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- Title
Instructional Case: Style, Inc.
- Authors
Wright, Sally
- Abstract
A significant trend in recent years has been specialization by auditing firms along industry lines such as banking, insurance and retailing. It is reasonable to expect that industry experience should enhance audit planning. Error patterns and, hence, areas of exposure vary by industry (Wright and Ashton 1989; Kreutzfeld and Wallace 1986; Maletta and Wright 1996) and industry experience has been shown to lead to greater knowledge of operations (Solomon et al. 1996) as well as enhance hypothesis generation (Wright and Wright 1997). Further, audit firms often specialize by industry to establish differentiation in service quality and as a marketing tool to attract clients (Danos and Eichenscher 1986; Craswell and Taylor 1991), e.g., KPMG Peat Marwick (Emerson 1993). Although industry specialization has been identified through research and by the auditing firms as important, auditing courses typically provide limited, general exposure to the nature of industry experience. Auditing textbooks refer to the need for industry knowledge (Carmichael et al. 1996; Kiger and Scheiner 1994), yet often fail to provide concrete examples or allow students to apply such information in an audit-related task. This case has two learning objectives. The first objective is to introduce students to a rich industry-specific situation drawn from an actual audit, providing an opportunity for them to consider unique industry-related inherent and control risk factors. The case highlights how the use of industry knowledge in the planning phase significantly impacts the extent of subsequent field work. Second, the case enables students to apply analytical procedures to generate hypotheses (likely causes) for unexpected fluctuations, a critical task which receives little attention in the classroom.
- Subjects
AUDITING; KPMG Peat Marwick LLP; AUDITORS; ACCOUNTING firms; RISK management in business; FINANCIAL services industry; MARKETING; SERVICE industries; ACCOUNTING
- Publication
Issues in Accounting Education, 1998, Vol 13, Issue 4, p1059
- ISSN
0739-3172
- Publication type
Article