Waste Is Our Business, Inc.: The importance of non-financial information in the audit planning process: case study

The article is from the Journal of Accounting Education, Sept 2008. The article is typical for this journal because it discusses the use of case studies in developing analysis and critical thinking skills in studemts. The purpose of the case study is to have the students consider information outside of the financial statements when performing an audit. Too often the focus of an audit ,from a students perspective, is on the financial statements and not on anecdotal information. Sometimes the most relevant information is gained by having conversations with staff and management. These conversations will give you insight into the culture of a company, how they value their employees, how they regard their customers and vendors and the company’s management style. For additional information, auditors will also ask to see the code of ethics for a company and will ask employees if they are aware that the company has a code of ethics and if so, have they read it or do they know where they can find it to read. Auditors also review the minutes of Board meetings and look for articles in the paper to gain additional information about the company and its business dealings.
Students studying accounting will have to take a course in auditing and gain an understanding of the audit planning and process . If they are not currently employed in the field of accounting and have not had the opportunity to be involved in an audit these case studies will serve as a good learning tool about how an audit is conducted. The business cases presented as examples usually have a twist where someone in the company is presenting information that is potentially misleading and possibly fraudulent in nature. Students are confronted with conflicting facts and figures and must map out how to determine what exactly is wrong with the corporate picture as presented. This certainly helps the students develop critical thinking and analysis skills that they will have to rely on as a professional.
The students who worked on this case study gave this a good rating in so far as achieving the stated learning objectives. It is difficult to determine the best methods for teaching certain subjects in accounting. Educators should continue to share their experiences so as a community we can have more resources to develop a diverse and challenging curriculum for accounting students.