Business Process Design and Internal Audit

UNIVERSITY OF TEXAS AT DALLAS

Course Syllabus
Spring 2006

Instructor: Mark Salamasick, CIA, CISA, CSP

Course Number: AIM 6380

Semester Hours: 3

Location: SOM 2.102

Time: Wednesday, 7:00-9:45 p.m.
Office Phone: (972) 883-4729

Email Address: Mark.Salamasick@utdallas.edu However, all class related email should be sent
webct and advising should be sent to regular email account.
Endorsed Internal
Audit Program: http://som.utdallas.edu/eiap
UTD IIA Students
Chapter: http://www.utdallas.edu/orgs/iia
Homepage URL: http://www.utdallas.edu/~msalam
Office Hours: Wednesday and Thursdays, but call ahead. Also by appointment.

Course Overview:
The course will cover internal audit from a broad perspective that includes information technology, business processes, and
accounting systems. Topics include internal auditing standards, risk assessment, governance, ethics, audit techniques, and
emerging issues. The course covers the design of business processes and the implementation of key control concepts and will
use a case study approach that addresses tactical, strategic, systems, and operational areas. Improvement in effectiveness and
efficiency will be covered in the areas of operations, finance and technology. The course is open to all majors with an interest
in the design and testing of controls for improving management processes. This is the first course leading to Endorsed Internal
Audit Certificate and will prepare students to sit for the Certified Internal Auditor Exam.

Prerequisites:
- The prerequisite for the class is that you have an undergraduate degree or be in the last 15 hours of the
degree program. Fast track students can also take the course with the approval of their advisor.

- The other prerequisite for the class is that you have a strong desire to learn about Internal Audit. You
should also have a strong interest in completing a twelve credit hour program in Internal Audit and
passing the Certified Internal Auditor exam.
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Required Materials:
• The Goal, A Process of Ongoing Improvement, Second Revised Edition, Eliyahu M. Goldratt and Jeff
Cox, 1992. The edition of the book doesn’t really matter. You can obtain from Half Price books,
online or many other sources.

• CIA Model Exam Questions 2004 from the IIA International. Cost is $25 for IIA members, you need
to also join as a student member see below.

• CIA Review Materials, Gleim (Parts 1 and 2 required for the course, but exam is all 4 Parts) . 11
Edition is the current Edition and you should get at least the second print. The first print had a
number of errors that have been corrected. The material is available directly from Gleim at a discount
to UTD students by calling their toll free number (800) 874-5346. CIA exam has undergone extensive
changes and the 10th edition will not be current! You also have the option to buy the CD version,
audio or online version which is completely up to you. The SOM lab will have the CD question
loaded for your use.

• For those who feel they need a textbook during the semester one is available that covers the many of
the topics we will cover in class. The textbook is optional and available through the IIA International
at a discount to members for $75. A copy is placed on reserve in the library. The text just came out in
mid 2005 so it is doubtful any discounts on used copies will be available for the class. The text is
Internal Auditing an Integrated Approach from Richard Cascarino and Say Van Esch with ISBN O
7021-6669-3.

• Access to the Protiviti website. You will be provided an ID and password to this site.

• Student Membership in IIA International which is available for $30. See www.theiia.org. This will give
you membership to the IIA for one year with subscription to the magazine. You should also join the
UTD student IIA chapter which will make you eligible to interview for internships, full time positions,
resume book, company visits, and much more.

Course Objectives:
• Understand the different roles of the internal auditor.
• Current understanding of internal audit standards, guidelines, and emerging issues such as COSO and
Sarbanes Oxley.
• Develop knowledge of Internal Audit and assurance services terms and procedures, including an
awareness of advanced internal auditing information processing concepts.
• Develop knowledge of business design practices and internal control frameworks including COSO.
• Become familiar with sources for Internal Audit
Business Process Design and Internal Audit 3
• Preparation for the Certified Internal Auditor Exam directed towards Parts 1 and 2.
• Utilize the Internet as a research and communication tool for internal audit.
• Network with Internal Auditors in the DFW area.
• Learn the controls and key questions to ask concerning the control techniques and the business process.
• Learn the concepts of efficient and effectively controlled environments. Also, be able to explain why
these controls are necessary and if there are any compensating controls explain why the controls may
not be necessary.
• Be able to adapt an audit checklist and audit program to various internal audit environments.
• Develop skills necessary to be able to perform an internal audit and prepare an internal audit report.
• Be able to describe some of the common features of audit software and be able to describe scenarios
where to integrate into the audit practice.
• Learn those areas of business risk and well-designed internal control systems. .
• Understand how to adapt audit coverage in various industries and emerging audit issues.

