Auditors frequently discover errors relating to recording and adjusting journal entries, and they must be able to clearly explain the necessary corrections to their clients in a nonconfrontational fashion.

The partners at the audit firm of Kumar & Kumar routinely request feedback from clients at the close of an audit, and have been getting some negative feedback. The comments include "staff lacks diplomacy when pointing out errors" and "inability to clearly explain proposed adjustments."

Karthick Praveen is an audit manager with the firm of Kumar & Kumar, and has been tasked with preparing a training seminar for new staff in how to prepare and present proposed adjustments. Karthick developed the following six illustrations:

Divide your class into six teams. Each team is to prepare the necessary adjusting/correcting entry(ies) related to one of the errors and present their solution to the class as though they are auditors making a presentation to their client. For each error, assume that your corrections are as of the calendar year end. Unless shown, assume that no additional entries were recorded during the year related to the item in question.
The goal will be diplomacy and clarity of explanation. At the end of each presentation, by show of hands, measure how many classmates believe the team was able to effectively and correctly explain their proposed correction. At the conclusion of the presentations, discuss elements that went well or poorly.

Transcribed Image Text:

ITEM #1 Date 06-30 Accounts Supplies Expense Cash Purchased computers with a three-year life and no salvage value ITEM #2 Date 04-15 Cash Revenues Accounts Collected customer deposits for future services 12-31 Revenues Unearned Revenues Completion of 25% of services provided under Apr. 15 agreement Debits Credits 10,000 10,000 Debits Credits 10,000 10,000 2,500 2,500