Why is there a need for auditing? How are audits priced? How do (different) auditor liability rules affect audit quality? These questions are raised frequently in light of the Wirecard scandal and the regulatory actions that just recently followed. This course addresses these (and other) questions by analyzing the auditor-client relationship as well as the market structure of the auditing profession. The analysis is based on theoretical models that use game theory. For that purpose, auditors are perceived as strategic players that rationally interact with their various stakeholders.
Students are familiar with the purpose and the scope of an independent audit. They realize that audfiting does not only mitigate agency conflicts, but is also a potential source for such frictions. Furthermore, students know how the auditor strategically interacts in game theoretic settings. They are aware of the influence of regulatory changes on the auditing profession and the responses of audit firms to these changes.
Not taken ACC 671
Preparation of the literature that will be provided for self-study
|Forms of teaching and learning||Contact hours||Independent study time|
|Lecture||2 SWS||9 SWS|
|Exercise class||1 SWS||5 SWS|
|Form of assessment||Written exam (60 min) or oral exam (30 min)|
Prof. Dr. Dirk Simons
Prof. Dr. Dirk Simons, Dr. Sebastian Kronenberger
|Frequency of offering||Fall semester|
|Duration of module||1 semester|
|Range of application||M.Sc. MMM, M.Sc. WiPäd, M.Sc. VWL, M.Sc. Wirt. Inf., LL.M.|
|Preliminary course work||–|
Wagenhofer, A. and R. Ewert (2015), Externe Unternehmensrechnung, 3rd edition, Springer.
Module-specific literature will be communicated in the lecture.
|Course outline||Introduction and Institutional Background|
The Need for Auditing
Audit Assignment and Low Balling
Learning Effects and Low Balling
Auditor Specialization and Low Balling
Audit Market Segmentation
Risk-Oriented Auditing Approach
Strategic Auditing and Substantive Testing
The Auditor’s Liability
Theory of Liability Regimes