ISBN#
978–0–912503–31–8
Suggested Selling Price
to Students:
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Short Audit Case: The Valley Publishing Company
11th Edition (2009)
Morris and Jones
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.
Objective of the Case:
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.
Ways to Use Audit Practice Case
- To emphasize the concepts you teach as you proceed in your auditing course. Students will do assignments shortly after they are discussed in class.
- To emphasize the concepts after you have covered basic auditing concepts.
Computer Application Included
A computer disk containing selected client records and audit working paper files has been provided. All files use Microsoft Excel spreadsheet software. The disk and instructions are filed in the back of the case for each student.
Estimated completion time: 30–40 hours with options for the Instructor to reduce time required.
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Contents:
- 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
- Part 2—Voucher Register
- Part 3—Selected Vouchers
- 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 and E—Prepaid Expenses and Investments
F—Property, Plant and Equipment, Accumulated Depreciation, Gain or Loss on Disposal, and Related Expenses
G and H—Vouchers Payable, Accrued Liabilities and Deferred Revenue
I through 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
- Client Records
- Last Year′s Workpapers (20x1)
- Computer Trial Balance
- Adjusting Journal Entries
- Cash Flow Statement and Worksheets
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Evaluation and Testing
of Internal Control
- 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.
Account Balance Testing and Analytical Procedures
- 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.
Memo Writing Instructions
- Suggested memo writing instructions are provided for students.
- Examples of completed memos are provided in solutions for optional handouts.
Other Important Characteristics of The Short Audit Case
- 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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