Integrated Audit Practice Case 4th Edition
Authors
Kerr, Elder, &
Arens
ISBN# 978-0-912503-25-7
Manual audit practice case to help students learn to
solve audit problems by applying knowledge from different sources.
Completing the Integrated Audit Practice Case is ideal
preparation for students to learn these skills. Students
are required to use a wide verity of information to make audit
decisions and integrate that information throughout an
audit.
CONTENTS:
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Overview of the practice case
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Learning Objectives
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Student’s role
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Work paper preparation guidelines
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Work paper fonts used in the practice case
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Typical set of audit files
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Indexing
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Cross–referencing
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Use of computers in the Integrated Audit Practice
Case
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Objectives of the Integrated Audit Practice Case
PRIMARY OBJECTIVE:
Help students understand the interrelationships among the many
audit decisions involved in audit planning, audit testing, and the
formation of the auditor's opinion.
SECONDARY OBJECTIVE:
Help students learn how auditors make decisions and perform audits
when they are confronted with information about an entire company
where some data may be irrelevant or contradictory.
ADDITIONAL OBJECTIVE:
Familiarize students with audit working papers and good working
paper techniques by having them prepare actual working papers.
A Supplement to the First Auditing Course
The integrated practice case can be used in one of two
ways:
| 1. |
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Emphasize the concepts you teach as you proceed throughout
the course. Students will do assignments shortly after they are
discussed in class
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| 2. |
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Emphasize the concepts you teach after you have covered the
basic auditing concepts. Assignments will be made near the end
of the basic auditing course. |
Designed for Use with Any Auditing Textbook
The case project is relevant for use in any auditing course,
regardless of the text, if the faculty member wants students to
understand such topics as audit risk, inherent risk, audit
planning, understanding and testing internal controls, analytical
procedures, and substantive tests of account balances.
Realistic Documents and Working Papers
Document packages for performing audits are multicolored and
stapled to assure realism. Working papers have been prepared and
reviewed by a practicing auditor.
Five Sets of Materials are Provided
| 1. |
Assignments Booklet – Contains the
instructions for each of the 10 audit assignments for the
Integrated Audit Practice Case.
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| 2. |
Documents File – Contains copies of
the invoices, checks, receiving reports, and other documents
used to perform many of the audit tests.
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| 3. |
Audit Planning, Tests of Controls, and Substantive
Tests of Transactions Working Papers – Includes
more than sixty working papers, some completed and others for
students to complete while doing assignments. Includes
financial statements, detailed accounts by division for
analytical procedures, engagement letter, planning
documentation, risk assessment information, and information
about internal controls including flowcharts and
questionnaires.
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| 4. |
Tests of Balances and Completing the Audit Working
Papers – Contains almost one hundred working
papers for cash, accounts receivable, inventories, accounts
payable, summary of possible misstatements, subsequent events,
representation letter, and management letter.
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| 5. |
Working Papers in Excel – Includes
working papers that can be conveniently prepared either in
Excel or on the paper working papers included in the working
paper file.
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Illustrative and Partially-Completed Working Papers
Provided
A file of working papers is provided to illustrate effective
working paper preparation for sales and cash receipts. Students
prepare working papers for the acquisition of goods and services,
cash disbursements, accounts payable, and other related accounts.
Many of the working papers are partially completed.
Emphasis on Decision Making in Conducting an Audit
Students start by making accept/reject decisions for an audit
client, and then proceed through the audit process making key
decisions in planning the audit, performing tests, and evaluating
results. Background information and detailed instructions are
provided to challenge and guide the students.
Students Learn Best By Doing
Students analyze information, make decisions, perform audit
tests, prepare working papers, and reach conclusions in several
segments of an audit. Doing the case requires students to integrate
information and decisions from earlier assignments into later ones.
Education research shows that students learn best by making the
decisions and doing the audit work.

Assignments
| 1. |
Review client background information |
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Includes client acceptance decision |
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Includes review of engagement letter |
| 2. |
Perform preliminary analytical
procedures |
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Includes evaluating financial condition |
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Includes identifying potential misstatements |
| 3. |
Determine materiality and assess acceptable
audit risk and inherent risks |
| 4. |
Assess control risk and plan tests of
controls and substantive tests of transactions |
| 5. |
Perform and evaluate tests of controls and
substantive tests of transactions |
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Uses attributes statistical sampling |
| 6. |
Perform audit of accounts receivable |
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Option A: Non-statistical sampling |
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Option B: Monetary unit sampling, attributes tables |
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Option C: Monetary unit sampling, Poisson
distribution |
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Option D: Variables-difference estimation |
| 7. |
Perform audit of accounts payable |
| 8. |
Perform audit of cash |
| 9. |
Perform audit of inventory |
| 10. |
Completing the audit |
Realism and Relevance
Materials have been reviewed and class tested by professors and
practitioners with extensive practice experience. Carol Borsum,
CPA, is a practicing auditor with six years of auditing experience
who worked on the audit staff of a large CPA firm. She has spent
more than five-hundred hours completing the entire case, making
recommendations for revisions, and making certain that the
materials and related working papers are relevant and realistic.
Two other practitioners reviewed the materials in detail.
Instructor's Guide and Solutions Manual
The Instructor's Guide has been developed to provide
guidance on how to most effectively use the case, options for
deleting partial or complete assignments, and grading hints. The
Solutions Manual is complete and detailed.