The approach used by Thibodeau and Freier emphasizes the substantial benefits of using real-life case examples in helping to impart knowledge related to the practice of auditing. For the fourth edition of Auditing and Accounting Cases: Investigating Issues of Fraud and Professional Ethics
the authors continue their quest to be known as the most current auditing and accounting case book on the market. In that spirit, all case questions in the fourth edition have been revised to incorporate the eight new standards adopted by the PCAOB (i.e., AS 8 - AS 15) that relate to the auditors assessment of and response to risk in an audit and that include guidance related to audit planning, supervision, materiality, and evidence.
This flexible case book is perfect for educators to prepare future audit professionals with 45 cases focusing on specific and relevant audit issues. These cases focus on specific auditing issues directly impacted by Sarbanes Oxley and Dodd-Frank, using the actual companies-Madoff, Enron, WorldCom, Quest, Sunbeam-that have become synonymous with the capital markets crisis in confidence.
Section 1 Fraud Cases: Violations of Accounting Principles
Case 1.1 Waste Management: The Matching Principle
Case 1.2 WorldCom: The Revenue Recognition Principle
Case 1.3 Qwest: The Full Disclosure Principle
Case 1.4 Sunbeam: The Revenue Recognition Principle
Case 1.5 Waste Management: The Definition of an Asset
Case 1.6 Enron: The Revenue Recognition Principle
Case 1.7 WorldCom: The Matching Principle
Case 1.8 Bernard L. Madoff Investment and Securities: Broker-Dealer Fraud
Case 1.9 Qwest: The Revenue Recognition Principle
Case 1.10 The Baptist Foundation of Arizona: The Conservatism Constraint
Case 1.11 WorldCom: The Definition of an Asset
Case 1.12 Bernard L. Madoff Investment and Securities: The Role of the Securities & Exchange Commission (SEC)
Section 2 Ethics and Professional Responsibility Cases
Case 2.1 Enron: Independence
Case 2.2 Waste Management: Due Care
Case 2.3 WorldCom: Professional Responsibility
Case 2.4 Enron: Quality Assurance
Case 2.5 Sunbeam: Due Care
Case 2.6 Bernard L. Madoff Investment and Securities: A Focus on Auditors and Accountants Legal Liability
Case 2.7 Enron: Audit Documentation
Section 3 Fraud and Inherent Risk Assessment Cases
Case 3.1 Enron: Understanding the Clients Business and Industry
Case 3.2 The Baptist Foundation of Arizona: Related Party Transactions
Case 3.3 WorldCom: Significant Business Acquisitions
Case 3.4 Sunbeam: Incentives and Pressure to Commit Fraud
Case 3.5 Qwest: Understanding the Clients Business and Industry
Case 3.6 Bernard L. Madoff Investment and Securities: A Focus on Related Party Transactions
Case 3.7 Waste Management: Understanding the Clients Business and Industry
Section 4 Internal Control Systems: Entity-Level Control Cases
Case 4.1 Enron: The Control Environment
Case 4.2 Waste Management: General Computing Controls
Case 4.3 The Baptist Foundation of Arizona: The Whistleblower Hotline
Case 4.4 WorldCom: The Internal Audit Function
Case 4.5 Waste Management: Top-Side Adjusting Journal Entries
Section 5 Internal Control Systems: Control Activity
Case 5.1 The Fund of Funds: Valuation of Investments
Case 5.2 Enron: Presentation and Disclosure of Special-Purpose Entities
Case 5.3 Sunbeam: Completeness of the Restructuring Reserve
Case 5.4 Qwest: Occurrence of Revenue
Case 5.5 The Baptist Foundation of Arizona: Presentation and Disclosure of Related Parties
Case 5.6 Waste Management: Valuation of Fixed Assets
Case 5.7 Qwest: Occurrence of Revenue
Case 1 Enron
Case 2 Waste Management
Case 3 WorldCom
Case 4 Sunbeam
Case 5 Qwest
Case 6 The Baptist Foundation of Arizona
Case 7 The Fund of Funds
New to this Edition
PCAOB Standards: All case questions in the fourth edition have been revised to incorporate the eight new standards adopted by the PCAOB (i.e., AS 8 - AS 15) that relate to the auditors assessment of and response to risk in an audit and that include guidance related to audit planning, supervision, materiality, and evidence. As a result, this book provides students with extensive opportunities to apply technical knowledge to auditing contexts.
New cases on Bernie Madoff: Three new cases that provide important details about the historic fraud perpetrated by Bernie Madoff have been added along with one revised case.
The 1st new case, Case 1.8 - Bernard L. Madoff Investment and Securities: Broker-Dealer Fraud is designed to introduce students to some of the key details of the fraud, including the definition of a Ponzi scheme and a description of the “split-strike” strategy that was allegedly employed by Madoff. In addition, the case allows instructors an opportunity to introduce students to a number of the key provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act that relate to the regulation of Broker-Dealers like Bernie Madoff.
The 2nd new case, Case 1.12 - Bernard L. Madoff Investment and Securities: The Role of the Securities & Exchange Commission (SEC) is designed to highlight the failure of the SEC in responding to the evidence submitted by Harry Markopolos that questioned the legitimacy of returns on Madoff's hedge fund.
The 3rd new case, Case 3.6 - Bernard L. Madoff Investment and Securities: A Focus on Related Party Transactions is designed to highlight the important relationship enjoyed by Bernie Madoff with many “feeder funds” that were instrumental to attracting investors into the Madoff fund. The case provides instructors with an opportunity to learn Madoff did not charge a fee on the money it managed.
The 4th Madoff case, Case 2.6 Bernard L. Madoff Investment and Securities: A Focus on Auditors' and Accountants' Legal Liability has been revised to reflect latest developments related to Madoff's accountant, David Friehling. In addition, the case highlights possible legal liability faced by auditors of the feeder funds.
Cases run only 3-5 pages in length, which dramatically reduces the time necessary for students to grasp key learning objectives. Students will be thankful for providing cutting-edge instruction in such an efficient manner.
Discussion questions: Discussion questions from each section will help to facilitate dialogue between you and your students, allowing for each individual student to firmly grasp the most important elements of each case.
Ensuring student mastery: Each case focuses on one specific topic, ensuring student mastery of that topic. The unique format also provides instructors with significant flexibility in integrating the case into their syllabus or lesson plan.
Post-Sarbanes Technical audit guidance: The cases provide in-depth, up-to-date coverage of the post-Sarbanes technical audit guidance issued by the PCAOB, organised around the following themes:
Fraud Cases: Violations of Accounting Principles
Ethics and Professional Responsibility Cases
Fraud and Inherent Risk Assessment Cases
Internal Control Systems; Entity-Level Control Cases
Accounts, Processes and Assertions