Auditing Cases An Interactive Learning Approach 7th
Edition
By Mark S. Beasley Solution Manual
All Chapters ( 1-12) Q&A Verified |Grade A+ Assured
Isbn 13: 9780134422701
DO NOT
COPY OR
REDISTRIBUTE
,Vice President, Business, Economics, and UK Courseware: Donna Battista Manager, Learning Tools: Brian Surette
Director of Portfolio Management: Adrienne D’Ambrosio Director, Content Developer, Learning Tools: Sarah Peterson
Courseware Portfolio Management: Ashley Dodge Senior Sponsoring Managing Producer, Digital Studio and GLP, Media Production and Development:
Editor: Neeraj Bhalla Ashley Santora
Editorial Assistant: Elisa Marks Managing Producer, Digital Studio: Diane Lombardo
Vice President, Product Marketing: Roxanne McCarley Digital Studio Producer: Regina DaSilva Digital
Senior Product Marketer: Tricia Murphy Studio Producer: Alana Coles Digital Content
Product Marketing Assistant: Marianela Silvestri Team Lead: Noel Lotz
Manager of Field Marketing, Business Publishing: Adam Goldstein Digital Content Project Lead: Martha LaChance
Field Marketing Manager: Nayke Popovich Project Manager: Liza Marie Borja, SPi Global
Vice President, Production and Digital Studio, Arts and Business: Etain O'Dea Interior Design: Jonathan Liljegren
Director of Production, Business: Jeff Holcomb Interior Cover Art: Petrovic Igor/Shutterstock
Managing Producer, Business: Melissa Feimer
Content Producer: Sugandh Juneja Operations
Specialist: Carol Melville
Design Lead: Kathryn Foot
Copyright © 2019, 2015, 2012 by Pearson Education, Inc. or its affiliates. All Rights Reserved. This
publication is protected by copyright, and permission should be obtained from the publisher prior to
any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise. For information regarding permissions,
request forms, and the appropriate contacts within the Pearson Education Global Rights and
Permissions department, please visit www.pearsoned.com/permissions/
Acknowledgments of third-party content appear on the appropriate page within the text.
PEARSON and ALWAYS LEARNING are exclusive trademarks owned by Pearson Education, Inc. or its affiliates in
the U.S. and/or other countries.
Unless otherwise indicated herein, any third-party trademarks, logos, or icons that may appear in this work
are the property of their respective owners, and any references to third-party trademarks, logos, icons, or
other trade dress are for demonstrative or descriptive purposes only. Such references are not intended to
imply any sponsorship, endorsement, authorization, or promotion of Pearson’s products by the owners of
such marks, or any relationship between the owner and Pearson Education, Inc., or its affiliates, authors,
licensees, or distributors.
,Auditing Cases: An Interactive Learning Approach provides exposure to real-world audit techniques
and hands-on learning for students in both undergraduate and graduate auditing courses. This
Seventh Edition continues our tradition of providing a rich learning experience for students that
challenges them to apply knowledge learned in the classroom and from traditional auditing
textbooks so they can develop skills to complete tasks they will be asked to do once they enter the
accounting and auditing profession.
The Seventh Edition continues to feature a variety of cases that address different aspects of the audit. Some
are based on real companies, while others are disguised as “hypothetical companies” in order to provide a
“surprise element” once they are completed. Additional cases include examples of client system
documentation and audit workpapers that students prepare and evaluate as if they are on a current
audit team.
Wells Fargo
Assessing the Impact of Ethical Culture
This case features the alleged inappropriate sales culture at Wells Fargo
Bank that ultimately led to the CEO’s 2016 testimony in front of the U.S.
Senate Banking Committee and his subsequent resignation. The bank’s audit
firm was challenged to defend its work by four U.S. Senators, one of whom
included Bernie Sanders, a recent candidate for U.S. President.
Koss, Inc.
The Sounds of a High-Fidelity Fraud
This case gives students a “bird's-eye” view of the 9th-largest embezzlement fraud in
U.S. history, which took place at the Koss Corporation, headquartered in
Wisconsin.The case vividly illustrates what can happen when internal control
over financial reporting (ICFR) is lax at a public company. The case will be
particularly interesting for students because much of the story of this massive
defalcation fraud is introduced through the words of the company’s CEO and the
individual who stole $34 million from the company, adapted from deposition
statements. The case brings to life the importance of effective ICFR, with an
emphasis on the Control Environment, and introduces students to the role that
accountants can play as expert witnesses in court cases.
Oilfields-R-Us, Inc.
Evaluation of Management Review Controls
This case introduces students to management review controls (MRCs), an
increasingly important topic in practice for both management and auditors. In a
MRC, members of management review key information and evaluate
reasonableness by comparing it to expected value, such as budget-to-actual
comparisons and review of accounting estimates. This case helps students
appreciate the importance of the effective design and execution of MRCs, and it
highlights some of the challenges of evaluating their effectiveness in audits of
internal control over financial reporting
, Town and Country Hardware
Evaluation of Tests of Controls with Automated
Component for the Expenditure Cycle (Purchases)
This case introduces students to internal controls with an automated
component that are an increasingly important topic in the practice for both
management and auditors. This case helps students appreciate the challenges of
evaluating the effectiveness of internal controls over financial reporting with an
automated component.
