G & S Manufacturing: An Applied Auditing Case

Abstract

This case provides students with the opportunity to gain hands on experience in the audit of cash disbursements, a voucher system and internal controls (or the lack there of) in the disbursement process. In particular, practical examples of concepts and procedures taught in an introductory auditing course, namely vouching, tracing, tests of controls and substantive testing are exemplified. The case includes sample invoices and a voucher register allowing the students to look at “actual” documents and ask good important questions. The case is broken down into three parts to allow students to receive feedback before continuing and the instructor plays the role of “consultant” providing an additional important learning opportunity. G & S Manufacturing is a small privately-held producer of steel products for the consumer market. As staff auditors performing part of the audit of G & S for the calendar year ended December 31, 2013 students will have to identify control deficiencies, substantive errors and other matters of concern in the audit of payables and cash disbursements. Students are provided with a copy of the voucher register for the month of December and all invoices relating to a selected sample of vouchers. The learning objectives of the case explicitly address the AICPA’s (American Institute of Certified Public Accountants) functional competencies of risk analysis, measurement and reporting; personal competencies of problem solving and decision making, and communication; and broad business competency of strategic/critical thinking.