The Reel Wheel: Using Analytical Procedures as Substantive Tests of Account Balances

The Reel Wheel: Using Analytical Procedures as Substantive Tests of Account Balances
Jason L. Smith University of Nevada, Las Vegas
ABSTRACT: This case provides students an introductory experience to substantive analytical procedures in a realistic audit setting. Students are presented with a scenario, adapted from a real-world example, requiring them to
(1) research relevant auditing standards, (2) develop an independent expectation for a clients revenue account, and
(3) consider the precision of the estimate, additional audit procedures, and the reliability of the underlying data and evidence obtained. In completing the case, students will learn to: (1) explain the benefits and challenges of using substantive analytical procedures, (2) research relevant auditing standards, (3) create and analyze relevant substantive analytics, (4) evaluate the appropriateness of data aggregation in substantive analytical procedures, and (5) discuss factors affecting the reliability of data used by the auditor. The case is typically assigned as an out-of-class assignment, combined with a subsequent in-class discussion. It can be used in either undergraduate or graduate auditing courses.
Keywords: substantive analytical procedures; disaggregated data; data analytics.
I. CASE
Coliseum Entertainment Corporation is one of the worlds largest hotel and gaming entertainment companies. Coliseum is a publicly-traded company; its stock trades on the New York Stock Exchange (NYSE) under the CEC ticker symbol. The company, which first went public in 1973, is currently experiencing financial pressure stemming from debt obligations incurred as part of its recent acquisition of a large competitor. One of Coliseums strategies to increase revenue has been to expand entertainment offerings and encourage increased traffic to its existing hotel and gaming properties. With this strategy in mind, Coliseum constructed a new attraction, the Reel Wheel, which opened on April 1, 20X4.
The Reel Wheel
The Reel Wheel is an observation wheel located at a new outdoor mall situated between two of Coliseums hotel properties

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