Enhancing Auditing Experience through Real-World Case Studies
Students find theoretical auditing courses less engaging. By introducing real, local, privately-owned company case studies early in the semester, motivation and understanding improve. This approach provides a practical and relatable learning experience, addressing the existing issues with theoretical and fictional cases.
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Creating a Capstone Creating a Capstone Auditing Experience Auditing Experience Susan L. Swanger Western Carolina University
The Problem: The Problem: Students are unmotivated by the theoretical nature of the course Existing cases are based on large, public companies not like the ones our students are apt to serve Introducing cases breaks monotony, but Fictional cases are fake
The Solution: The Solution: Create a case to be used early in the semester (before students start to tune you out) Base the case on a real, local, privately- owned company Create materials that are life-like and individual assignments that are manageable
Email #1 Email #1 RE: Cullowhee Manufacturing Company Eric Masterson <eric.masterson@swangerandassociates.com> Sent: Wednesday, August 27, 2014 2:30 pm To: Michael Hayes Hey Mike I got good news and bad news The good news is we have the opportunity to maybe get a new audit client Cullowhee Manufacturing Company, just down the road. The bad news is that we need to hurry up and gather some info on them to decide whether we even want them as a client. I am totally swamped right now, so I really need your help. I have a meeting with the Partner, Susan Swanger, on September 5th, so I need for you to do a little work. First, check out their website to get an idea of what they are all about. Find out who the key players are in the company. Then review their financials to see what we might be dealing with how big are they, are they profitable, any weird looking accounting or disclosure items or things you don t quite understand stuff like that Summarize what you find in a memo to me, so that I have some background info when I meet with Swanger on the 5th. In fact, you better get it to me by 5:00 on the 4thso I have a chance to look at it before I meet with her. I have uploaded last year s audited financials into the CMC folder. Dewey, Cheatum & Howe CPA s out of Greenville SC did their audit last year.
Email #2 Email #2 version 1 version 1 RE: Jackson Paper Manufacturing Company Eric Masterson <eric.masterson@swangerandassociates.com> Sent: Wednesday, September 8, 2014 10:30 pm To: Michael/Michelle Hayes Dude/Dudette: You totally left me dangling I got home late Thursday night and read your memo but still had no clue what that company does, how long they have been around, how big they are, how reputable, what kind of accounting issues they may have nothing! Nada!!! I had to cancel & reschedule my meeting with Swanger. We are now meeting on Wednesday afternoon at 3:00. I need that info by noon on Wednesday. Don t let me down!!! I am counting on you.
Email #2 Email #2 version 2 version 2 RE: Cullowhee Manufacturing Company Eric Masterson <eric.masterson@swangerandassociates.com> Sent: Wednesday, September 8, 2014 10:30 pm To: Michael/Michelle Hayes Dude/Dudette: I got home late Thursday night and read your memo but still wasn t sure about some things I had asked for. Like how big they are and some of the complicated accounting issues they may have. Luckily, my meeting with Swanger got pushed to Wednesday 3:00 pm so if you can get me a revised memo by noon on Wednesday, that would be great!!! Thanks.
Email #3 Email #3 RE: Cullowhee Manufacturing Company Eric Masterson <eric.masterson@swangerandassociates.com> Sent: Wednesday, September 10, 2014 To: Michael/Michelle Hayes Hey -- I met with Swanger this afternoon. She seems ready to move forward on this pretty quickly. The info you pulled together was really helpful. Thanks a bunch. I am headed out of town to work on another client so I need for you to go back through those financial statements with a fine tooth comb. Give me a listing of ANYTHING that looks weird, ANYTHING that seems complicated and ANYTHING you don t understand. If there are some complicated accounting issues that neither of us can grasp, we might need to pull in someone with some expertise in those areas. If you can get me this by this by noon on Monday (the 15th) we can sit down and talk about it that afternoon. 10:30 pm
Email #4 Email #4 RE: Cullowhee Manufacturing Company Eric Masterson <eric.masterson@swangerandassociates.com> Sent: Monday, September 22, 2014 2:30 pm To: Michael/Michelle Hayes I need you to do a search of the company using the LexisNexis Company Dossier database available through our library. See if anything pops up from the last couple of years that might shed light on their reputation or methods of doing business. We should also try to find out who their attorneys are. Then check out Harrison Ford make sure he s not involved in anything shady. If you can get me this by noon on Friday we can sit down and talk about it that afternoon.
Email #5 Email #5 RE: Cullowhee Manufacturing Company Eric Masterson <eric.masterson@swangerandassociates.com> Sent: Wednesday, October 1, 2014 6:05 pm To: Michael/Michelle Hayes Good news! Swanger has given me the green light to go ahead and schedule a plant visit at Cullowhee Manufacturing. I contacted the CMC folks and we currently have it scheduled for 2:30 pm on Wednesday, October 8th. Once again, I am going to be out of town that day so I need for you and Aaron/Erin (the other new staff person) to go in my absence. The three of us can sit down this Monday afternoon (the 6th) to decide what questions we need answered, and get a sense of what you need to be looking for. We will also do a brainstorming session so please bring with you a listing of where you think fraud could occur at CMC. They have also sent me their 8-month Financial Statements (through August 31, 2014). I have not had a chance to look at it yet but I uploaded it into the CMC file folder. I will be writing a planning memo and will need to set the scope of the current year audit, so I need for you and Aaron/Erin to annualize those financials (you can do that in an excel spreadsheet). Then give me your thoughts on anything that looks out of line compared to prior years. Finally, I need to know your thoughts on what planning materiality should be. My next meeting with Swanger is 4:00 pm on the 24th(geeezzzz, I just hate those Friday afternoon meetings but what can I do???) so by 5:00 pm on Thursday the 23rd, I will need your spreadsheet, and a memo that summarizes your plant visit, fully describing their production process & documents their responses to our questions. Be sure to highlight any new areas of concern or risk for both CMC and for us that should be considered in the planning process that resulted from the tour or your analysis of the interim results. See you on Monday!
Benefits of the CMC Project Benefits of the CMC Project Enhances engagement of students by using REAL people, places & things Provides a vehicle to require students to sort through information, prioritize relevance, and eliminate unnecessary items Requires students to practice their written communication skills by responding appropriately in written form (emails and memoranda) Requires students to work under time and deadline constraints to submit their work for review by the audit senior Allows students to explore and learn about some of the nuances of private business enterprises (e.g., S Corporations, key person life insurance, related parties, equity transactions, compensation, etc.)
Students in Break Room to Meet Students in Break Room to Meet with Management with Management
Students on Plant Tour Students on Plant Tour
