GRA 6242 Audit Theory

GRA 6242 Audit Theory

Course code: 
GRA 6242
Department: 
Accounting and Operations Management
Credits: 
6
Course coordinator: 
Christopher Bleibtreu
Course name in Norwegian: 
Audit Theory
Product category: 
Master
Portfolio: 
Master of Accounting and Auditing
Semester: 
2021 Autumn
Active status: 
Active
Level of study: 
Master
Teaching language: 
English
Course type: 
One semester
Introduction

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. 

Learning outcomes - Knowledge

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. 

Learning outcomes - Skills

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. 
General Competence

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. 

Course content

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
Teaching and learning activities

-

Software tools
No specified computer-based tools are required.
Additional information

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. 

Qualifications

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.

Required prerequisite knowledge
  • EXC 3520 Microeconomics 
  • SØK 3520 Mikroøkonomi or similar 
  • GRA 6219 Auditing, theory and methodology
Exam categoryWeightInvigilationDurationSupport materialsGroupingComment exam
Exam category:
Activity
Form of assessment:
Presentation
Exam code:
GRA 62421
Grading scale:
ECTS
Grading rules:
Internal examiner
Resit:
Examination when next scheduled course
30No -Group/Individual (1 - 2)Presentation of an assigned research paper
Exam category:
Submission
Form of assessment:
Written submission
Exam code:
GRA 62422
Grading scale:
ECTS
Grading rules:
Internal and external examiner
Resit:
Examination when next scheduled course
70Yes3 Hour(s)
  • BI-approved exam calculator
  • Simple calculator
  • Bilingual dictionary
Individual Written examination under supervision
Exams:
Exam category:Activity
Form of assessment:Presentation
Weight:30
Invigilation:No
Grouping (size):Group/Individual (1-2)
Support materials:
Duration: -
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
Weight:70
Invigilation:Yes
Grouping (size):Individual
Support materials:
  • BI-approved exam calculator
  • Simple calculator
  • Bilingual dictionary
Duration:3 Hour(s)
Comment:Written examination under supervision
Exam code:GRA 62422
Grading scale:ECTS
Resit:Examination when next scheduled course
Type of Assessment: 
Ordinary examination
Total weight: 
100
Sum workload: 
0

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.