J. of Acc. Ed. 31 (2013) 84–106

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J. of Acc. Ed.

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Best Practice

Bridging the education-practice divide: TheSalisbury University auditing internship program

0748-5751/$ - see front matter � 2012 Elsevier Ltd. All rights reserved.http://dx.doi.org/10.1016/j.jaccedu.2012.12.003

⇑ Corresponding author. Tel.: +1 410 548 5563; fax: +1 410 546 6208.E-mail addresses: rfdombrowski@salisbury.edu (R.F. Dombrowski), kjsmith@salisbury.edu (K.J. Smith), bgwood@s

edu (B.G. Wood).1 Tel.: +1 410 543 6325; fax: +1 410 546 6208.2 Tel.: +1 410 677 4819; fax: +1 410 546 6208.

Robert F. Dombrowski 1, Kenneth J. Smith ⇑, Bob G. Wood 2

Franklin P. Perdue School of Business, Salisbury University, 1101 Camden Avenue, Salisbury, MD 21801, United States

a r t i c l e i n f o a b s t r a c t

Article history:Available online 18 January 2013

Keywords:Education-practice gapExperiential learningIn-house auditing internship program

This paper describes in detail the Auditing Internship Programoffered each fall and spring semester by the Department ofAccounting & Legal Studies at Salisbury University. The Program,which has grown and evolved over the past 20 years, was foundedon the purported benefits of experiential learning and calls datingback nearly three decades for curricular change designed toenhance the core competencies of accounting graduates. Theinternship is organized and run as an actual accounting practicein which the instructor serves as the Executive Partner and main-tains professional liability insurance though the AICPA carrier. Stu-dents, working in teams ranging in size from three to seven, serveas the professional staff. The client base consists of not-for-profitorganizations that vary in size and complexity. Services range fromlimited scope consulting engagements to operational and financialaudits. As evidence of program quality, in 2011 the practice suc-cessfully completed an AICPA mandatory peer review for qualityof accounting, auditing and attestation services performed byAICPA members in public practice. Additional assessment data inthe form of student and employer feedback indicate that the Pro-gram is meeting its stated objectives. The description of programoperations, cost and fee structure, and implementation recommen-dations presented in this paper may be used as a guide for thosefaculty interested in implementing similar programs at theirinstitutions.

� 2012 Elsevier Ltd. All rights reserved.

alisbury.

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1. Introduction

For quite some time, accounting faculty have faced the challenge of designing curricula and coursecontent that meet the evolving needs of the auditing profession. This issue appears particularly cogentin light of assertions that, despite decades of dialogue, a gap has emerged between accounting educa-tion and accounting practice. For example, Grumet (2001) asserts that while the academic accountingcommunity ‘‘excels in teaching the theoretical side of the profession, it is growing increasingly out oftouch with the real world of CPA professionals’’ (p. 9). He also suggests that the heart of the issue cen-ters on the fact that accounting faculty members do not need to possess either a CPA certificate or rel-evant practical experience to be qualified to teach. Adding additional fuel to the fire, Fishman (2007)asserts that ‘‘The preponderance of PhDs do not have practical experience, but they do have textbookknowledge’’ (p. 12). She proposes that accounting professors, or at least those in the US, have the dualresponsibility to prepare students for accounting practice and to pass the CPA exam.

Accounting educators who might be tempted to dismiss the above assertions as meritless would dowell to consider the conclusions and recommendations in the Human Capital section of the AdvisoryCommittee on the Auditing Profession (2008). After spending ‘‘considerable time and effort surveyingthe human capital issues impacting the auditing profession, including education, licensing, recruit-ment, retention, and training of accounting and auditing professionals’’ (p. VI:1), the Committee tar-geted a number of areas for improvement. Accounting faculty and accounting curricula were amongthese targeted areas. With respect to the former, the Committee heard testimony that often newaccounting faculty may have little practical experience (Carcello, 2007), and the ‘‘difficulty of academ-ics’ acquiring ‘‘practice-oriented’’ knowledge as the bond between the profession and academia isunderdeveloped’’ (p. VI:19). To address these concerns, the Committee heard suggestions to improvethese relationships by means of incentives for sabbaticals and sharing practice experience (VI:19).

