The cases are now organized according to key phases and aspects of an audit, including specific sections on ethics and fraud. Some of the cases are comprehensive; however most are designed to specifically target a particular area (e.g., client acceptance, analytical procedures, materiality, and audit of internal controls over financial reporting).  All are carefully designed to enhance interactive learning in the classroom while making preparation by the instructor as quick and simple as possible.

The 3^rd edition also includes four new cases:

1.        “WorldCom: The Story of a Whistleblower” (Case 3.4)

This case focuses on the role of the internal auditors in uncovering the WorldCom fraud and sensitizes students to the pressures a person faces when he or she becomes aware of fraud. The case provides an approach to follow should they become aware of potential unethical or illegal actions and illustrates key characteristics of an effective whistleblower program. The case also provides an overview of the key requirement of the Sarbanes-Oxley Act’s whistle blowing provision and code of ethics.

2.       “Sarbox Scooter, Inc.: Scoping and Evaluation Judgments in the Audit of Internal Control over Financial Reporting” (Case 5.6)

This case teaches students important concepts and provides hands-on experiences with the planning stage of the audit of internal control over financial reporting and in the evaluation of internal control deficiencies. The case is comprised of two parts that can be assigned independently. In Part A students are introduced to the quantitative and qualitative factors that must be addressed when deciding which locations and accounts will be tested to achieve a high level of assurance with respect to the design and operating effectiveness of controls over financial reporting. In Part B, students are introduced to the considerations and steps used by auditors to evaluate the likelihood and magnitude of possible misstatement for the various levels of internal control deficiency. Students then get hands-on experience evaluating deficiencies using the framework.

3.        “Wally’s Billboard & Sign Supply: The Audit of Cash” (Case 9.1)

This case gives students hands-on experience with the audit of cash, a task many will face immediately out of college or even on an internship.  Students conduct audit procedures, tying numbers from client documents to bank statements and reconciliations.  Errors are seeded into the case, and one of the bank confirmations is a smudged, blurry faxed copy.  The instructor notes include a copy of the actual forged Bank of America confirmation used by Parmalat to mislead its auditors to bring the importance of care in the evaluation of audit evidence home to students in a vivid and memorable way.

4.        “Longeta Corporation: Auditing Revenue Contracts” (Case 9.3)

This case exposes students to revenue recognition issues and reminds them of the main GAAP criteria necessary to record revenue in financial statements.  Students research GAAP related requirements for revenue recognition in the SEC’s Staff Accounting Bulletin No. 101.  They use that research information to evaluate the appropriateness of the company’s accounting treatment for that transaction.  Students evaluate the substance of a customer’s “order letter” and a corresponding “side agreement” issued to the customer by the company’s vice president of sales.  The case solution reveals that this hypothetical company actually is a disguised real company fraud case investigated by the SEC.  The SEC ultimately charged the actual company for fraud, including charges filed against the vice president of sales.  This emphasizes the importance for senior management to understand key revenue recognition criteria, including management outside traditional financial reporting responsibilities.

All cases have been updated to reflect the changes in the profession, standards, and the regulatory environment.