Alpine Cupcakes, Inc.
Audit Case Study
by Callaway Dee, Durtschi, Mindak
ISBN: 978-1-61853-073-8 | Copyright 2017
TabsThis casebook is a resource to use in the development of students’ comprehension of critical auditing concepts. The casebook is suitable for both graduate and undergraduate students and can be used as a supplement to any auditing textbook. Students act as employees of Garcia and Foster, CPAs and conduct an internal inspection of the firm’s audit of Alpine Cupcakes, Inc. Garcia and Foster is a fictitious regional firm with 20 offices located in large cities throughout the western United States. As part of its quality control procedures, the firm chooses five offices each year and conducts an internal inspection of a completed audit engagement.
The case assignments require students to review completed audit workpapers rather than create workpapers from scratch. This allows students to find errors in completed audit procedures and related documentation. For example, students identify weaknesses in the client’s internal controls that the auditors failed to find, evaluate the auditors’ tests of internal controls and substantive testing procedures, and assess the quality and completeness of the auditors’ workpaper documentation.
This casebook provides students an opportunity to see realistic audit workpapers, visualize how audit workpapers are linked to the audit program, and learn how source documents are integrated into audit tasks. Students practice critical thinking skills as they consider the purpose of audit procedures and the issues that arise when trying to implement those procedures in a realistic setting.
Although Alpine Cupcakes, Inc. is a fictitious company, we generated the accounting records in the casebook by creating over 2 years of realistic transactions for a company that manufactures and sells cupcakes. Thus, the underlying client source documents are representative of actual transactions, providing students the opportunity to observe the association between audit workpapers and realistic client documents. This realism is valuable to students, especially given the revised approach to the auditing portion of the CPA exam, in which the AICPA adds document review simulations.
The casebook contains three modules (risk assessment, cash, and accounts receivable). Each module can be used independently; in addition, portions of modules or specific questions within modules can be chosen by the instructor. The risk assessment module focuses on preliminary analytical procedures, materiality estimation, and applying the audit risk model. The cash module contains a comprehensive audit of cash, including evaluation of internal controls over cash receipts and disbursements, test of control procedures, and substantive testing. The accounts receivable module incorporates consideration of the sales revenue and accounts receivable processes, including processes related to the company’s estimation of uncollectible accounts. Students will evaluate the auditor’s test of control and substantive testing over the sales and accounts receivable processes and transactions.
Carol Callaway Dee
Carol Callaway Dee is an associate professor of accounting in the Business School at the University of Colorado Denver.
Prior to coming to CU Denver, she was on the faculty of Florida State University. She earned her PhD in accounting from Louisiana State University and a BS in accounting from the University of Florida. Dr. Dee was an academic fellow for the Public Company Accounting Oversight Board’s Office of Research and Analysis and its Center for Economic Analysis, conducting research on the economic effects of proposed auditing standards. She has published in a number of journals, including The Accounting Review, Contemporary Accounting Research, Current Issues in Auditing, Issues in Accounting Education, and Journal of Accounting and Public Policy, and she serves as an associate editor for the Journal of Forensic Accounting Research. Her accounting cases, Return of the Tallahassee Bean Counters: A Case in Forensic Accounting (with Cindy Durtschi) and Grand Teton Candy Company: Connecting the Dots in a Fraud Case (with Cindy Durtschi and Mary Mindak) are used by faculty around the world. She is a recipient of the CU Denver Business School’s “Outstanding Tenure-Track Teacher of the Year” Award.
Cindy Durtschi
Cindy Durtschi is a full professor of accounting at the Driehaus College of Business, DePaul University, where she directs the Masters in Accountancy program.
She
received her PhD from the University of Arizona. Prior to arriving at DePaul University, she
held positions at Florida State University and Utah State University. Dr. Durtschi teaches forensic accounting in
the MSAA (Master’s of Audit and Advisory Services) program at DePaul as well as
financial accounting in both the MSA and MBA programs. She has won the Gus
Economos Distinguished Teaching Award for the Kellstadt Graduate School of
Business at DePaul University, the Teacher of the Year for the Huntsman College
of Business at Utah State University, and Outstanding Teacher Award for the
Department of Finance at the University of Arizona. Dr. Durtschi’s research is published in Journal of Accounting Research, Journal
of Accounting, Auditing and Finance, Journal of Forensic Accounting, Issues in
Accounting Education as well as other journals. She received the 2006 American Accounting Association
Innovation in Audit Education Award for her first published case in forensic
accounting, The Tallahassee BeanCounters: A
Problem-Based Learning Case in Forensic Auditing. She continues to publish forensic
accounting cases (now with Carol Callaway Dee, Mary Mindak, and/or Robert
Rufus) that are used in classrooms around the world. Dr. Durtschi is currently on the editorial
boards of Issues in Accounting Education,
Journal of Forensic and Investigative Accounting, Journal of Forensic Accounting Research, and Journal of Accounting and Free Enterprise. She is past president of the Forensic
Accounting Section of the American Accounting Association.
Mary P. Mindak
Mary P. Mindak is an associate professor of accounting in the Driehaus College of Business at DePaul University.
She graduated from Miami University with a BS in Accountancy and a Masters of Accountancy and received her PhD from the University of Cincinnati. Professor Mindak worked at Ernst & Young as an auditor in the Financial Services and Healthcare industries. She also worked in corporate accounting at Western & Southern Life Insurance Company. Dr. Mindak’s research focuses on areas affecting audit risk, including aggressive reporting, earnings management, fraud, bankruptcy, and corporate responsibility. Her work has been published in Issues in Accounting Education, Research in Accounting Regulation, Managerial Auditing Journal, Journal of Accounting Ethics and Public Policy, and The CPA Journal. She currently teaches Auditing and Financial Reporting at DePaul University. She has experience with case competitions through her previous work as the faculty advisor for DECA (a student organization with multiple case competitions each year) and the PwC Corporate Challenge Case Competition.
