Short Audit Case:
The Valley Publishing Company 11^th Edition

Authors

William J Morris Jr. and Ambrose Jones III
ISBN# 978-0-912503-31-8

The Short Audit Case a manual audit practice set that includes the typical audit procedures used for account balance testing, including a variety of analytical procedures, and the preparation of financial statements with footnotes from the audit work papers. Each of the 10 weekly assignments includes challenging situations for the students. For the most part, the work has been preplanned. A computer disk is included, with the trial balance and work papers for each assignment.

Introduction

Section 1: Problem Narration

	Preliminary Assignment
	Assignment # 1	Purchases and Cash Disbursements (except payroll)
	Assignment # 2	Cash in Banks and On Hand
	Assignment # 3	Accounts Receivable, Bad Debts and Advertising Revenues
	Assignment # 4	Inventory of Newsprint, Newsprint Consumption and Publication Sales
	Assignment # 5	Prepaid Expenses, Investments and Other Assets
	Assignment # 6	Property, Plant and Equipment, Accumulated Depreciation, Gain or Loss on Disposal, and Related Expenses
	Assignment # 7	Vouchers Payable, Accrued Liabilities and Deferred Revenue
	Assignment # 8	Long-Term Debt and Related Interest Expense, and Stockholders’ Equity
	Assignment # 9	Operations
	Assignment #10	Federal Income Taxes and Completing the Audit

Section 2: Selected Records and Documents

	Part 1	Miscellaneous Records and Documents – Exhibits 1–13 (duplicated in computer files, except 11 and 12)
	Part 2	Voucher Register (duplicated in computer files)
	Part 3	Selected Vouchers (in computer files only) –

Section 3: Permanent File

	PF-1	History and Background
	PF-2	Organization Chart
	PF-3	Chart of Accounts
	PF-4	Excerpts from Minutes of Meetings of Shareholders and Board of Directors – Year 20x1
	PF-5	Excerpts from Minutes of Meetings of Shareholders and Board of Directors – Year 20x2
	PF-6	The Accounting System and Control Procedures: Purchases and Cash Disbursements Revenue and Cash Receipts Revenue and Cash Receipts – Flowcharts

Section 4: 20x1 Workpapers

		Report and Financial Statements
		Cash Flow Worksheets
		Senior’s Audit Memorandum
		Working Trial Balances
		Adjusting Journal Entries
		Reclassification Entries
		Client’s Representation Letter
		Correspondence with General Counsel Regarding Pending Litigation
		Preliminary Analytical Review
		Workpapers:
		A	Cash in Banks and On Hand
		B	Accounts Receivable, Bad Debts and Advertising Revenues
		C	Inventory of Newsprint, Newsprint Consumption and Publication Sales
		D–E	Prepaid Expenses and Investments
		F	Property, Plant and Equipment, Accumulated Depreciation, Gain or Loss on Disposal, and Related Expenses
		G–H	Vouchers Payable, Accrued Liabilities and Deferred Revenue
		I–K	Long–Term Debt and Related Expenses, and Stockholders’ Equity
		M	Operations
		T	Test of Purchases

Section 5: 20x2 Workpapers

	Audit Program
	Selected Workpapers
	Client’s Representation Letter
	Correspondence with General Counsel Regarding Pending Litigation
	NOTE: The Workpapers prepared by the client are in the computer files.

APPENDIX: Instructions for Use of the Computer Files

	Instructions for the Student
	Audit Workpapers (Workpapers)
	Client Records (RECORDS)
	Last Year’s Workpapers (20x1)
	Computer Trial Balance
	Adjusting Journal Entries
	Cash Flow Statement and Worksheets

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Designed to illustrate the principles of audit field work by preparing working papers and performing audit procedures, including basic auditing principles, the preparation, organization and integration of audit working papers and preparing the financial statements and audit report from the working papers.

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1.	Emphasize the concepts you teach as you proceed in your auditing course. Students will do assignments shortly after they are discussed in class.
2.	Emphasize the concepts after you have covered basic auditing concepts.

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A computer disk containing selected client records and audit working paper files has been provided. All files use Excel spreadsheet software. The disk and instructions are filed in the back of the case for each student.

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	Assignments permit students to perform all steps needed to gain an understanding and evaluate the effectiveness of internal control in an audit.
	Sufficient information is provided in the permanent file to evaluate the control environment.
	Materials include tests of controls samples for detecting and evaluating exceptions and their effect on the audit.
	Flowcharts are included for students' use in evaluating internal control.
	An assignment to prepare management letter suggestions

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	Widespread use of analytical procedures is included throughout the case.
	Assignments include a wide variety of account balances to provide audit experience.
	Cash in banks and on hand
	Accounts receivable, bad debts, and advertising revenues
	Inventory of newsprint and publication sales
	Prepaid expenses and investments
	Property, plant and equipment, accumulated depreciation, depreciation expense, and gain or loss on disposal
	Accounts payable and accrued expenses
	Long-term debt and related interest expense
	Stockholders' equity
	Operating expenses
	Income tax expense and liability

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	Suggested memo writing instructions are provided for students.
	Examples of completed memos are provided in solutions for optional handouts.

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	An employee fraud is included. Students must design analytical procedures and do inquiry to discover the fraud.
	Preliminary analytical procedures are illustrated. Percentages in the trial balance facilitate the preliminary analytical procedures.
	Two types of errors are included in the trial balance.
	Two alternative but similar tests of controls samples are included for purchases to permit professors to change assignments from term to term.

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