Audit and Soups Inc.
Simply Soups Inc.: A Teaching Case Designed to Integrate the
Electronic Cash Confirmation Process into the Auditing Curriculum
ABSTRACT: Simply Soups Inc., a producer of organic canned soups, has hired your firm,
Putnam and Jacobs LLP, to perform a financial statement audit for the year ended December 31,
2013. Using the PCAOB’s proposed standard on confirmations and electronic confirmations, you are to complete the testing of the cash balance reported by Simply Soups Inc. at year-end. Today, a majority of large banks require auditors to use electronic cash confirmation requests and, as a result, mostly all large audit firms use them. When using electronic confirmation requests, audit firms typically rely on a third-party intermediary to provide a secure technological platform to transmit information between the bank and the auditor as well as to validate the authenticity of the respondent. In requiring you to electronically confirm cash balances using a third-party intermediary, this case provides an opportunity to improve your understanding of current audit practice, strengthen your technical knowledge of applicable standards, and develop the professional judgment skills necessary to appropriately evaluate and document the persuasiveness of audit evidence.
Keywords: Electronic cash confirmations, substantive tests of details, cash, SOC reporting
Forthcoming in Issues in Accounting Education
CASE
Company Overview
Founded in 1985, Simply Soups Inc. is an American producer of organic canned soups and related products. Simply Soups Inc. products are sold in 120 countries around the world. The company’s mission is to craft fresh, delicious and nourishing soup using only the highest quality organic ingredients and spices. Simply Soups Inc. makes its fresh soups by hand, using local organic ingredients and savory spices without added preservatives or artificial ingredients.
Each year, nearly 100 million U.S. households, or more than 80 percent
Electronic Cash Confirmation Process into the Auditing Curriculum
ABSTRACT: Simply Soups Inc., a producer of organic canned soups, has hired your firm,
Putnam and Jacobs LLP, to perform a financial statement audit for the year ended December 31,
2013. Using the PCAOB’s proposed standard on confirmations and electronic confirmations, you are to complete the testing of the cash balance reported by Simply Soups Inc. at year-end. Today, a majority of large banks require auditors to use electronic cash confirmation requests and, as a result, mostly all large audit firms use them. When using electronic confirmation requests, audit firms typically rely on a third-party intermediary to provide a secure technological platform to transmit information between the bank and the auditor as well as to validate the authenticity of the respondent. In requiring you to electronically confirm cash balances using a third-party intermediary, this case provides an opportunity to improve your understanding of current audit practice, strengthen your technical knowledge of applicable standards, and develop the professional judgment skills necessary to appropriately evaluate and document the persuasiveness of audit evidence.
Keywords: Electronic cash confirmations, substantive tests of details, cash, SOC reporting
Forthcoming in Issues in Accounting Education
CASE
Company Overview
Founded in 1985, Simply Soups Inc. is an American producer of organic canned soups and related products. Simply Soups Inc. products are sold in 120 countries around the world. The company’s mission is to craft fresh, delicious and nourishing soup using only the highest quality organic ingredients and spices. Simply Soups Inc. makes its fresh soups by hand, using local organic ingredients and savory spices without added preservatives or artificial ingredients.
Each year, nearly 100 million U.S. households, or more than 80 percent
References: American Institute of Certified Public Accountants (AICPA). 1992. AU Section 330, The Confirmation Process American Institute of Certified Public Accountants (AICPA). 2010. AT Section 801, Reporting on Controls at a Service Organization American Institute of Certified Public Accountants (AICPA). 2012. Users and User Entities. Bunge, J., S. Patterson, and J. Steinberg. 2012. Peregrine CEO’s Dramatic Confession. Wall Street Journal (July 14): A1. PricewaterhouseCoopers (PwC). 2011. Getting the right fit on service organization/provider controls reporting Public Company Accounting Oversight Board (PCAOB). 2004. Audit Documentation. Auditing Standard No Public Company Accounting Oversight Board (PCAOB). 2010a. Audit Evidence. Auditing Standard No Public Company Accounting Oversight Board (PCAOB). 2010b. Proposed Auditing Standard Related to Confirmation and Related Amendments to PCAOB Standards Release No. 2010-003. Available at: http://pcaobus.org/Rules/Rulemaking/Docket% 20028/2010-07-13_Release_2010-003.pdf. Public Company Accounting Oversight Board (PCAOB). 2012. Staff audit practice alert no. 10: Maintaining and applying professional skepticism in audits Rothfeld, M., S. Patterson, and J. Bunge. 2012. Red Flags at Failed Broker. Wall Street Journal (July 13): C1.