A Case Examining the Interaction of Auditor/Client Management and Audit Committee Members
This case was adapted by Steve Salterio from a case originally prepared by Todd DeZoort and Steve Salterio for an earlier project (see, DeZoort and Salterio, The Effects of Corporate Experience and Financial-Reporting and Audit Knowledge on Audit Committee Members' Judgments, 20 Auditing: A Journal of Practice and Theory, 2, 2001, 31-47). Funding for the original project was provided by the CGA Canada Research Foundation which has also given permission for adaptation for this purpose.
The present version of the case is designed for an in-class, role playing exercise. There are three separate fact scenarios provided for auditors, CFO's and audit committees respectively. The case addresses a dispute between auditors and management that is now in the hands of the audit committee. In this present version of the case, the issue in dispute concerns timing of revenue recognition and associated expenses under a new pricing policy for a combined extended warranty/product sales. Instructors would, however, be able to adapt the case facts to incorporate different accounting issues.
In keeping with the policy of the Centre for Accounting Ethics, this case will be made freely available to any Canadian Accounting instructor for use in the classroom, on condition that copyright is acknowledged. The case may be ordered using the order form available on this web site.