Due Diligence on Fast-Fashion Inventory through Data Querying

Abstract

In this simulation of a merger and acquisition due diligence engagement for a fast-fashion retailer's inventory account, learners develop IT audit skills by (1) preparing a business process representation, (2) identifying audit objectives for testing management assertions about inventory, (3) designing audit procedures to implement audit objectives, (4) querying data files to execute audit procedures, and (5) communicating results. The simulation develops skills for analyzing data to verify the internal consistency of accounting records and to detect conditions warranting further investigation. The simulation, workable with a database query tool or audit software, is appropriate for students with querying proficiency and audit procedure design capability. The simulation helps bridge the understanding gap between IT auditors and general auditors by enabling novice auditors to experience an auditing situation in which they apply IT audit tools to verify internal consistency of data and detect unusual conditions in an audit of financial statement assertions.