Starbucks: Identifying & Writing Up a Critical Audit Matter (While Contemplating the Starbucks Experience)

Authors

  • Edward Lynch California State University Fullerton
  • Anthony Chen California State University Fullerton

Abstract

The Starbucks case provides a hands-on learning experience for both undergraduate and graduate auditing students to apply the recently adopted Audit Standard 3101 (AS 3101) which, among other things, requires auditors to disclose critical audit matters (CAMs) in the auditor’s report. The student is exposed to realistic facts and circumstances found in accounting practice, including the challenge of applying the new audit standard to the client’s test for goodwill impairment. The case is structured to guide students through the critical thinking process of identifying, analyzing and evaluating factors that lead an auditor to determine an issue is a CAM. In addition to CAMs, the case also provides an opportunity to experience and discuss the recent changes to goodwill impairment testing set forth in Accounting Standard 2017-04. Finally, the case culminates with the student reviewing the SEC handbook on: How to Create Clear SEC Disclosure Documents with respect to the use of vertical lists and subtitles; and then writing up the CAM for inclusion in the auditor’s report. The write-up requires the application of vertical lists and subtitles as well as providing the specific content required by AS 3101.

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Published

2022-01-07

How to Cite

Starbucks: Identifying & Writing Up a Critical Audit Matter (While Contemplating the Starbucks Experience). (2022). The Accounting Educators’ Journal, 31(1). https://aejournal.com/ojs/index.php/aej/article/view/736