Reflects Recent Auditing Standards
This edition includes updates that reflect new auditing standards issued by the AICPA’s Auditing
Standards Board (up through SAS No. 132, The Auditor’s Consideration of an Entity’s Ability to Continue as a Going
Concern) and the PCAOB’s Auditing Standards (up through AS 3101, The Auditor’s Report on an Audit of Financial
Statements When the Auditor Expresses an Unqualified Opinion). When relevant, questions expose students to
new guidance contained in recently issued auditing standards.
Updated and Re-ordered Materials and Questions
Many of the case questions have been restructured to change the nature of the topics addressed and to
expose students to different issues from those examined in prior editions. Many cases also have
reordered questions. Dates in hypothetical cases have been set in calendar year 2018 with audit
procedures performed on the 2017 fiscal year information and/or interim procedures performed
on the 2018 fiscal year information. When appropriate, we have changed underlying data in some of
the hypothetical cases so that the cases differ from prior editions. All of these changes reduce the
potential benefit of students seeking our solutions from prior editions of the casebook. Further,
students who inappropriately access and use solutions to prior editions are more likely to be
detected by the instructor.
Auditing educators continue to look for opportunities to increase their emphasis on the development of
students’ professional judgment, critical thinking, communication, and interpersonal relationships skills.
Development of these skills requires a shift from passive instruction to active involvement of students
in the learning process. Unfortunately, current course materials provided by many publishers are not
readily adaptable to this kind of active learning environment, or they do not provide materials that
address each major part of the audit process. The purpose of this casebook is to give students hands-
on exposure to realistic auditing situations focusing specifically on each aspect of the audit process.
Over 50 Cases Spanning the Audit Processes
This casebook contains a collection of 50 auditing cases plus a separate learning module about
professional judgment that allows the instructor to focus and deepen students’ understanding in each
of the major activities performed during the conduct of an audit. These cases expose students to
aspects of the audit spanning from client acceptance to issuance of an audit report, with a particular focus
on how professional judgment is applied throughout the audit. Each case is primarily assigned to one of
12 identified aspects of an audit; however, a number of cases address more than one topic. As a result,
cases are cross-referenced in the Table of Contents so that instructors can easily pinpoint how a
particular case might be useful to address different audit topics. The following Table of Contents
Overview provides the number of cases for each of the 12 topics.
Edition
By Mark S. Beasley Solution Manual
All Chapters ( 1-12) Q&A Verified |Grade A+ Assured
Isbn 13: 9780134422701
DO NOT
COPY OR
REDISTRIBUTE
,Vice President, Business, Economics, and UK Courseware: Donna Battista Manager, Learning Tools: Brian Surette
Director of Portfolio Management: Adrienne D’Ambrosio Director, Content Developer, Learning Tools: Sarah Peterson
Courseware Portfolio Management: Ashley Dodge Senior Sponsoring Managing Producer, Digital Studio and GLP, Media Production and Development:
Editor: Neeraj Bhalla Ashley Santora
Editorial Assistant: Elisa Marks Managing Producer, Digital Studio: Diane Lombardo
Vice President, Product Marketing: Roxanne McCarley Digital Studio Producer: Regina DaSilva Digital
Senior Product Marketer: Tricia Murphy Studio Producer: Alana Coles Digital Content
Product Marketing Assistant: Marianela Silvestri Team Lead: Noel Lotz
Manager of Field Marketing, Business Publishing: Adam Goldstein Digital Content Project Lead: Martha LaChance
Field Marketing Manager: Nayke Popovich Project Manager: Liza Marie Borja, SPi Global
Vice President, Production and Digital Studio, Arts and Business: Etain O'Dea Interior Design: Jonathan Liljegren
Director of Production, Business: Jeff Holcomb Interior Cover Art: Petrovic Igor/Shutterstock
Managing Producer, Business: Melissa Feimer
Content Producer: Sugandh Juneja Operations
Specialist: Carol Melville
Design Lead: Kathryn Foot
Copyright © 2019, 2015, 2012 by Pearson Education, Inc. or its affiliates. All Rights Reserved. This
publication is protected by copyright, and permission should be obtained from the publisher prior to
any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise. For information regarding permissions,
request forms, and the appropriate contacts within the Pearson Education Global Rights and
Permissions department, please visit www.pearsoned.com/permissions/
Acknowledgments of third-party content appear on the appropriate page within the text.
PEARSON and ALWAYS LEARNING are exclusive trademarks owned by Pearson Education, Inc. or its affiliates in
the U.S. and/or other countries.
Unless otherwise indicated herein, any third-party trademarks, logos, or icons that may appear in this work
are the property of their respective owners, and any references to third-party trademarks, logos, icons, or
other trade dress are for demonstrative or descriptive purposes only. Such references are not intended to
imply any sponsorship, endorsement, authorization, or promotion of Pearson’s products by the owners of
such marks, or any relationship between the owner and Pearson Education, Inc., or its affiliates, authors,
licensees, or distributors.
