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We examined 36,367 school district audit results from the Federal Audit Clearinghouse data base for the five-year period from 1998 to 2002. We found that school districts have a high level of internal control and grant compliance findings. School districts are slow in filing their financial reports and delayed financial reports are positively associated with larger district size, government auditors, sole practitioner auditors, and problems with internal controls and qualified reports. We found a negative association between audit delay and a low-risk classification. Continuing material weaknesses in financial reporting and grant compliance could result in funding losses for those districts not meeting proper financial reporting standards. Timelier reporting would identify problem areas sooner and promote remedial action and greater compliance.

This relatively short case gives students a comprehensive overview of the steps required to prepare consolidated financial statements under U.S. GAAP when a subsidiary prepares its accounts under a foreign GAAP—in this case, International Financial Reporting Standards (IFRS). While the case is closely based on an actual Australasian company seeking listing in the United States, the product and the exact financial details are disguised. Specifically, the case exposes students to the following: accounting for foreign currency transactions; adjustments to convert foreign GAAP to U.S. GAAP (accounting for license fees); translation of financial statements; change of functional currency; remeasurement of financial statements; and foreign consolidation and statement of cash flows with foreign operations. The case has been field-tested in an advanced accounting course and is also suitable for use in international accounting courses. Both undergraduate and graduate students have profited from the case.

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