Real Audit™ Implementation Guide

Purpose:

Real Audit™ can be used as a supplement to any auditing textbook to illustrate the audit process or as a graded assignment. The lite version (which includes planning, AR, and FA) requires approximately 2 1/2-5 hours of time for students to complete; whereas, the full version (which includes planning AR, FA, AP, and INV) requires about 5-8 hours. A new completing the audit module (coming fall 2008) should take approximately 1 1/2 hours.

How much time will it take to complete each section?

Planning - 3/4 to 2 hours
Accounts receivable - 3/4 to 2 hours
Fixed Assets - 1 to 2 hours
Accounts payable - 3/4 to 2 hours
Inventory - 1 1/2 to 3 hours
Completing the Audit - 1 to 2 hours (coming fall 2008)

How difficult is each section?
It all depends on the area and assertion being tested, for e.g.,

Planning: engagement risk - moderate, analytical procedures - moderate, materiality - moderate, detection risk - moderate, audit strategy - moderate
Accounts Receivable: clerical - easy, confirms - moderate, sales cutoff - moderate, valuation - difficult
Fixed Assets: clerical - easy, additions - moderate, retirements - moderate, repairs & maintenance completeness - easy, depreciation valuation/allocation - moderate, leases - difficult, disclosure - moderate
Accounts Payable: clerical - easy, completeness statements & confirms - easy to moderate, completeness search for unrecorded liabilities - moderate, disclosure - moderate
Inventory: analytical procedures - moderate, observation and memo - moderate, clerical - easy to moderate, shipping and receiving cutoff - easy, pricing test - moderate, LCM - moderate, valuation - difficult, disclosure - easy to moderate
Completing the Audit: contingencies and legal letter - moderate, subsequent events review - easy, obtain and evaluate management representation letter - easy to moderate, going concern review - moderate to difficult, summarize misstatements noted - moderate, final analytical review - moderate, reporting decision - moderate to difficult

When do you assign each part?

Planning - during or after the chapters on analytical procedures, audit risk model, materiality, and internal controls
Accounts receivable - during or just after the chapter on AR or the revenue cycle
Fixed Assets - during or just after the chapter on FA or resource management
Inventory - during or just after the chapter on INV or the conversion cycle
Accounts payable - during or just after the chapter on AP or the expenditure cycle

Do you have recommendations on how to get the students going in an optimal way?

Yes, try these Getting Started Hints

Do you have an example of how you would integrate the lite version into an undergraduate auditing course?

Yes, right here Example syllabus

How do you use the simulation in class?

1. One possibility is have your students work on it independently and then discuss the findings with them in a class discussion format.

2. Another possibility, is to have them work on it in class under your supervision.

3. Another possibility, is to have your students work on it individually first and then assign them to groups (ie., audit teams to discuss their findings), then have the groups present their findings to a simulated audit committee (the instructor can be a member of this committee and/or you could invite alumni or members of public accounting firms in your area to assist). Given the recent increased emphasis on audit committees this option is highly recommended. The recommended format of the presentation is to begin by summarizing the auditors responsbilities, then present the audit findings (i.e., proposed adjustments), then discuss any difficulties with the engagement, problems with management, and any significant internal control problems.

Can I keep track of the students work?

Yes, unlike texts, cases and practice sets where you have no idea when or if the student is doing their homework, with Real Audit™ the student's performance report will be e-mailed to you every time they log out (Just check the pertinent box on the instructor's adoption form to enable this feature)

How do you grade the student's work?

There are many ways to grade the Real Audit™ assignments:

1. A good way to start is to grade their progress as class participation

2. You can also have them turn in their planning memo for a grade.

3. Turning in their working papers to support any adjustments they found is another deliverable that can be graded

4. You can also use their performance reports to assign a grade

5. In addition, we think the best way to assess the student's work is to assign them to teams after (or before, although account sharing is not allowed) they do the online work and to have the team make a presentation of their findings to the audit committee. We suggest that they present a. their audit responsibilites, b. their findings, c. any disagreements with management, d. any difficulties or unresolved matters, and e. any significant internal control deficiencies.

How much preparation is there for me as instructor?

It varies, but we feel an instructor should look over the users manual in addition to the instructor's section of the web site including the implementation guide. That should take about one hour. In addition, you should spend one to two hours test driving the lite version of the software. The full version will take another hour to review. Looking over the solutions manual (available to adopters) may also be helpful.

If I have a problem, what should I do?

Most problems can be solved easily by referring to the troubleshooting section of the user's manual (it's at the end). If the answer is not there, do not spin your wheels - e-mail: [email protected] with a description of the problem and your phone number and we will respond in a timely manner by e-mail or phone, as necessary.

Questions? E-mail: [email protected]