ColAlta Pipeline: An External Auditing Simulation

ColAlta Pipeline: An External Auditing Simulation

The overall goal of this project is to provide you with a semester-long simulation of an audit of the financial statements of a pipeline company. There are three main objectives behind this simulation:

1. To help you better understand the concepts presented in the external audit course by giving you some hands-on practice related to those concepts;
   
   
2. To provide you with examples of the type of work you could see in a real audit firm during the first couple of years of your audit career;
   
   
3. To help you understand and appreciate some of the other activities and work done behind the scenes by the partners and managers of an audit firm.

The case is broken into five tasks, submission of which will be staggered throughout the semester. The five tasks are as follows:

Your group will prepare a group Code of Conduct to establish the rules for your group and guide your interactions over the course of the semester.

Your group will conduct research into the current economy and the natural gas pipeline industry to gain familiarity with the company you will be auditing. You will evaluate the financial statements, assess risk, and recommend materiality.

Your group will review the results of interviews with select staff of the client company in order to familiarize yourselves with the client’s internal controls. You will then document the client’s internal controls. You will conduct testing of controls on a random sample of source documents provided by the company. For the purpose of this simulation, assume the majority of the testing has already been completed. Your group will complete only the last few samples.

Your group will conduct substantive testing (testing of details) on a random sample of source documents provided by the company you will be auditing. For the purpose of this simulation, assume the majority of the testing has already been completed. Your group will complete only the last few samples.

Your group will evaluate a series of events that took place after the end of the fiscal year, but prior to the end of your audit (subsequent events). Your group will also evaluate the evidence you have gathered during the course of your audit, and recommend an opinion on the financial statements of the company.