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ISSUES IN ACCOUNTING EDUCATION American Accounting Association Vol. 35, No. 1 D01: 10.2308/iace52584 February 2020 pp. 1324 The Reel Wheel: Using Analytical Procedures as Substantive Tests of Account Balances Jason L. Smith University of Nevada, Las Vegas Nathaniel M. Stephens Utah State University ABSTRACT: This case provides students an introductory experience to substantive analytical procedures in a realistic audit setting. Students are presented with a scenario, adapted from a real-world example, requiring them to (1) research relevant auditing standards, (2) develop an independent expectation for a client's revenue account, and (3) consider the precision of the estimate, additional audit procedures, and the reliability of the underlying data and evidence obtained. In completing the case, students will learn to: (1) explain the benets and challenges of using substantive analytical procedures, (2) research relevant auditing standards, (3) create and analyze relevant substantive analytics, (4) evaluate the appropriateness of data aggregation in substantive analytical procedures, and (5) discuss factors affecting the reliability of data used by the auditor. The case is typically assigned as an out-of- class assignment, combined with a subsequent in-class discussion. It can be used in either undergraduate or graduate auditing courses. Keywords: substantive analytical procedures; disaggregated data; data analytics. 1. CASE is a publiclytraded company; its stock trades on the New York Stock Exchange (NYSE) under the CEC ticker symbol. The company, which rst went public in 1973, is currently experiencing nancial pressure sterruning from debt obligations incurred as part of its recent acquisition of a large competitor. One of Coliseum's strategies to increase revenue has been to expand entertainment offerings and encourage increased trafc to its existing hotel and gaming properties. With this strategy in mind, Coliseum constructed a new attraction, the Reel Wheel, which opened on April 1, 20x4. C oliseum Entertainment Corporation is one of the world's largest hotel and gaming entertainment companies. Coliseum The Reel Wheel The Reel Wheel is an observation wheel located at a new outdoor mall situated between two of Coliseum's hotel properties on the Las Vegas Strip. The Reel Wheel is the largest observation Wheel in the world, standing 550 feet tall. It has 28 observation cars, each holding up to 40 people. The cars have 225 square feet of interior space, and each weighs roughly 44,000 pounds. It takes approximately 30 minutes for the wheel to make a complete rotation. The Reel Wheel operates dailyyearroundwith observation cars departing from 11:00 am. to 2:00 a.m., with the exception of four service days. Cars departing between 11:00 am. and 5:00 pm. are considered \"day time\" rides; those departing between 5:00 p.m. and 2:00 am. are considered \"night time\" rides. During night time operations, the wheel lights up with more than 2,000 LED lights that bathe the Wheel and its riders in a rainbow of bright and colorful ghts. We appreciate helpful comments and suggestions provided by Allen D. Blay (associate editor), Greg Bleazard, CPA, and Valaria P. Vendrzyk (editor), as well as the anonymous journal reviewers in the development of this case. We also thank the accounting practitioners who helped in developing the case setting and the students who have provided insights regarding their experiences with the case. Professor Smith gratefully acknowledges the nancial support of the EY Faculty Fellowship at the Lee Business School at the University of Nevada, Las Vegas, and Professor Stephens is grateful for the support of the I on M. Huntsman School of Business at Utah State University. All errors are our own. Supplemental materials can be accessed by clicking the links in Appendix B. Editor's note: Accepted by Allen D. Blay, under the Senior Editorship of Valaria P. Vendrzyk. Submitted: October 2018 Accepted: September 2019 Published Online: October 2019 13 0503 eunr v0 uu uosaxmr uea llq lpd'lrQQZSSDEUQZHVEVZISUL(QEIlDIH-llilluEISEUUJOD'SSGIUUSIIE'UelplIGUJ/lidllli tum; PQPBOIUMOG 16 Smith and Stephens APPENDIX A Requested Data Regarding Reel Wheel Ticket Sales Coliseum Entertainment Workpaper (WP) ID: A.01 Substantive Analytical Procedure - Ticket Sales Revenue: The Reel Wheel Date: Year-end Audit: December 31, 20X5 Prepared By: 20X5 Unaudited Account Balance (Ticket Sales Revenue) Account Data Point Unit Label Tickmark WP Reference Ticket Sales Revenue (unaudited) S 73,468.219.00 dollars PBC from Trial Balance Allocated tolerable difference (i.e., tolerable error) 675,000.00 dollars AA.09 20X5 Summary Information & Data for "The Reel Wheel" Description Data Point Unit Label Tickmark WP Reference Observation Wheel Height 350 PBC, RW Number of Passenger Cars 28 cars PBC, RW Interior Space per Car 225 square feet PBC. RW Maximum Capacity per Car 40 passengers PBC, RW Time Required for Car Revolution 30 minutes PBC, RW Hours of Operation (Open 11:00am PBC, RW Hours of Operation (Close) 2:00am PBC, RW Description (20X5 calendar year) Data Point Unit Label Tickmark Days in Operation WP Reference 361 lays PBC Total Passengers ,058,452 passengers PBC from A.02 Total Children Passengers 250,389 passengers PBC A.02, A.03 Description (20X5 calendar year) Data Point Unit Label Tickmark WP Reference Regular Ticket Price (Child; Age 0 - 12) dollar RW Regular Ticket Price - Day (Adult; Age 13+) 24.95 dollars RW Regular Ticket Price - Night (Adult; Age 13+) 34.95 dollar RW Summer Ticket Price - Day (Adult; Age 13+) 19.95 dollars RW Summer Ticket Price - Night (Adult; Age 13+) 29.95 dollars RW Wholesale Ticket Price 12.95 dollars PBC Notes Where noted, data is verified at multiple sources (e.g., PBC, RW). The Reel Wheel sells some tickets to wholesalers - such as third-party travel websites - if booked as part of a travel package that includes a stay at a Coliseum hotel. . Although not specifically listed on the RW website, prices for Las Vegas locals (Photo ID required) are 40% off of Regular Adult (Day, Night) prices. No additional summer discount apply for locals. Tickmark Legend PBC RW Provided by client (Coliseum Entertainment) Sourced from Reel Wheel public website Downloaded from http://meridian.allenpress.com/iae/article-pdf/35/1/13/2434826/iace-52584.pdf by Ryan Torkelson on 04 June 2020 Accounting Association Issues in Accounting Education Volume 35, Number 1, 2020The Reel Wheel: Using Analytical Procedures as Substantive Tests of Account Balances 17 Coliseum Entertainment Workpaper (WP) ID: A.02 Substantive Analytical Procedure - Ticket Sales Revenue: The Reel Wheel Date: Year-end Audit: December 31, 20X5 Prepared By: 20X5 Ticket Sales Data for "The Reel Wheel" [Provided by Client] Total Passengers Unit Label Tickmark WP Reference January 245,163 people PBC February 228,455 people March 261,996 people Q1 20X5 735,614 people April 255,898 people May 270,268 people June 256,758 people Q2 20X5 82.924 people July 270,000 people August 260,209 people September 256,207 people Q3 20X5 786,416 people October 273,523 people November 246.589 people December 233.385 people Q4 20X5 753,497 people 20X5 Total 3,058,451 people PBC to A.01 Tickmark Legend PBC Provided by client (Coliseum Entertainment) Downloaded from http://meridian.allenpress.com/iae/article-pdf/35/1/13/2434826/iace-52584.pdf by Ryan Torkelson on 04 June 2020 Issues in Accounting Education American Volume 35, Number 1, 2020 Association
