GRA 6242 Audit Theory
GRA 6242 Audit Theory
From an economic perspective, accounting can be regarded as an information system whereat auditing provides assurance over the respective information. The main objective of the research-oriented course Audit Theory is to analyse the economic role of the audit. The analyses are primarily based on formal-theoretical models; however, empirical studies are also considered.
By the end of the course, the students are familiar with the purpose and the underlying economic mechanisms of independent audits. They understand how auditors and auditees strategically interact in Agency Theory settings and other game theoretical frameworks. The students can identify the mechanisms that make audits a potential resolution of agency conflicts but can also identify potential sources of agency conflicts inherent in the audit. The students can analyse the impact of regulations on audit outcomes and the audit market structure. They also understand how the audit market structure, in turn, can influence the reliability of audit outcomes.
By the end of the course, the students are able to:
- Analyse the incentives of auditors and auditees.
- Analyse the relationship between auditors, auditees and addressees of (audited) financial statements.
- Analyse the effects of audit market regulations, audit standards and the legal environment on audit outcomes.
- Analyse the effects of the audit market structure on audit outcomes.
These skills ultimately enable students to:
- Assess the information content of audited accounting numbers.
Upon completion of the course, the students have a comprehensive understanding of the economic role of independent audits. They further understand the general idea behind formal-theoretical models in auditing (and accounting) and can use formal-analytical model approaches to assess empirical results.
The lectures covers the following topics:
- Stewardship, information and insurance hypotheses
- Costs and benefits of auditing
- Demand for and supply of audits
- Optimal contracts and moral hazard in auditing frameworks
- Optimal audit procedures and strategies
- Quality of audited financial statements
- Auditor liability
- Auditor independence
- Audit market regulations
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Please note that while attendance is not compulsory in all lectures, it is the students’ own responsibility to obtain any information provided in class. All parts of the assessment must be passed in order to get a grade in the course.
All courses in the Masters programme will assume that students have fulfilled the admission requirements for the programme. In addition, courses in second, third and/or fourth semester can have spesific prerequisites and will assume that students have followed normal study progression. For double degree and exchange students, please note that equivalent courses are accepted.
Covid-19
Due to the Covid-19 pandemic, there may be deviations in teaching and learning activities as well as exams, compared with what is described in this course description.
Teaching
Information about what is taught on campus and other digital forms will be presented with the lecture plan before the start of the course each semester.
- EXC 3520 Microeconomics
- SØK 3520 Mikroøkonomi or similar
- GRA 6219 Auditing, theory and methodology
| Assessments |
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Exam category: Activity Form of assessment: Presentation Weight: 30 Grouping: Group/Individual (1 - 2) Comment: Presentation of an assigned research paper Exam code: GRA 62421 Grading scale: ECTS Resit: Examination when next scheduled course |
Exam category: Submission Form of assessment: Written submission Invigilation Weight: 70 Grouping: Individual Support materials:
Duration: 3 Hour(s) Comment: Written examination under supervision Exam code: GRA 62422 Grading scale: ECTS Resit: Examination when next scheduled course |
All exams must be passed to get a grade in this course.
A course of 1 ECTS credit corresponds to a workload of 26-30 hours. Therefore a course of 6 ECTS credits corresponds to a workload of at least 160 hours.