No abstract

Designed to be used in an undergraduate or Master's auditing course, this Case asks students to evaluate work performed on the financial statement audit of a private wholesale merchandiser. Through this evaluation, students can uncover issues relating to gaining knowledge of a client and its environment, risk assessment, materiality, audit strategy, and specific audit procedures for the revenue/receivables/receipts accounting cycle. The Teaching Notes provide support both for instructors who ask students to prepare the Case in advance of class and for instructors who instead assign the Case for analysis in real-time during class, whereby the Case is read aloud paragraph-by-paragraph and issues are discussed as they are detected.

This case focuses on fraud investigation in a not-for-profit organization, along with an examination of governance and management control practices. The student assumes the role of an accountant investigating a possible fraud. The student is first presented with sample invoices paid by the organization that are fraught with irregularities and red flags of potential fraud. Drawing on the student's knowledge of control systems and corporate governance, the student's task is to identify suspicions of possible fraudulent transactions, identify key suspects, and develop an investigative plan. The class can also discuss recommendations to improve governance and control mechanisms to avoid future occurrences of fraud. The case is presented in three parts, and closely parallels a fraud investigation as additional information is revealed in each successive part of the case. This is much like peeling the layers of an onion which is a common way to describe the evolution of a fraud investigation. This case is based on a real fraud investigation conducted by one of the authors who was engaged by the province's Ministry of Health. Students who express disbelief about issues portrayed in the case can be reassured that these faithfully represent actual events. R ESUM ELe cas propos e par les auteurs porte sur une enquête pour fraude dans un organisme sans but lucratif, en parall ele avec un audit des pratiques de gouvernance et de contrôle de gestion. L' etudiant joue le rôle d'un comptable faisant enquête sur une possibilit e de fraude. Des echantillons de factures qui ont et e r egl ees par l'organisation et qui pr esentent des irr egularit es et trahissent une fraude potentielle sont d'abord soumis a l' etudiant. La tâche de l' etudiant consiste a formuler des soupc ßons en ce qui a trait a de possibles op erations frauduleuses, a d eterminer qui sont les principaux suspects et a elaborer un plan d'enquête, en s'appuyant sur sa connaissance des syst emes de contrôle et de la gouvernance d'entreprise. La classe peut egalement discuter des recommandations visant l'am elioration de la gouvernance et des m ecanismes de contrôle afin d' eviter que ce genre de situation ne se reproduise. Le cas se pr esente en trois volets et s'apparente de tr es pr es a une enquête sur fraude, des renseignements suppl ementaires etant r ev el es a chaque etape successive. L'exercice est tr es comparable a celui de peler un oignon, ainsi que l' evolution d'une enquête pour fraude est souvent d ecrite. Ce cas repose sur

This two‐part case focuses on indicators or red flags of a possible fraud being committed by a majority shareholder against a minority shareholder. The student assumes the role of an accountant investigating the possible fraud. In Part 1 the student is provided with a whistleblower complaint and examines the draft financial statements that will be used for the purchase price of the sale of shares by the minority shareholder to the majority shareholder. In Part 2 the student is provided with further information on inventory controls and the accounting practices. Drawing on the student's knowledge of control systems and financial statement analysis, the student's task is to identify the possible fraudulent transactions and quantify their effect.

This two‐part case focuses on red flags of attempted earnings management for a St. Lucian company that is moving from 100 percent family‐owned to selling 50 percent of the family's shares to an equity fund. In order to increase the earnings growth rate in the three years leading up to the proposed sale to an equity fund in 2021, the earnings for the most recent three years (2016–2018) have been artificially depressed. The resulting byproduct of the earnings management is the underprovision of income taxes for the past three years, which is detected by the tax authorities in St. Lucia. The student assumes the role of a tax auditor for the tax authority in St. Lucia assigned to audit Castries Merchandising Inc. (CMI), a merchandiser of building products, hardware, and automobile parts. In Part 1 the student is provided excerpts of the financial statements of CMI with some anomalies that have been detected by a software program. In Part 2 the student is provided with further information of excerpts from the trial balance and an interview with the CFO, who is a member of the family ownership group of CMI and also a Canadian CPA registered in Ontario. Drawing on the student's knowledge of auditing, accounting principles, and financial statement analysis, the student's task is to both reassess the income taxes for the years 2016 to 2018 and contemplate how management may be manipulating the financial statements in order to benefit from the planned future sale of CMI's shares to an equity fund.