Homework:
All assignments should be completed and turned in on time. A significant reduction or zero points will be
received for late assignments. A number of assignments will require you to prepare the assignment in
PowerPoint and make a short presentation in class. Due to the increase in class size all groups may or may
not be able to give a class presentation, but should be prepared to give the presentation at any point. Most
of these assignments will be due the Tuesday before class and should be posted to WebCT by each person
in the group. Please do not send homework to my email or my TA’s email address!

Attendance:
Notify the instructor in advance, if possible, if you cannot attend class. Class attendance is extremely
important since many of the topics and guest speakers are unique to the class discussion. We will also be
working on class projects involving actual audits with the UTD Audit Department, UT Southwest Medical
and City of Garland. Meetings will be set up outside of class time for these groups to meet. If you know
that will be a problem make a decision to sign up for the alternative project versus the audit project.

Since this is an extremely fast paced class I have found that those missing the first class have a lot of
difficulty during the entire semester. If you fall in this category you need to discuss with one of the TA’s to
make sure you understand the requirements of the class. The first class is one of the most important classes
during the entire semester!

Communication:
We will make use of WebCT for posting assignments and Case Study material. Also, discussion
in class is the best way to learn as many of you bring varied backgrounds that can add different
views to the class.
Business Process Design and Internal Audit 4

Handouts:
The course will have numerous handouts and case studies that will be used to stimulate class
discussion. It is your responsibility to obtain all handouts if class periods are missed. Numerous
presentations will be used to compliment the course with current material.

Tests:
These will be given throughout the semester to test your preparedness for the actual CIA exam. Students
will be expected to study and learn the exam material outside of class and be prepared with any questions
during the class. Saturday review sessions for the CIA exam will be established if desired by students. In
addition a significantly reduced rate of $30 per part is available to students, but you must register online at
www.dallasiia.org by March 3. This review session is conducted by Dr. Glenn Sumners and you can sign up
for one or all four parts of review session. These review sessions are held all day on March 11, 12, 13, and
14th. Each part is covered on consecutive dates.

Grading:
Your grade will consist of the following:

Percent

2 CIA Review Exams 25%

Case Studies 25%
Class Audit Project 25%
Class Assignments and Class Participation 25%
___
Total Points 100%

Class Portal and Current Topics:

A number of websites will be valuable resources during the course of the semester. All students will
have free access to the subscription service of the Protiviti KnowLeader site. We are one of only few
classes in the country to have this access and you need to take advantage of the resource during the class.
This will allow us to be very current on our topical coverage along with indexed links to numerous other
sources. You will have an id and password that is issued for use during this class. Current topics from
the site will be discussed during the class. You will also receive a twice a month newsletter from
Protiviti of current audit events. You are expected to followup and read accordingly for discussion in
class.
Business Process Design and Internal Audit 5

Dallas Chapter of the Institute of Internal Auditors

The local IIA Chapter has monthly meetings. Four meetings are held during the spring semester and you
are strongly encouraged to attend. The dates are set at January 12, February 2, March 2, April 6 and May
4. You are invited to attend the luncheon meetings from the Dallas Chapter of the IIA at a reduced rate
of $15 and possibly free as long as you guarantee that you will show. These meetings offer you an
opportunity to network with audit professionals, hear great speakers, and learn more what is going on in
the Dallas area. The local chapter http://www.dallasiia.org/ has more than 1,500 members and is one of
the only platinum chapters in the world. In addition the Information Audit and Control Association
meetings(http://www.isacantx.org/) are at reduced student rates at $10. Meetings are typically on
Thursday at lunch and the first is on January 12th with the IIA at a joint meeting. This association has
over 1,000 local members. The national IIA site is www.theiia.org and national ISACA site is
www.isaca.org.

IIA Student Chapter

During the fall semester of 2003 a student chapter of the IIA was formed at the University. Participation
in the chapter is requirement for all those in the Endorsed Internal Audit Program and participation
highly recommended for others interested in Internal Audit.

