1.

AUDITING IN THE BUSINESS CURRICULUM

POSSIBLE ADVANTAGES FROM AN EARLY INTRODUCTION TO AUDIT-
ING, 3. AUDITING AND THE BUSINESS GAME, 5.

2 . AUDITING I N A GAME ENVIRONMENT . . . . . . . . . . . . . . . . . . . . . . . .

THE GAME ENVIRONMENT, 9. Organization of the Teams, 9. The Industry
Setting, 1 0 . New Products and Marketing Strategy, 1 0 . The Production
Simulation, 1 1 . External Financing, 1 2 . Documentation, 1 2 . THE PHI-
LOSOPHY OP MODERN AUDITING, 1 3 . The Concept of the Audit, 1 3 .
THE EVOLUTION OF THE MODERN AUDIT, 1 4 . PURPOSES OF THE AUDIT,
1 5 . Auditing and Management Services, 1 6 . Bases for the Opinion, 1 7 . Sum-
mary, 1 8 . AUDITING PHILOSOPHY AS APPLIED TO THE MANAGEMENT
GAME, 1 8 . Application of Recognized Accounting Principles, 1 8 . The
Audit of Internal Check, 1 9 . Audit of the Financial Statements, 2 0 . Audit
of Internal Control, 2 1 . Audit of the Decision-Making Process, 2 2 . Audit
Documentation, 2 2 . Conclusion, 2 3 .

3 . THE AUDIT PROJECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CLASSROOM TRAINING AND PREPARATION, 2 4 . THE MAJOR STEPS IN
THE AUDIT OF TOE GAME TEAMS, 2 6 . THE REPORT TO THE BOARD
OF DIRECTORS, 2 8 .

4 . RESULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXHIBIT I: FIRM A - l ANNUAL REPORT, 3 2 . FINANCIAL HIGHLIGHTS,
3 3 . MARKETING HIGHLIGHTS, 3 7 . PRODUCTION HIGHLIGHTS, 3 8 . New
Construction, 3 8 . General Operations, 3 8 .
EXHIBIT I I : AUDIT REPORT TO FIRM A - l , 4 0 . SUBMITTED TO MAN-
AGEMENT TEAM AND BOARD OF DIRECTORS OF FIRM A - l BY CHASE
AND COMPANY, C.I.T. C P A S , 4 0 . I. SUMMARY OF RECOMMENDATIONS,
4 4 . I I . REPORT TO STOCKHOLDERS, 4 5 . I I I . OVERALL MANAGEMENT
CONTROL, 4 5 . IV. MARKETING, 4 7 . V. PRODUCTION, 4 7 . V I . FINANCE,
4 8 . VII. INTERNAL PROCEDURES AND CHECKS, 4 9 . VIII. FUTURE A U -
DITS AND FEES, 5 0 .
EXHIBIT I I I : AUDIT WORK PAPERS CONCERNING FIRM A - l , 5 2 . Chase
and Company, CI.T. CPAs, 5 2 . STATEMENT OF OVERALL ASPECTS OF
INTERNAL CONTROL, 5 3 . AUDIT OF OVERALL ASPECTS OF INTERNAL
CONTROL, 5 4 . AUDIT OF MARKETING FUNCTION, 5 6 . AUDIT OF PRODUC-
TION FUNCTION, 5 7 . Raw Materials Inventory, 5 7 . Finished Goods Inven-
tory, 5 8 . Construction, 5 9 . Factory Scheduling, 5 9 . Decision-Making Process,
6 0 . Recommendations, 6 0 . SUPPLEMENTAL WORK PAPER FOR AUDIT OF
PRODUCTION FUNCTION, 6 1 . AUDIT OF FINANCIAL FUNCTION, 6 1 . Gen-
eral Summary, 6 1 . Interviews with Financial Officer, 6 3 . Verification and
Opinon, 6 5 . STATEMENT OF INTERNAL CHECK, 6 8 . THE INTERNAL CON-
TROL SYSTEM OF THE A - l CORPORATION, 6 8 . 1 . Definition and Objectives,
6 8 . II. Fundamental Principles, 6 9 . III. The System, 7 0 . AUDIT OF INTERNAL
CHECK, 7 1 . VERIFICATION OF FINANCIAL STATEMENTS, 7 1 . Independent
Construction of Balance Sheet, 7 1 . Balance Sheet Corrections, 7 4 . Profit and
 Loss Statement Correction, 74. Independent Calculations of Annual Profit
and Loss Statement from Quarterly Print-Outs (No Rounding), 74. Inde-
pendant Calculation of Additions to Retained Earnings, 74. Verification of
Additions to Net Worth, 74. Construction of Sources and Uses of Funds
Statement, 78. COMPLETE CORRESPONDENCE F I L E OF FIRM A - l , 78.
Management Memoranda, 79. Minutes of Meetings of the Board of Di-
rectors, 80. Management Action and Audit, 89. Audit Proposal, 90.
E X H I B I T IV.: SELECTED EXCERPTS FROM AUDIT WORK PAPERS AND
A U D I T R E P O R T S , 92. SELECTIONS F R O M W O R K P A P E R S , 92. E X C E R P T 1 ,
92. E X C E R P T 2, 95. E X C E R P T S 3 AND 4, 97. SELECTIONS F R O M A U D I T
R E P O R T S , 99. E X C E R P T 5, 9 9 . Opinion, 99. E X C E R P T 6, 99. Recommenda-
tion, 99. E X C E R P T 7, 99. Comment, 99. E X C E R P T 8, 100. Opinion, 100.
E X C E R P T 9, 100. Recommendation, 100. E X C E R P T 10, 100. Recommenda-
tion and Comment, 100. E X C E R P T 1 1 , 1 0 1 . Observation, 1 0 1 . EXCERPT
12, 1 0 1 . Observation, 1 0 1 . EXCERPT, 13, 1 0 1 . Comment, 1 0 1 . EXCERPT
1 4 , 102. Recommendation, 102. E X C E R P T 1 5 , 102. Recommendation, 102.

5. CONCLUSION
E V A L U A T I O N , 103. P O S T S C R I P T O N T H E SECOND A U D I T EXERCISE, 105.