Problem \# 4 A Project Management Case Study INTRODUCTION As students of Lixin University of Accounting and Finance, you are aware that in addition to assisting with taxes, information systems, and other problems, public accounting firms perform annual audits for their clients. Thus, you are aware that Auditing a large corporation or public sector organization is a highly complex undertaking. Since audits require a great deal of experience CPA time and since accounting firm assumes legal liability for the accuracy and appropriateness of its findings, CPA firms must carefully plan and meticulously execute each audit. Moreover, since often, the audit team must actually be doing onsite to do the job at the client company for a matter of weeks during the audit, it must minimize interference in the company's ongoing operations. Thus, Audit Planning and Execution (generally known as "Audit Trail," can be very large and demanding project. THE AUDIT TRAIL PLANNING PROBLEM Auditing a large company involves a number of distinct activities - from planning the audit through the final review with company executives by the accounting firm's partner in charge of the audit. The table seen below is an example set of activities taken from the American Institute for CPAs monograph showing data for typical audit activities from an audit program of a medium size firm. The data present the precedence relationships and three time estimates of nineteen (19) audit activities. You and your group members are tasked to plan and manage as a consulting project. Note that the most likely times seen in the table are derived from the standard times provided by handbook of the American Institute for CPAs monograph. Previous audit experiences have suggested adding the optimistic and pessimistic times for the purpose of generating and analyzing project completion probabilities and risk determination. In general, public accounting firms need to carefully plan the audit engagement with several objectives in mind: minimize disruption of the client company's operations, maximize the effectiveness of the highly paid CPAs engaged in the audit, and complete the audit effectively, efficiently and accurately - on or before the target date. Note from the column labeled "Predecessor Activities" that there are complex relationships between and among the 19 activities. Also note that all times are estimated in hours, and that the wide range of most likely activity duration times - from one hour for activities M,N, and P to as much as 145 hours for activity E. Your group is asked to use your business operations and analytics experience to conduct a Project Management Study (i.e., your Audit Trail Planning and Analysis) of the Audit Activities and prepare a managerial report which includes answers to the following questions. Please attach all of your calculations (using Excel Solver, Microsoft Project, QM, or whatever tools you find appropriate to conduct your tasks. Note that you can make use of dummy activities if suitable for your analysis. MANAGERIAL REPORT The Questions your Managerial Report include: 1. Propose the project network (i.e., the PERT diagram for the Audit Trail Program). Your network must show the precedence relationships of all of the 19 tasks. You may choose to use an AOA or an AON diagram. 2. Compute the expected completion times and variances of each activity on the network. 3. Compute the ES, EF, LS, and LF of all activities on the project network. 4. Provide a table of all the activity slack times and the critical path on the network. How many activities are critical, and how many are not? 5. Do you identify any activities that are driving this project? What are your recommendations with respect to these activities? 6. Compute the probabilities of the project completions for the following time periods in hours (290, 300,310,319,330,340 and 350) and construct a diagram (illustrating the pairs of completion times and probabilities) 7. For extra Bonus Points - Use MS project to produce a Gantt chart of the project. Problem \# 4 A Project Management Case Study INTRODUCTION As students of Lixin University of Accounting and Finance, you are aware that in addition to assisting with taxes, information systems, and other problems, public accounting firms perform annual audits for their clients. Thus, you are aware that Auditing a large corporation or public sector organization is a highly complex undertaking. Since audits require a great deal of experience CPA time and since accounting firm assumes legal liability for the accuracy and appropriateness of its findings, CPA firms must carefully plan and meticulously execute each audit. Moreover, since often, the audit team must actually be doing onsite to do the job at the client company for a matter of weeks during the audit, it must minimize interference in the company's ongoing operations. Thus, Audit Planning and Execution (generally known as "Audit Trail," can be very large and demanding project. THE AUDIT TRAIL PLANNING PROBLEM Auditing a large company involves a number of distinct activities - from planning the audit through the final review with company executives by the accounting firm's partner in charge of the audit. The table seen below is an example set of activities taken from the American Institute for CPAs monograph showing data for typical audit activities from an audit program of a medium size firm. The data present the precedence relationships and three time estimates of nineteen (19) audit activities. You and your group members are tasked to plan and manage as a consulting project. Note that the most likely times seen in the table are derived from the standard times provided by handbook of the American Institute for CPAs monograph. Previous audit experiences have suggested adding the optimistic and pessimistic times for the purpose of generating and analyzing project completion probabilities and risk determination. In general, public accounting firms need to carefully plan the audit engagement with several objectives in mind: minimize disruption of the client company's operations, maximize the effectiveness of the highly paid CPAs engaged in the audit, and complete the audit effectively, efficiently and accurately - on or before the target date. Note from the column labeled "Predecessor Activities" that there are complex relationships between and among the 19 activities. Also note that all times are estimated in hours, and that the wide range of most likely activity duration times - from one hour for activities M,N, and P to as much as 145 hours for activity E. Your group is asked to use your business operations and analytics experience to conduct a Project Management Study (i.e., your Audit Trail Planning and Analysis) of the Audit Activities and prepare a managerial report which includes answers to the following questions. Please attach all of your calculations (using Excel Solver, Microsoft Project, QM, or whatever tools you find appropriate to conduct your tasks. Note that you can make use of dummy activities if suitable for your analysis. MANAGERIAL REPORT The Questions your Managerial Report include: 1. Propose the project network (i.e., the PERT diagram for the Audit Trail Program). Your network must show the precedence relationships of all of the 19 tasks. You may choose to use an AOA or an AON diagram. 2. Compute the expected completion times and variances of each activity on the network. 3. Compute the ES, EF, LS, and LF of all activities on the project network. 4. Provide a table of all the activity slack times and the critical path on the network. How many activities are critical, and how many are not? 5. Do you identify any activities that are driving this project? What are your recommendations with respect to these activities? 6. Compute the probabilities of the project completions for the following time periods in hours (290, 300,310,319,330,340 and 350) and construct a diagram (illustrating the pairs of completion times and probabilities) 7. For extra Bonus Points - Use MS project to produce a Gantt chart of the project