students to the disciplinary process.
E-mail: I will communicate with you periodically by e-mail, so check your mail regularly. I do not want this communication to be one way, so feel free to respond to my comments or just tell me what is going on in your life.
Prerequisites: The prerequisites for this class are senior status and completion of all junior level BA core courses and completion of all junior level accounting courses with a grade of "C" or better or graduate standing. You must have successfully complied with the prerequisites or you will be administratively dropped. This action will come after the official rosters have been printed, at which time it will be past the time when classes can be added or money refunded for a course.
Weather policy: Classes are normally held during inclement weather, unless otherwise notified by official radio or TV announcements. You may call 575.7000 for announcements about university closings or check www.pigtrail.uark.edu/info/weather.nclk.
ProQuest: Some homework assignments require you to read articles in professional journals. In these cases I recommend that you use the ProQuest Full Text file on the internet. Use the following procedures: First, go to the university homepage (www.uark.edu) and select "Library." From the library homepage select "Full-text Resources" and then "UMI ProQuest Direct." Then search by word, publication, or topic. To read some tables, select "page image" rather than "full text."
1. Select an industry that can be adequately studied and researched (e.g., one or more local companies or branches in the industry that can be visited, internet sites that can be visited). Clear the selection of the industry with the instructor before proceding further.
2. Arrange a visit with the management of a local company in the industry you have selected and obtain information (develop a list of questions and clear with instructor before hand) about industry issues that can be included in the case.
3. Develop a fictitious entity with characteristics similar to real companies in the industry. The description should be very detailed and include, among other things, financial statements, descriptions of key personnel, products, competitors, etc. A helpful source is the Form 10-K and proxy statement in the SEC Edgar files of a company in the industry.
4. Select a process (e.g., marketing, purchasing, logistics, security, enviromental, safety, or other process) and develop a detail description of it. Read ahead in the syllabus for examples of some of these processes. Describe the process, the individuals involved, the documents generated, the controls in place, etc. Seed this process with some examples of inefficient and/or inefffective procedures.
5. Develop a website to present the case. Install links to readings, companies in the industry, etc.
6. Develop an off-line solution to the case, including an audit report.
Organization: All members of each team should meet and decide how to organize the teams and who will accept leadership positions on the teams. This task is to be completed and reported by Class No. 5. All team members are expected to make substantial contributions. If any team member does not perform up to the expectations of the other team members, he or she will receive a reduced grade on the project.
Timing: To complete the project during the semester, we will
establish the following deadlines:
Class No. 11 - Complete all organizing and planning, including
an extensive and exhustive search of the internet, library, and other
sources to identify information that should be considered for the
project. Also, meet with the manager of an entity in the indusrty
to learn how the entity operates and develop a plan for the
work.
Class No. 23 - Complete work according to the plan. This work
may include development of documents, discussions with entity
personnel, preparation of flowcharts, etc. The work should be
reviewed by team leaders as it progresses so that it is in final form
by the deadline.
Class No. 32 - Finalize report. The report should be drafted
as the work progresses. Prepare both a written and a presentation
version. Be sure to practice your presentation until you have it
perfected. You may invite the manager of the entity you obtained
information from to the presentation.
Other: In all contacts with personnel at local companies and
in all presentations, you should dress and act professionally.
Consider me to be the manager on the project. I am available to
consult with the team or individual team members at any time. I recommend
that you make use of this resource.