by Callaway Dee, Durtschi, Mindak
ISBN: 978-1-61853-073-8 | Copyright 2017Tabs
This casebook is a resource to use in the development of students’ comprehension of critical auditing concepts. The casebook is suitable for both graduate and undergraduate students and can be used as a supplement to any auditing textbook. Students act as employees of Garcia and Foster, CPAs and conduct an internal inspection of the firm’s audit of Alpine Cupcakes, Inc. Garcia and Foster is a fictitious regional firm with 20 offices located in large cities throughout the western United States. As part of its quality control procedures, the firm chooses five offices each year and conducts an internal inspection of a completed audit engagement.
The case assignments require students to review completed audit workpapers rather than create workpapers from scratch. This allows students to find errors in completed audit procedures and related documentation. For example, students identify weaknesses in the client’s internal controls that the auditors failed to find, evaluate the auditors’ tests of internal controls and substantive testing procedures, and assess the quality and completeness of the auditors’ workpaper documentation.
This casebook provides students an opportunity to see realistic audit workpapers, visualize how audit workpapers are linked to the audit program, and learn how source documents are integrated into audit tasks. Students practice critical thinking skills as they consider the purpose of audit procedures and the issues that arise when trying to implement those procedures in a realistic setting.
Although Alpine Cupcakes, Inc. is a fictitious company, we generated the accounting records in the casebook by creating over 2 years of realistic transactions for a company that manufactures and sells cupcakes. Thus, the underlying client source documents are representative of actual transactions, providing students the opportunity to observe the association between audit workpapers and realistic client documents. This realism is valuable to students, especially given the revised approach to the auditing portion of the CPA exam, in which the AICPA adds document review simulations.
The casebook contains three modules (risk assessment, cash, and accounts receivable). Each module can be used independently; in addition, portions of modules or specific questions within modules can be chosen by the instructor. The risk assessment module focuses on preliminary analytical procedures, materiality estimation, and applying the audit risk model. The cash module contains a comprehensive audit of cash, including evaluation of internal controls over cash receipts and disbursements, test of control procedures, and substantive testing. The accounts receivable module incorporates consideration of the sales revenue and accounts receivable processes, including processes related to the company’s estimation of uncollectible accounts. Students will evaluate the auditor’s test of control and substantive testing over the sales and accounts receivable processes and transactions.
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