ACCY 405 Assurance and Attestation
The Complete Exam Bible · Fall 2026ACCY 405 Overview
- Fall 2026
- Upper-division accounting course
- Prerequisite: ACCY 304
- Two exams and team projects
What the course is about
ACCY 405 Assurance and Attestation is an upper-division accounting course at the University of Illinois Urbana-Champaign.
- Assessed by Two exams, a team project in two parts, a group presentation and ongoing homework and participation.
- Hardest step Choosing the assertion and the direction of a test before choosing the procedure.
- How to prepare Argue from a course concept, then explain why the obvious alternative is weaker.
How ACCY 405 is assessed
| Component | Weight | Format |
|---|---|---|
| First Exam | 15% | Multiple choice, problems and short answer; held 30 September 2026 |
| Second Exam | 20% | Evening exam on 16 November 2026, 6 to 8 PM |
| Assurance Services Team Project: Individual component (Part 1a) | 10% | Individual written assignment in Module II |
| Assurance Services Team Project: Group component (Part 1b, Part 2) | 20% | Group work in teams of four or five |
| Group Presentation | 10% | Recorded team talk of up to 10 minutes |
| Homework, Quizzes, Engagement, and Participation | 25% | Lowest homework grade is not counted |
The six components listed in the Fall 2026 syllabus total 100%. Attendance at the Professional Lyceum on four Thursdays is described as a required component of the course but carries no separate weight in the table. The lowest homework grade is not counted, up to 1% extra credit is available through the Accountancy Research Laboratory, and a missed exam excused for an acceptable reason moves its weight to the other exam. Check Canvas for any change.
Assessment structure
Segment widths reproduce the published percentage weights, in the order the syllabus lists them, and total 100%.
Current ACCY 405 dates
| Date | Item | Control |
|---|---|---|
| 30 September 2026 | First Exam | Day 11 of the Fall 2026 schedule. |
| 21 October 2026 | Group Talks due | Day 17 of the Fall 2026 schedule. |
| 16 November 2026 | Second Exam | Evening, 6 to 8 PM; location to be announced. |
| 9 December 2026 | Final project due | Day 29 of the Fall 2026 schedule. |
Dates are taken from the Fall 2026 course schedule in the syllabus. Confirm exact deadlines and submission settings in the live LMS.
What ACCY 405 covers
Eleven chapters follow the Fall 2026 schedule from the demand for assurance to risk, evidence and completion.
Assurance and the Trust Relationship
Assurance, attestation and the financial statement audit; promiser, truster and verifier; labels and seals as everyday assuranceA course about checking other people's claims
The first class of ACCY 405 asks what assurance and attestation are, why they are worth studying and how the course will study them.
- What assurance and attestation mean
- The assurance universe and where the audit sits
- Promiser, truster and verifier
- Food fraud and the truster's exposure
- Seals, labels and rebuilding trust
- Reading a package as an auditor would
The Market Game and Information Asymmetry
Gains from trade by quality grade, hidden quality, short-lived reputations and the lemons marketA class built around a game
The second class replaces the lecture with a market game.
- Rules of the market game
- Gains from trade by quality grade
- Why the highest grade is not always best
- Hidden quality and reluctant buyers
- Reputation and its limits
- The lemons market
Demand for Assurance and Who Pays the Verifier
The law of assurance and the fee test, who hires the attester, endogenous and exogenous demand, evidence that audits add valueThe law of assurance
The third class draws a rule out of the market game. The probability of trade increases as buyers bid more and as sellers ask less, so a narrow bid-ask spread signals a likely trade and a smaller information gap.
- The law of assurance and the fee test
- Promiser-paid and truster-paid engagements
- Endogenous and exogenous demand
- Signalling and adverse selection
- Monitoring and moral hazard
- Information risk and insurance
Financial Statement Assertions
Existence, completeness, valuation, rights and obligations, presentation and disclosure; the four-step verification frameworkWhat an assertion is
The course defines an assertion as something declared with confidence but without proof, and draws the key consequence: assertions made without proof create information problems, and information problems create the demand for assurance.
