AUDITING CASES COMPREHENSIVE
EXAMINATION TEST 2026 CERTIFICATION
EVALUATION CASE STUDY PRACTICE SET
◉ PSU Revenue Key Findings
Answer: - Dining had largest portion of rev, Hotel had 2nd highest
- Cash accounts decreased from FY15- operating bank account is
largest portion
- Trends: peaks in Oct and June (football and music festival)
- Dips in Nov-Jan (renovations and holiday closures)
- JE sources: credit card receipts, cash receipts, checks, regular JVs
- GUESTSYS (hotel system) and Yvonne Chapman (catering
manager) are appropriate preparers
- FY16 had more late June entries
- Lag between effective date and entry date suggests need for year-
end adjustment controls
- Large posting observed around June 22 (hotel) and Dec 10 (Dining)
- Cash was larger than credit card receipts- could suggest extra cash
coming in for refunds or sales during the year that aren't considered
revenue
◉ Inventory case details
, Answer: Had to decide whether Box A inventory should be written
down to the lower of cost or market at year end 12/31/2018
The issue arises because Box B was introduced (newer model),
causing demand and prices for Box A to drop sharply
CFO prefers to minimize write down to preserve 2018 bonuses
CEO prefers to take a large write down to "reset" profits for better
2019 bonuses
◉ Inventory Case: assertion being tested
Answer: Valuation and allocation
◉ Inventory: key information given
Answer: - LIFO cost per unit for 2017 and 2018
- sales and pricing data (Box A sales price fell from 140 to 80)
- Major buyers refusing purchases or requesting returns
- Sales VP projecting 40,000 units of Box A to sell in 2019 and
10,000 in 2020
◉ Inventory: type of testing done
Answer: Substantive (valuation analysis)
- Calculations of NRV for Box A
- Comparison of NRV vs Cost (LIFO)
EXAMINATION TEST 2026 CERTIFICATION
EVALUATION CASE STUDY PRACTICE SET
◉ PSU Revenue Key Findings
Answer: - Dining had largest portion of rev, Hotel had 2nd highest
- Cash accounts decreased from FY15- operating bank account is
largest portion
- Trends: peaks in Oct and June (football and music festival)
- Dips in Nov-Jan (renovations and holiday closures)
- JE sources: credit card receipts, cash receipts, checks, regular JVs
- GUESTSYS (hotel system) and Yvonne Chapman (catering
manager) are appropriate preparers
- FY16 had more late June entries
- Lag between effective date and entry date suggests need for year-
end adjustment controls
- Large posting observed around June 22 (hotel) and Dec 10 (Dining)
- Cash was larger than credit card receipts- could suggest extra cash
coming in for refunds or sales during the year that aren't considered
revenue
◉ Inventory case details
, Answer: Had to decide whether Box A inventory should be written
down to the lower of cost or market at year end 12/31/2018
The issue arises because Box B was introduced (newer model),
causing demand and prices for Box A to drop sharply
CFO prefers to minimize write down to preserve 2018 bonuses
CEO prefers to take a large write down to "reset" profits for better
2019 bonuses
◉ Inventory Case: assertion being tested
Answer: Valuation and allocation
◉ Inventory: key information given
Answer: - LIFO cost per unit for 2017 and 2018
- sales and pricing data (Box A sales price fell from 140 to 80)
- Major buyers refusing purchases or requesting returns
- Sales VP projecting 40,000 units of Box A to sell in 2019 and
10,000 in 2020
◉ Inventory: type of testing done
Answer: Substantive (valuation analysis)
- Calculations of NRV for Box A
- Comparison of NRV vs Cost (LIFO)
