Client Interviews

Required deliverable: Following the in-class Helix analysis and prior to the simulated meeting, document the following in a 1/2 to 1 page memo addressed to Bill Titera, titled "Pre-Interview Update on PSU Audit":

• A very brief introduction of the purpose of the memo (hint: to highlight any concerns arising from the audit of PSU Hotel).
• A succinct description of the main concerns arising from the audit.
• A discussion of the controls that the team is going to assess in the Client Interview.

• You can use sub-headings if you would like to separate accounts or controls that are more important.
• Do not exceed the single page requirement. If you run out of space, conclude the memo stating that additional concerns or controls have also been identified, but the most important ones have been listed above.

Required deliverable: Following the Audit Analytics class, each group will meet with the instructor individually to simulate a meeting with the client to follow-up on issues raised during the audit. Students will play the audit team assigned to undertake an initial control walkthrough meeting with the client. Consider the following key elements of the meeting:

• The key learning objective is to be able to effectively communicate in a professional setting, including asking the right questions, obtaining necessary information in the midst of time constraints, incorporating evidence to focus the conversation, and avoiding or resolving conflict respectfully.
• There is a strict time limit for the meeting similar to how there are time constraints in the real world. Do your best to not go overtime.
• Each team will be assigned a time slot, and the interview will be recorded for my later review, students only attend their time and do not observe the meetings of the other teams.

• I will reveal which character I will play in the interview at the conclusion of the Helix case. Assume that you have interacted with the client before, and you know of my character, but we have not met before.
• Assume that the hotel is part of a portfolio of hotels owned by a publicly traded company. That is, this is the audit of a public company subject to SOX 404 reporting and PCAOB inspections.
• Consider how you would make use of the Helix tool, or findings from that analysis, when talking with the client.
• There is a strict time limit for the meeting (similar to how there are time constraints in the real world).
• Before the client interview, meet with your group to discuss your approach to the meeting. Consider roles and responsibilities of each person during the meeting, how you will approach the client and the issues you hope to get resolved, and how you plan on resolving conflict with the client if it occurs.

Required deliverable: Following the client interview on Oct 29, document the following in a 1/2 to 1 page memo addressed to Bill Titera, titled "Post-Interview Update on PSU Audit":

• A discussion of your findings regarding the internal controls of PSU Hotel.
• What additional documentation, if any, is needed for the completion of the testing of controls over financial reporting.
• If you have an estimate of the potential effect on revenue or net income of the control weaknesses (i.e., extent of potential misstatement), include that amount. (If not, don't stress about this requirement.)
• A conclusion stating clearly whether your team's assessment of PSU Hotels points to either a material weakness or significant deficiency in any controls over financial reporting, and if so, which specific control (or controls) has the weakness or deficiency.

• You can use sub-headings if you would like to separate accounts or controls that are more important.
• Use Auditing Standard AS 2201 to help consider the indicators of control weaknesses (sections .69 to .70) and the distinction between material weaknesses and deficiencies (see .62-.70 for deficiencies and .90-.93 for material weaknesses).
• Do not exceed the single page requirement. If you run out of space, conclude the memo stating that additional risks have also been identified, but the most important ones have been listed above.