Errors in the Auditor’s Report—A Teaching Case

Abstract

This series of three exercises engages students with experiential learning related to the PCAOB’s unqualified auditor’s report on financial statements. The case can be facilitated either in the classroom or online and is easily customizable for undergraduate and graduate audit courses. The case can provide a 20-minute introduction of the auditor’s report to an entire class period filled with exercises covering different aspects of audit opinion reporting and discussing an ethical decision-making process. During the first two exercises, students analyze auditor’s reports to detect deviations from the PCAOB standard unqualified auditor’s report. During the third exercise, students use the Giving Voice to Values (GVV) approach to plan a strategy for correcting an auditor’s report error, despite their audit manager’s initial instructions to ignore the issue. By applying the GVV ethical decision-making framework in an auditor decision context, the case prompts students to infer and consider different stakeholders’ incentives and biases. Data Availability: Data are available upon request.