- Assertions as claims without proof
- Existence and occurrence
- Completeness and cutoff
- Valuation and allocation
- Rights and obligations
- Presentation and disclosure
Audit Reports, Audit Quality and Regulation
PCAOB standards and the integrated audit, reasonable assurance and material weakness, regulation, litigation and reputationWhere this topic sits in the course
After the conceptual framework, the Fall 2026 schedule turns to the auditor's reporting model and then to two sessions on audit quality, regulation and litigation, with a data analytics activity and a score card exercise on audit quality.
- The auditor's reporting model
- The PCAOB and its early standards
- The integrated audit and two opinions
- Reasonable assurance and material weakness
- Audit quality as a credence service
- Regulation, litigation and reputation
Strategic-Systems Auditing and the Client's Business
Business states, information intermediaries and management representations; how auditing became risk based; the top-down routeStarting from the business
Module II opens with a strategic analysis of a client and its business processes.
- Strategic and business risk
- Business states, intermediaries and representations
- A century of risk-based auditing
- Sampling and non-sampling risk
- The purely substantive audit
- The top-down route to assertions
Evidence-Driven, Belief-Based Risk Assessment
Audit risk and its components, beliefs against knowledge, professional judgment and the belief-revision loopTwo ways to describe auditing
The course objectives put two descriptions side by side: auditing as a recursive, professional-judgment process of evidence-driven, belief-based risk assessment, or auditing as rituals and routines that relieve discomfort about the accuracy of financial information.
- Two descriptions of auditing
- Audit risk and its components
- The compensatory audit risk model
- Knowledge against belief
- Reasonable assurance as well-justified belief
- Mental models and expectations
Triangulating Audit Evidence
Evidence of and from three sources, confirmation bias, replication against triangulation, levels of magnificationWhat triangulation means
The schedule pairs risk assessment with evidence triangulation, and the course objectives list triangulation among the evidence concepts that support an assurer's reasoning, along with persuasiveness, diagnosticity and predictive validity.
- Three sources of evidence
- Agreement that proves too little
- Confirmation bias and rival hypotheses
- The distortion gradient
- Replication against triangulation
- Levels of magnification
Planning Risk Assessments
The four-phase audit workflow, fraud and error at planning, planning components and indicator reasonableness testsPlanning inside a recursive workflow
The KPMG monograph shows the audit as a unified whole in four phases: planning, control evaluation, substantive testing and completion.
- Four phases and one recursive assessment
- Controls or substantive: the preliminary choice
- Fraud and error at three levels
- Pervasive risks and overall responses
- Components planning identifies
- Indicator reasonableness tests
Control Evaluation and Internal Control Evidence
Design and implementation against operating effectiveness, walkthroughs and risk points, IT and application controlsWhy controls matter to an assurer
The course objectives say attesters draw on frameworks to assess internal control strengths and weaknesses.
- Controls as indirect evidence
- Design and implementation
- Operating effectiveness
- Walkthroughs and significant risk points
- General IT and application controls
- Controls over accounting estimates
Substantive Testing, Sampling and Completion
Analytical procedures and tests of details, projecting sample results, responses to fraud risk, completing the engagementMatching procedures to misstatements
The later part of Module II covers audit evidence, audit sampling, inventory, accounts payable, fraud and completing the engagement.
- Procedures and the misstatements they target
- Vouching and tracing directions
- Analytical procedures
- Tests of details
- Projecting a sample
- Three responses to fraud risk
Its syllabus describes an intensive conceptual and applied introduction to assurance services in society, centred on the services Certified Public Accountants provide but also looking at assurance beyond the financial statement audit. The prerequisite listed is ACCY 304 and its prerequisites.
