ACCT 422: Auditing Theory and Practice

ACCT 422, Auditing Theory and Practice, is a 3-credit undergraduate course at University of Maryland Global Campus with ACCT 311 as its prerequisite.

UMGC describes it as a study of the auditing profession, the audit process and other assurance and nonassurance services related to the CPA profession. The objective is to design an audit plan, apply audit procedures, evaluate audit findings and assess the impact of standards and emerging issues.

Topics include generally accepted auditing standards, tests of controls and substantive tests, statistical sampling, data analytics, report forms and opinions.

UMGC notes that the course may use problem sets, case studies, computer applications and other materials. Auditing asks for a new way of thinking: instead of recording transactions, you gather evidence about whether someone else recorded them correctly.

What ACCT 422 Covers

Key Concepts Explained

The Audit Risk Model

Audit risk equals inherent risk times control risk times detection risk. The auditor assesses inherent and control risk, then sets detection risk by deciding the nature, timing and extent of substantive procedures.

Tests of Controls Versus Substantive Tests

Tests of controls check whether a control operated effectively, for example by inspecting approvals on a sample of purchase orders.

Substantive tests look for misstatements in the figures themselves, such as confirming receivables or vouching recorded sales to shipping documents. Strong controls can reduce, but never eliminate, substantive testing for material accounts.

Management Assertions

Audit procedures are designed around assertions, the claims management makes in the financial statements. For account balances, these include existence, completeness, rights and obligations, and valuation and allocation; for transactions, occurrence, completeness, accuracy, cut-off and classification.

Choosing the right direction of testing matters: vouching from recorded entries to source documents tests existence or occurrence, while tracing from source documents to the records tests completeness.

Audit Opinions

Sampling and Data Analytics

Statistical sampling lets auditors draw conclusions about a population from a sample, with a measurable risk of being wrong.

Attribute sampling estimates how often a control fails; variables sampling estimates the amount of misstatement in an account. Sample size rises with the desired confidence and falls as the tolerable misstatement or deviation rate grows.

Data analytics complement sampling: running tests over a whole population, such as searching all journal entries for weekend postings or round amounts, can direct attention to the riskiest items. Whichever technique you use, document what was tested, what was found and what it means for the conclusion.

Typical Assignments and How to Approach Them

Where Students Get Stuck

• Procedures not linked to assertions. Each procedure should address existence, completeness, valuation or another specific assertion.
• Confusing control tests with substantive tests. Ask whether you are testing a process or a balance.
• Sampling evaluation. Projecting the error to the population is the step students skip.
• Opinion choice. Practice material versus pervasive decisions until they are quick.

Study Tips for ACCT 422

• Learn the management assertions and pair each with typical procedures.
• Build a table of opinion types and the situations that trigger them.
• Practice a full audit plan for one account, such as receivables, end to end.
• Try simple analytics in Excel on a sample ledger.

How We Help with ACCT 422

Send the case, instructions, rubric and your draft. An audit tutor can explain standards, prepare a custom plan or analysis for reference, or review your work. See our accounting assignment help guide for more.

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