,Auditing Cases: An Interactive Learning Approach provides exposure to real-world audit techniques
and hands-on learning for students in both undergraduate and graduate auditing courses. This
Seventh Edition continues our tradition of providing a rich learning experience for students that
challenges them to apply knowledge learned in the classroom and from traditional auditing
textbooks so they can develop skills to complete tasks they will be asked to do once they enter the
accounting and auditing profession.
The Seventh Edition continues to feature a variety of cases that address different aspects of the audit. Some
are based on real companies, while others are disguised as “hypothetical companies” in order to provide a
“surprise element” once they are completed. Additional cases include examples of client system
documentation and audit workpapers that students prepare and evaluate as if they are on a current
audit team.
Wells Fargo
Assessing the Impact of Ethical Culture
This case features the alleged inappropriate sales culture at Wells Fargo
Bank that ultimately led to the CEO’s 2016 testimony in front of the U.S.
Senate Banking Committee and his subsequent resignation. The bank’s audit
firm was challenged to defend its work by four U.S. Senators, one of whom
included Bernie Sanders, a recent candidate for U.S. President.
Koss, Inc.
The Sounds of a High-Fidelity Fraud
This case gives students a “bird's-eye” view of the 9th-largest embezzlement fraud in
U.S. history, which took place at the Koss Corporation, headquartered in
Wisconsin.The case vividly illustrates what can happen when internal control
over financial reporting (ICFR) is lax at a public company. The case will be
particularly interesting for students because much of the story of this massive
defalcation fraud is introduced through the words of the company’s CEO and the
individual who stole $34 million from the company, adapted from deposition
statements. The case brings to life the importance of effective ICFR, with an
emphasis on the Control Environment, and introduces students to the role that
accountants can play as expert witnesses in court cases.
Oilfields-R-Us, Inc.
Evaluation of Management Review Controls
This case introduces students to management review controls (MRCs), an
increasingly important topic in practice for both management and auditors. In a
MRC, members of management review key information and evaluate
reasonableness by comparing it to expected value, such as budget-to-actual
comparisons and review of accounting estimates. This case helps students
appreciate the importance of the effective design and execution of MRCs, and it
highlights some of the challenges of evaluating their effectiveness in audits of
internal control over financial reporting
, Town and Country Hardware
Evaluation of Tests of Controls with Automated
Component for the Expenditure Cycle (Purchases)
This case introduces students to internal controls with an automated
component that are an increasingly important topic in the practice for both
management and auditors. This case helps students appreciate the challenges of
evaluating the effectiveness of internal controls over financial reporting with an
automated component.
Reflects Recent Auditing Standards
This edition includes updates that reflect new auditing standards issued by the AICPA’s Auditing
Standards Board (up through SAS No. 132, The Auditor’s Consideration of an Entity’s Ability to Continue as a Going
Concern) and the PCAOB’s Auditing Standards (up through AS 3101, The Auditor’s Report on an Audit of Financial
Statements When the Auditor Expresses an Unqualified Opinion). When relevant, questions expose students to
new guidance contained in recently issued auditing standards.
Updated and Re-ordered Materials and Questions
Many of the case questions have been restructured to change the nature of the topics addressed and to
expose students to different issues from those examined in prior editions. Many cases also have
reordered questions. Dates in hypothetical cases have been set in calendar year 2018 with audit
procedures performed on the 2017 fiscal year information and/or interim procedures performed
on the 2018 fiscal year information. When appropriate, we have changed underlying data in some of
the hypothetical cases so that the cases differ from prior editions. All of these changes reduce the
potential benefit of students seeking our solutions from prior editions of the casebook. Further,
students who inappropriately access and use solutions to prior editions are more likely to be
detected by the instructor.
Auditing educators continue to look for opportunities to increase their emphasis on the development of
students’ professional judgment, critical thinking, communication, and interpersonal relationships skills.
Development of these skills requires a shift from passive instruction to active involvement of students
in the learning process. Unfortunately, current course materials provided by many publishers are not
readily adaptable to this kind of active learning environment, or they do not provide materials that
address each major part of the audit process. The purpose of this casebook is to give students hands-
on exposure to realistic auditing situations focusing specifically on each aspect of the audit process.
Over 50 Cases Spanning the Audit Processes
This casebook contains a collection of 50 auditing cases plus a separate learning module about
professional judgment that allows the instructor to focus and deepen students’ understanding in each
of the major activities performed during the conduct of an audit. These cases expose students to
aspects of the audit spanning from client acceptance to issuance of an audit report, with a particular focus
on how professional judgment is applied throughout the audit. Each case is primarily assigned to one of
12 identified aspects of an audit; however, a number of cases address more than one topic. As a result,
cases are cross-referenced in the Table of Contents so that instructors can easily pinpoint how a
particular case might be useful to address different audit topics. The following Table of Contents
Overview provides the number of cases for each of the 12 topics.
