Auditing
Cases
Instructor Resource Manual
SEVENTH EDITION
Mark S. Beasley Frank A. Buckless
Steven M. Glover Douglas F. Prawitt
New York, Ny
Verifiedbrainbooster
,Vice President, Business, Economics, And Uk Courseware: Donna Battista Manager, Learning Tools: Brian Surette
Director Of Portfolio Management: Adrienne D’ambrosio Content Developer, Learning Tools: Sarah Peterson
Director, Courseware Portfolio Management: Ashley Dodge Managing Producer, Digital Studio And Glp, Media Production And Development:
Senior Sponsoring 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
Senior Product Marketer: Tricia Murphy Digital Studio Producer: Alana Coles
Product Marketing Assistant: Marianela Silvestri Digital Content 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.
Isbn 10: 0-13-442270-8
Isbn 13: 978-0-13-442270-1
Verifiedbrainbooster
, PREFACE
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.
NEW CASES TO THE SEVENTH EDITION
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
CASE 3.6 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.
CASE 4.8 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.
CASE 5.8 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.
, INSTRUCTOR RESOURCE | DO NOT COPY OR REDISTRIBUTE Iii
Copyright © 2019 Pearson Education, Inc. Verifiedbrainbooster
Cases
Instructor Resource Manual
SEVENTH EDITION
Mark S. Beasley Frank A. Buckless
Steven M. Glover Douglas F. Prawitt
New York, Ny
Verifiedbrainbooster
,Vice President, Business, Economics, And Uk Courseware: Donna Battista Manager, Learning Tools: Brian Surette
Director Of Portfolio Management: Adrienne D’ambrosio Content Developer, Learning Tools: Sarah Peterson
Director, Courseware Portfolio Management: Ashley Dodge Managing Producer, Digital Studio And Glp, Media Production And Development:
Senior Sponsoring 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
Senior Product Marketer: Tricia Murphy Digital Studio Producer: Alana Coles
Product Marketing Assistant: Marianela Silvestri Digital Content 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.
Isbn 10: 0-13-442270-8
Isbn 13: 978-0-13-442270-1
Verifiedbrainbooster
, PREFACE
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.
NEW CASES TO THE SEVENTH EDITION
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
CASE 3.6 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.
CASE 4.8 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.
CASE 5.8 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.
, INSTRUCTOR RESOURCE | DO NOT COPY OR REDISTRIBUTE Iii
Copyright © 2019 Pearson Education, Inc. Verifiedbrainbooster
