| Details | | Publication Date: | 2005-12-23 |
| Size | | Length: | 195 pages | | Height: | 10.5 in | | Width: | 8.3 in | | Thickness: | 0.5 in | | Weight: | 14.4 oz |
Publisher's Note
The fourth edition of the Peach Blossom Cologne Company Audit Case contains many new features, most significantly exercises dealing with the audit of internal control over financial reporting. Optional exercises simulate the planning phase of a real audit, including preparation of an engagement letter, completing a time budget, and conducting analytical procedures. In analyzing the potential problems uncovered by analytical procedures, students are required to provide an analysis of risks and a discussion of those accounts that may present potential problems. The optional internal control flowcharting exercises are based on the client's computer system. Two statistical sampling exercises are included: an attributes sampling application and a variables sampling exercise using dollar-unit (PPS) sampling. New to this edition is a table that cross-references exhibits to their related assignments. Additionally, students are provided a CD that contains working paper templates enabling students to complete some or all of the working papers electronically. For those instructors who would like to provide audit programs to their students, a CD containing audit programs is available. Students can use these programs as a starting point for developing their own audit programs.
The case allows for a flexible approach. By including all or some of the optional exercises, the instructor can provide exposure to audit planning, the internal control audit, the client's business processes, and statistical sampling. Alternatively, the optional exercises may be omitted if the instructor wishes to expose students only to the rudiments of a financial statement audit. It should take approximately 12-15 hours to complete the required exercises and about 25-30 hours if all optional exercises are assigned. Whichever strategy is followed, it is highly desirable to incorporate the case into classroom discussions utilizing the assignments as a vehicle for introducing topics.
The optional exercises include flowcharting of various accounting processes and a detailed analysis of the associated controls. Once the student has finished these exercises, he or she will be in a position to prepare audit programs dealing with controls and transactions.
In all assignments, the student is required to prepare a substantive audit program for testing balances. The student obtains the necessary information from the internal control questionnaire provided in each assignment, from the background and permanent file materials, and from a review of the prior period working papers. As an alternative, instructors may wish to provide audit programs to their students. Programs are included on the instructor's CD.
Prior year's working papers are included to provide the student with a format for preparing the current year's working papers. This feature relieves the instructor from having to spend a great deal of time discussing working paper formats or having to provide them to students. The working papers also provide a good place for students to start preparing programs because the working papers include the steps typically found in an audit program. The prior period working papers do not include all items found in an actual audit. Nor do they include all the working papers required to complete the case. Some prior period working papers have been omitted to encourage creativity.
Finally, the review of the internal control questionnaires and working of the optional exercises dealing with the audit of internal control will enable the student to prepare a draft of the auditor's report on internal control over financial reporting, as well as an internal control letter for the Audit Committee.
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