We continue to need assistance with the student chapter and the chapter will be having meetings, site
visits, mock interviews, internship opportunities, golf outings, and a resume book. Information Session
about the program will be held throughout the year with participation from the student’s chapter.
Individuals can participate in the Student Chapter and not the class. This will be a great opportunity for
those wanting to get full time employment, internships, learn more about the program, network with
many companies throughout the country along with IIA International. This past summer three students
from the student chapter participated in the Endorsed Internal Audit Program and International
Conference in Chicago. In 2006 the program is in Houston and the UTD Student Chapter will be playing
a major role in that event.

It is important for all students to have an up to date resume and take special care to speak knowledgable
about internal audit during those interviews. The student chapter will take on key projects including
working with firms in building integrated automated workpaper case studies.

Endorsed Internal Audit Program:

This course along with other requirements will lead to an Endorsed Internal Audit Certificate from IIA
International. Details of those requirements are given on the webiste som.utdallas.edu/eiap. You should
Business Process Design and Internal Audit 6
have on file an application for the program along with acceptance of the faculty advisor to be considered
part of the program. This endorsement is highly recognized in the business community and the criteria

for the UTD program is established to ensure a high degree of credibility. The UTD program is noted as
being the fastest growing Internal Audit Program worldwide and continues to gain statue among leading
corporations.

Class Audit Project:

One of the most beneficial portions of the class is to get actual internal audit work experience. We have
integrated that into this class since the first year of starting the program. Since the program has grown
we have also made this into an even more beneficial experience for you while assisting some audit
organizations complete their audit plans. You have the opportunity to work on an audit with UTD, UT
Southwest Medical or City of Garland. You will be interviewing to work on this assignment to get on
one of the audits. You can also choose not to work on the audit and work on an alternative project.
During the first class you will receive more information about the audits along with the requirements of
the audit. Typically the audits will require 5 to 10 hours outside of class per week.

You also have the opportunity to work on an alternative project, but has to be completed by February
26th. The audits will typically run the entire semester. The alternative project will be the IIA
Competition topic for the Esther R. Sawyer Scholarship Award. The topic and requirements are at
www.theiia.org/index.cfm?doc_id=1041 The competition topic is:
Social responsibility reporting by publicly traded companies has become an expected part of doing business on
a global scale. The IIA's Standard 2130 on Governance states that internal auditing "should contribute to the
organization's governance process by evaluating and improving the process through which: 1) values and goals
are established and communicated, 2) the accomplishment of goals is monitored, 3) accountability is ensured,
and 4) values are preserved." What is the role of internal auditing in sustainable development and corporate
social reporting?
A committee will review and submit the best papers to IIA International for entry into the competition
with a cover letter from the director of the program.
Business Process Design and Internal Audit 7
Class Schedule:
The class schedule is subject to change, based on the needs of the students. We will have many guest
speakers for the class in addition many case studies to cover. Changes to the class will be discussed as the
need arises.

Schedule
Week Date
1 January 11, 2006
2 January 18, 2006
3 January 25, 2006
4 February 1, 2006
Topic Quiz/Case
Study
Introduction
Student Chapter Presentation
Internal Audit Project Discussion
Resume Review and Discussion
Overview of the Audit Process and COSO
Model
Course Resources Overview-www.theiia.org
www.protiviti.com
Business Process Design Discussion –JC Assignment #1
Penny-Completed Reading of The Goal
Resume Review Follow-up
Risk Assessment Process and Audit
Planning-UTD Audit Group
Internal Audit Standards Case Study 1

5 February 8, 2006 Audit Programs and Audit Workpapers

6 February 15, 2006 Internal Audit Skills-Types of Engagements, Case Study 2
Communicating Results
7 February 22, 2006 Test and Guest Speaker Assignment #2
8 March 1, 2006 Ethics
N/A March 8, 2006 Spring Break
9 March 15, 2006 Sarbanes Oxley Presentation Case Study 3

10 March 22, 2006 Audit Software and CAATS - Integration into Case Study 4
the audit process
11 March 29, 2006 Fraud
12 April 6, 2006 Control Self Assessment and The Audit Role Case Study 5
as Consultant
13 April 13, 2006 Corporate Governance
14 April 20, 2006 Enterprise Risk Management Assignment #3
15 April 27, 2006 Class Wrap Up, Discussion, and Part II Test Part II Test