The simulation encompasses the audit of accounts receivable (AR) for Southern Industries (SI), a wholesaler of stainless steel screws for wood, concrete, drywall, and various other applications. SI is a company in the wholesaler industry, and provides other companies with the screws they need to manufacture products, build structures, and maintain facilities and equipment. The students are assuming the role of a new staff accountant assigned to audit AR. All planning procedures were completed by the audit team during the planning phase. Therefore, students are instructed that the risk of material misstatement (RMM) for AR was assessed as high and the tolerable misstatement for AR is $10,000.

This simulation involves the completion of audit steps that utilize substantive tests of details, management inquiry, and analytical procedures. In conjunction with the testing, students are required to investigate any issues that arise, propose any adjusting journal entries, and document their work...

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