The course expects critical thinking and careful communication about how assurance professionals make decisions and what they deliver.
Module I: why assurance exists
The first module asks why society demands assurance, what is being assured, what assurance is worth, what makes it high quality and how regulation shapes the profession.
It starts from a trust relationship between a promiser, a truster and an independent verifier, uses an in-class market game to show how hidden quality can shrink a market, and builds a rule for when assurance is worth its fee.
Financial statement assertions, the auditor's reporting model, audit quality, regulation and litigation complete the module.
Module II: risk, evidence and verification
The second module uses the strategic-systems approach, read through a KPMG monograph by Bell, Peecher and Solomon, to show how auditors assess risk from the business down, form and revise beliefs, and triangulate evidence from the business itself, the systems that record it and management's own representations.
Its later sessions turn to audit evidence, sampling, inventory, accounts payable, fraud and completing the engagement, and students plan and perform an attest engagement in teams.
How the course is taught
ACCY 405 belongs to the department's Project Discovery curriculum.
Most classes combine a short lecture with group activities, many of which have no single right answer, and the syllabus warns that the course will feel harder at first because assignments are deliberately ambiguous. Readings include the Messier, Glover and Prawitt auditing text, the monograph, and research articles on the demand for assurance, the expanded audit report, audit quality and the external monitoring of audit firms.
A Professional Lyceum brings practitioners to speak on four Thursdays.
How to use this guide
Start with the assessment structure and the chapter map, then work one chapter at a time. Each chapter moves from the key concepts to a worked model answer and practice items, and each model is AskSia-authored rather than a copy of a course activity.
Use the practice to build an argument of your own: state a claim, name the concept that supports it and explain why the obvious alternative is weaker.
Evidence and assessment control
Assessment components and weights follow the Fall 2026 syllabus. Teaching explanations and practice cases are independently written.
Confirm dates, rooms, permitted materials and any schedule change on Canvas, where the course says changes will be announced.
Worked example · free
Choose the assertion and the direction of the test
- 2Name the assertion: completeness of payables, because the risk is an omitted liability.
- 2Choose the direction: trace from receiving records and later payments forward to the ledger.
- 2Add outside evidence: supplier statements or confirmations from suppliers the client uses.
Key terms
- Assurance
- Independent professional work that makes information more useful to decision makers, in the AICPA's definition as paraphrased by the course.
- Attestation
- Work in which a practitioner reports in writing on how far another party's written claim can be relied on.
- Information Asymmetry
- A situation in which one party to a trade knows more about quality than the other, which can reduce trade until the gap is bridged.
- Lemons Market
- A market in which buyers who cannot observe quality discount every offer, honest sellers leave and only low quality trades.
- Financial Statement Assertion
- A claim management makes about an account, such as existence, completeness, valuation, rights and obligations, or presentation and disclosure.
- Reasonable Assurance
- Assurance that is high yet short of certainty that the statements contain no material misstatement.
- Risk of Material Misstatement
- The chance that the statements are already materially misstated before any audit work, made up of inherent risk and control risk.
- Detection Risk
- The risk that the auditor fails to detect a misstatement that could be material on its own or in aggregate.
- Triangulation
- Gathering evidence of and from business states, information intermediaries and management representations so that they support one conclusion.
- Material Weakness
- A control deficiency, alone or with others, serious enough that a material misstatement has more than a remote chance of slipping through.
ACCY 405 FAQ
How is the grade in this assurance course split?
The Fall 2026 syllabus lists the First Exam at 15%, the Second Exam at 20%, the individual team-project part at 10%, the group part at 20%, the group presentation at 10%, and homework, quizzes, engagement and participation at 25%.
What kinds of questions appear on the exams?
The syllabus says the format may include multiple choice questions, problems and short answer questions, drawing on readings, the textbook, lectures, class discussions and group talks. Many questions have no single correct answer, so reasoning that compares alternatives matters.
What do the team projects involve?
