An Auditing SimulationFor an interesting example of how an unflashy simulation can be put together and used in the classroom, I'd suggest having a look at what Faye Borthick (Georgia State University)1 and Mary B. Curtis (University of North Texas) have created for helping students develop their skills for conducting audits that involve analyzing company financial information electronically.
In a 2005 paper (pdf), Borthick and Curtis present in detail a simulation of a due diligence engagement2 for the inventory account of Threadchic, a clothing retailer.3 The simulation's objectives are to help students learn to:
- Prepare a business process representation (diagram).
- Develop, by financial statement assertion (e.g., "Inventory is $X"), audit objectives for the inventory account.
- Design audit procedures to implement the audit objectives.
- Execute the audit procedures by querying the data.
- Communicate audit objectives, audit procedures, results from execution of queries, matters warranting follow-up, and lessons learned.
The learning objectives represent essential skills for audit expertise in situations where auditors are expected to analyze data electronically to verify the internal consistency of accounting records and to detect conditions warranting further investigation.Borthick and Curtis note that "students have been surprised at the depth of thought required to design the audit program, execute it with audit or query software, refine their audit programs, make sense of the results, and imagine procedures for resolving unusual conditions."
. . .
Completing the simulation requires learners to wrestle with ambiguities embedded in a realistic audit setting as they make the inferences necessary to develop an approach to performing the audit.4
Borthick and Curtis investigated the ability of the Threadchic simulation to accelerate students' acquisition of auditing expertise. They looked specifically at the impact on learning of using business process modeling (one of the learning objectives for the simulation, as listed above), and report that "students with business process modeling experience outperformed students without that experience in every audit task" (i.e., developing audit objectives, designing an audit procedure, executing the audit procedure, and interpreting the results).5
1 Clicking on the Borthick link takes you to a page that provides links to summaries of other work Borthick has done in the areas of instructional design and evaluation of learning outcomes.
2 In a 2004 version of their paper (pdf), Borthick and Curtis provide an answer key for the simulation.
3 A due diligence audit is one carried out as part of the process through which a company decides whether or not to move ahead with a merger or acquisition it is considering. In the case of the Borthick-Curtis simulation, the inventory audit is part of the investigation a potential acquirer is undertaking to determine whether the financial statements Threadchic has provided are accurate.
4 You can look at the simulation as students experienced it here. To gain access, enter user name "ac863" and password "Qd0319."
5 Here (2004 - pdf) and here (2007 - pdf) Bortnick reports the results of research conducted with Carol. W. Springer, a colleague at Georgia State University, on developing accounting students' critical thinking skills. A working paper by Springer showing how critical thinking skills developed in an accounting course can carry over into other academic areas is here (2004 - MSWord).