With respect to curricula, the Committee noted that ‘‘Since the 1950s, several private sector groupshave studied and recommended changes to the accounting curricula, but notwithstanding these pleasfor reform, curricula are characteristically slow to change’’ (pp. VI:3–VI:4). To encourage curriculachange the Committee recommended the implementation ‘‘. . .of market-driven, curricula and contentfor accounting students that continuously evolve to meet the needs of the auditing profession andhelp prepare new entrants to the profession to perform high quality audits’’ (p. VI:2).

For decades experiential learning, i.e., learning by doing, has been touted as a means for bridgingthe gap between theory and practice and enhancing student learning outcomes (e.g., Kolb & Kolb,2009; McCarthy, 2010). Allen (2011, p. 11) puts forth three reasons that educators should considerincorporating experiential learning in the accounting curriculum: (1) work experience makes studentsmore marketable – these activities help students gain needed experience that they can discuss in jobinterviews with potential employers; (2) hands-on learning can help reinforce and clarify conceptsintroduced in the classroom; and, (3) many students find such activities to be fun enhancements tothe traditional classroom experience and helpful in making informed career choices. While experien-tial learning activities can take several forms, e.g., individual or group research projects, internships,service learning projects, etc., they share the common theme of providing real-world context to the-oretical subject matter. In doing so, they appear to provide a means of better preparing students forthe challenges that they will face as they transition from the classroom to the workplace.

It is beyond the scope of this article to address the professionalization of accounting faculty aspectof the education-practice gap. Rather, our purpose is to introduce the Salisbury University (SU) Audit-ing Internship Program (AIP), an experiential learning activity designed to provide auditing studentswith knowledge, skills, and abilities that will enable to them make value-added contributions to theirprospective employers starting the first day on the job. The information provided is intended to serveas a guide to faculty at other institutions who might be interested in implementing a similar intern-ship program. To facilitate this goal, we provide a description of the operations of our program, evi-dence of program effectiveness, and strategies for implementing similar programs.3

3 One of the anonymous reviewers suggested that we include an appendix that takes the reader through an actual studentproject. Confidentiality constraints related to the small town environment in which the Program operates suggest that it would notbe prudent to do this.

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The balance of this paper is organized as follows. Section 2 examines efforts taken at other institu-tions in the Mid-Atlantic region of the US to provide real-world context to their auditing curricula. Wediscuss the evolution and objectives of the program in Section 3, followed by a detailed description ofthe program structure and operations in Section 4. In Section 5 we report the assessment of programeffectiveness. We provide recommendations for others considering the implementation of similarexperiential learning opportunities at their institution in Section 6, and conclude in Section 7 witha short summarization of the program and its achieved benefits.

2. Auditing course enhancements at other Mid-Atlantic Institutions (United States)

To gain a perspective of what others are doing to enhance their audit curricula, and to assess theuniqueness of the SU audit internship program, we conducted an email survey of institutions offeringundergraduate auditing courses in the Mid-Atlantic region of the US. The survey consisted of a letterfrom the department chair that read:

I have a quick favor to ask. Would you mind sending me a return message that simply denotes anyactivities that transpire in your program’s undergraduate auditing course that supplement the dis-semination of technical knowledge? Examples might include case studies, student presentations,office visits to CPA firms, mock audits, accounting, auditing or consulting projects for live clientsetc. Thank you in advance for your assistance.

Table 1 presents the responses received to this solicitation. As is evident, schools are incorporatingwide, varied, and often multiple activities into their curricula to enhance their auditing courses. Casestudies represent the most popular activity with 37 of the 46 reporting institutions (80%) indicatingtheir use in one form or the other. Twenty institutions (43%) report that they incorporate student pre-sentations into their classes, 12 (26%) have students conduct mock audits, and 10 (22%) report the useof various software simulations (e.g., ACL for sampling and data analysis) to provide real-world con-text to their courses. Eight universities (17%) either have CPA firm and/or other accounting profession-als visit class to speak on various issues, demonstrate auditing tools (e.g., workpapers), or evaluatestudent work. Audit workpaper completion/evaluation, training videos, and writing assignments alsoappear as elements of audit courses at designated institutions in this sample.

