January 8, 2018

Vignette 3: Auditing Is a People Business

In this vignette, the audit team has identified a potential error in the income statement. On Monday evening, the engagement team realized that the income statement analytic showed a decrease in marketing expenses for the quarter and the year. However, the engagement team’s expectation was that the company would have an increase in marketing expense because of additional spending. The company’s earnings call is scheduled for Thursday morning, and the senior manager wants to get to the issue resolved well before then. The video illustrates two different approaches that the audit team could employ, each ending in very different ways.