A Short Case in Operational Auditing: Priority Freight Costs

• In Event: Teaching, Learning, and Curriculum 5

Abstract

In auditing courses, internal controls are presented as the policies and procedures used to help ensure the accuracy of the financial statements. This case demonstrates that adequate internal controls and the proper alignment of authority and performance can have an impact on profitability as well as reporting accuracy. In this short operational case, students have an opportunity to observe how individuals utilized priority shipping for raw material purchases to improve the performance metrics of its purchasing managers. The case exposes students to the operational auditing process, the necessity of designing appropriate performance metrics, and the impact of properly designed internal controls on operating costs.

Author

• Richard H Gifford, SUNY, Geneseo