Course Overview

course description for Advanced Auditing II (Internal Controls & Forensic Auditing) – normally offered in Year 3, Semester 6 of a BBA in Auditing:

Advanced Auditing II (Internal Controls & Forensic Auditing)

Course Code: BBA-AUD 370
Credit Hours: 3
Semester Offered: Year 3 – Semester 6

Course Description

This course builds on Advanced Auditing I by focusing on the evaluation of internal control systems and the application of forensic auditing techniques. Students will study the design, implementation, and testing of internal controls, with emphasis on fraud prevention and detection. The forensic auditing component introduces investigative techniques used to uncover financial irregularities, fraud schemes, and corruption in organizations. The course combines theory with practical case studies to equip students with the skills required to respond to fraud risks and provide assurance on the effectiveness of internal controls.

Course Objectives

By the end of the course, students should be able to:

1. Understand the principles and objectives of internal control systems.

2. Evaluate the design and effectiveness of internal controls in organizations.

3. Apply audit procedures to detect weaknesses, fraud risks, and control failures.

4. Understand the role of forensic auditing in fraud detection, investigation, and litigation.

5. Apply professional skepticism and ethical considerations in forensic audits.

6. Prepare reports and evidence suitable for use in legal proceedings.

Learning Outcomes

On completion of this course, students will be able to:

• Assess and test internal control systems using established frameworks (e.g., COSO, COBIT).

• Identify fraud risk factors and recommend improvements in control environments.

• Apply investigative and forensic audit techniques to detect financial fraud.

• Understand the legal and ethical issues involved in fraud investigations.

• Draft forensic audit reports and provide expert witness testimony.

Key Topics

1. Internal Controls Overview

   • Nature, objectives, and limitations of internal control

   • Internal control frameworks (COSO, COBIT, etc.)

   • Relationship between internal controls and audit risk

2. Evaluation of Internal Controls

   • Understanding and documenting internal controls

   • Control environment, risk assessment, control activities, information & communication, monitoring

   • Testing internal controls and identifying weaknesses

3. Fraud and Risk Management

   • Types of fraud (financial statement fraud, asset misappropriation, corruption)

   • Fraud risk factors and red flags

   • Role of internal controls in fraud prevention and detection

4. Introduction to Forensic Auditing

   • Definition, objectives, and scope of forensic auditing

   • Difference between forensic auditing and traditional auditing

   • Role of forensic auditors in corporate investigations

5. Forensic Audit Techniques

   • Investigative procedures and interviewing techniques

   • Document analysis, digital forensics, and data analytics

   • Evidence collection, preservation, and chain of custody

6. Legal & Ethical Issues in Forensic Auditing

   • Laws governing fraud, corruption, and financial crimes

   • Auditor’s responsibilities in fraud detection

   • Ethical dilemmas and independence issues

7. Reporting in Forensic Auditing

   • Preparing forensic audit reports

   • Use of forensic evidence in court

   • Role of auditors as expert witnesses

Teaching Methods

• Lectures and seminars

• Case studies of corporate frauds (e.g., Enron, Parmalat, Wirecard)

• Simulation exercises in internal control evaluation

• Practical workshops on forensic investigation techniques

Assessment Methods

• Assignments & Case Studies (20%)

• Midterm Examination (20%)

• Group Project (Forensic Audit Investigation Report) (10%)

• Final Examination (50%)

???? Recommended Textbooks & References

1. Singleton, T., Bologna, J., & Lindquist, R. – Fraud Auditing and Forensic Accounting

2. Arens, A. A., Elder, R. J., & Beasley, M. S. – Auditing and Assurance Services: An Integrated Approach

3. COSO – Internal Control: Integrated Framework

4. Association of Certified Fraud Examiners (ACFE) – Fraud Examiners Manual