Three of the institutions sampled (7%) indicate that they have used auditing students in some form ofconsulting activity for live clients. Duquesne University has had students work on consulting projectswith community businesses. University of Mary Washington has had students assist in safety, security,and Americans with Disabilities Act (ADA) audits on various campus locations using an ADA-providedaudit program. Slippery Rock University indicated that audit students have been used in consulting pro-jects for not-for-profit organizations. The laudable nature of these experiential activities notwithstand-ing, we could find no another institution that has an ongoing live practice with mandatory participationby all accounting majors that has undergone AICPA Peer Review for quality control purposes, as is thecase with the SU Audit Internship Program.4

3. The SU auditing internship program: History and objectives

3.1. The applied business learning requirement at SU

In Fall 1988, in recognition of the purported benefits of experiential learning, the Franklin P. PerdueSchool of Business at SU instituted the Applied Business Learning Experience (ABLE) program. ABLE isa required internship designed to give students the opportunity to participate in a faculty-approvedwork or course experience relevant to a chosen academic major and related to career objectives. ABLEinternships include a faculty-guided class that must be taken at the same time a student is completing

4 While the Perdue School requirement for students at Salisbury University to complete an internship for credit is not unique(e.g., see the University of Wisconsin—Platteville internship program: http://www.uwplatt.edu/busacctng/intern.html#require-ments), as noted herein, we could find no other institution that has an in-house auditing internship, let alone one that is agraduation requirement for all accounting majors.

Table 1Sample of Mid-Atlantic region institutions: Undergraduate auditing course supplemental activities.a

Institution Supplemental activities

American University Case studiesBloomsburg University Case studies; major practice setBucknell University Case studies; audit videos; research and write-up of business memos to client on specific US

GAAP-IFRS differencesCatholic University Case studies with presentationsChristopher Newport

UniversityCase studies

Clarion University Case studies; audit workpaper evaluation; partial fictitious audit using PPC softwareCollege of William and

MaryCase studies; simulated audits; simulated audit workpapers

Drexel University Case studies; student presentations; review of memos, mock audits (with Sr. Big-4 staff reviewof student work)

Duquesne University Case studies; student presentations; team mock audits; use of PricewaterhouseCooper’s‘‘Auditing Alchemy’’ training module; consulting projects with community businesses;Pennsylvania Institute of CPAs Writing Contest

Elizabethtown College Comprehensive case study; student team presentations; exercises using ACL audit analyticsoftware

Frostburg University Research paper and class presentation; ACL projectGannon University Case studiesGeorge Mason

UniversityCase study; mock audit

Georgetown University Student teams develop and present planning memos summarizing critical audit risks andanalytical procedures

George WashingtonUniversity

Student presentations (GAAP to IFRS)

Grove City College Case studies; student presentations; guest speakers; Software applications – XBRL, ACL, EXCEL;current topic discussions

Hampton University Case studies (content and ethics cases)James Madison

UniversityMock student inventory observations (videoed); guest speakers with real audit workpapers forstudents to examine

Kutztown University Case study that emphasizes analysis and documentationLaSalle University Case studies; class presentations by professionals; ACL assignment; final fraud paperLiberty University Valley Publishing Case from Armond DaltonLock Haven University Cases studies; major practice setLoyola University in

MarylandCase studies and student team presentations of auditing ethics cases; current topicpresentation by accounting professionals

Lynchburg College Integrated Audit Practice Case by Armond Dalton, Inc.; Gleim Audit and Systems ExamQuestions and Explanations book

Mary Baldwin College Practice problems (online course)University of Mary

WashingtonSafety, security and ADA audits on various campus locations using ADA audit program; use ofWEB content in lieu of text

Mt. St. Mary’sUniversity

Case studies; mini mock audits; presentations by partners from audit firms

Muhlenberg College Case studies; student presentations; research-based writing assignmentsOld Dominium

UniversityCase studies

Penn State University Case studies with student presentations; ACL projects; practicing CPA guest speakers; largeaudit risk project

Radford University Case studies relating to auditing failures and fraud; comprehensive auditing project(EarthWear)

Slippery RockUniversity

Case studies, ACL projects, consulting projects for not-for-profits

St. Joseph’s University Case study of Arthur Andersen-Enron debacle; student presentations; in-class practitionerpresentations

Towson University Case studies; student presentations; audit simulations; research projectsUniversity of Baltimore Case studies; Apollo Shoes, Inc. online audit that accompanies the Louwers et al. textbookUniversity of Delaware Case study/mock audit by student groups using The Lakeside Company (Pearson)

supplemented with additional audit tasksUniversity of Md.-

College ParkCase Studies (self-developed) that simulate the audit experience; video interviews with ofaudit partners and fraud videos

