Controls, Payables, and Materiality: A Case of Unknown Collusion

Abstract

SUMMARY This case is inspired by actual experiences within the accounting and accounts payable departments of a large energy company, formerly part of the S&P 500. The primary objective of the case is to provide a real-world scenario depicting the challenges that companies face in designing and implementing controls over financial reporting, as well as the challenges that external auditors face when evaluating audit findings. In completing the case, you will assume the role of a staff auditor on the audit engagement team for Herringbone Affiliates. The case includes discussion questions that have you consider the perspective of both company management and the audit team.