Three projects are assigned in Module II: one individual writing assignment and two group projects in which teams plan and perform an attest engagement. Work is judged on writing quality and content, and free riders can lose marks.
Why do the five financial statement assertions matter so much?
They turn a balance into testable claims. Each assertion points to a different direction of error, so naming the right one decides which evidence and which test direction an auditor should use.
What does the audit risk model say in plain terms?
Audit risk depends on the chance the statements were misstated before the audit and the chance the auditor misses it. When the first is high, the auditor must accept less of the second by gathering stronger evidence.
Why does the course keep returning to triangulation?
Because agreement between records that management controls can hide a shared error. Evidence from customers, suppliers or operating data outside the accounting system can confirm or contradict the records in a way more of the same records cannot.
Questions students ask in each ACCY 405 chapter
- Is every assurance service an audit?
- No. An audit is one kind of attest engagement, and attestation is one kind of assurance. A product seal or a certification can improve information for buyers without any written assertion being formally reported on. Chapter 01 · Assurance and the Trust Relationship
- Why did the debrief say the best grade is not always the best outcome?
- Because what matters for society is the gap between value to buyers and cost to sellers. In the game that gap was largest for the middle grade, so trading it created more total value than trading the highest grade. Chapter 02 · The Market Game and Information Asymmetry
- When is assurance not worth buying?
- When its fee exceeds the extra value it creates for the truster less the existing gap between asking price and bid. In that case the trade still fails, so paying for the report only adds cost. Chapter 03 · Demand for Assurance and Who Pays the Verifier
- How do you choose the right assertion for a misstatement?
- Decide first whether the balance is likely overstated, understated or wrongly described. Overstatement points to existence or occurrence, understatement to completeness, a wrong amount to valuation, and a misplaced item to presentation. Chapter 04 · Financial Statement Assertions
- Does a clean opinion mean there are no errors?
- No. It gives reasonable assurance, high but never absolute, that the statements are free of material misstatement. Small errors can remain, and the auditor does not promise certainty. Chapter 05 · Audit Reports, Audit Quality and Regulation
- Why does an auditor need to understand the client's strategy?
- Strategy creates the business risks that make certain accounts likely to be wrong. Without it, the auditor has no expectation for what the figures should look like and cannot spot results that are too good to be true. Chapter 06 · Strategic-Systems Auditing and the Client's Business
- What happens to detection risk when control risk rises?
- Acceptable detection risk falls. To keep audit risk at its target, the auditor must gather more persuasive substantive evidence, changing the nature, timing or extent of testing. Chapter 07 · Evidence-Driven, Belief-Based Risk Assessment
- Why is a customer confirmation stronger than an invoice?
- Invoices and shipping documents are produced inside the client and can be fabricated along with the ledger. An arm's-length customer stating what it owes is outside management's control and less likely to misstate the debt. Chapter 08 · Triangulating Audit Evidence
- Why is fraud risk assessed separately from error at planning?
- Fraud involves concealment and intent, so procedures designed to catch honest mistakes may miss it. Separating the two lets the auditor plan responses, such as unpredictable procedures, aimed specifically at fraud. Chapter 09 · Planning Risk Assessments
- Why not test every control's operating effectiveness?
- Because a control that is poorly designed or not implemented gives no basis for reliance even if performed perfectly. Testing its consistency would add cost without reducing the risk of misstatement. Chapter 10 · Control Evaluation and Internal Control Evidence
- What is the difference between vouching and tracing?
- Vouching starts from the recorded amount and looks for support, so it tests whether recorded items exist. Tracing starts from source evidence and looks for the record, so it tests whether anything is missing. Chapter 11 · Substantive Testing, Sampling and Completion
How to study for the exam
Prepare each reading for its key point and the argument behind it, not for isolated facts. After every chapter, write one short answer that names a claim, a concept and a contrast, and check every direction word against your own reasoning.
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