(continued on next page)

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Table 1 (continued)

Institution Supplemental activities

Univ. of Md.-UniversityCollege

Case study and student presentation; research project; ethics assignment

University of Md.-Eastern Shore

Case study simulation; work paper preparation and audit reports; Using ACL (generalized auditsoftware) approach for Audit Sampling – PPS (probability proportional-to-size sampling) andattribute sampling

University of Pittsburgh Case studies using the PwC simulation for Alchemy, Inc.; student presentations aboutaccounting scandals

Villanova University Case studies; Alchemy simulation; student interviews with auditors after researching an audittopic; guest speakers

VirginiaCommonwealthUniv.

Review of workpapers that determine materiality and sample size (for a given accountbalance); illustration of a substantive analytical procedure

Virginia PolytechnicUniversity

Student team case and ethics presentations; Big 4 firm and an internal audit/consulting firmguest speakers

Virginia StateUniversity

Apollo Shoes, Inc. online audit case

Washington and LeeUniversity

Case studies and student presentations

Widener University Case studies; Videos on an audit illustration, ethics, independence, and internal control;professional standards research

York College ofPennsylvania

Case studies (written-up and graded); team audit simulation projects; individual positionpaper

a The supplemental activities summarizations for each institution represent our categorization of the activities reported inreturn email messages in response to our initial solicitation. We take sole responsibility for any inadvertent mischaracterizationof any specific enhancement.

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a worksite internship. To successfully complete the ABLE program, participants must participate in anapproved work or course experience meeting the minimum requirement of 10 h per week for at least10 weeks (100 h), with some variation allowed as long as the 100-h minimum requirement is met.Students typically satisfy the ABLE requirement during their junior or senior year, often during thesummer leading into the senior year of study.

ABLE participants are expected to:

� take steps toward personal and professional growth;� work to the satisfaction of a business professional;� discover how their talents, personality and approach to work will play an important role in their

professional development;� develop a sense of respect for the business community and the professionals for whom they work;� accept responsibility for the choices made and effort put forth in the context of career exploration

and development; and,� discover first-hand that a career is a reward that is earned.

3.2. Evolution of the audit internship program

The SU Auditing Internship Program’s inception and growth parallels that of the Perdue School’sABLE program. In 1991, seeking an opportunity to give back to the community, SU’s auditing instructorcontacted Lower Shore Enterprises (LSE), a local not-for-profit organization whose mission is to trainand provide employment opportunities for individuals with disabilities. This contact resulted in theinstructor providing pro bono consulting work for the organization.5 Shortly thereafter, a representativefrom the local Parent–Teachers Association (PTA) contacted the instructor for assistance. The instructorand a select group of students helped the PTA set up an accounting system. After these initial engage-ments, word spread among other area not-for-profit organizations and additional solicitations for assis-tance came from volunteer fire departments, the Veterans of Foreign Wars, and the Special Olympics.

5 From the inception of the program in 1991, the auditing instructor, a licensed CPA in the State of Maryland operating underAICPA rules, has run the practice as a sole proprietorship, and maintained liability insurance under the AICPA carrier.

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Sensing an opportunity for students to obtain hands-on experience by assisting local not-for-profitorganizations, SU’s auditing instructor began to formalize the assistance projects. Initially, the engage-ments were designed as extra credit projects in which approximately half of the auditing students par-ticipated on a voluntary basis due to the limited number of clients. These projects were structured asoperational audits wherein organized steps and procedures were undertaken to assess clients’ opera-tions in accordance with established criteria or standards with the primary aim of assessing the effec-tiveness and efficiency client operations. The final product of these engagements was a set ofrecommendations for improvements submitted for client review only, i.e., there were no intendedthird-party users as would be the case in an independent financial audit.

The client list expanded over the ensuing years primarily from word-of-mouth endorsements bykey individuals at the client organizations. Within a few years, the auditing instructor had enoughwork to justify mandatory participation by all students as a graded team project component of theauditing course. Individual projects ranged in complexity from assisting clients to set up theiraccounting systems to the completion of financial statement audits.

By the middle of the last decade, clients serviced by the program increased in number and com-plexity to the point that the instructor and students became excessively burdened. The completion ofa number of engagements required effort that extended beyond the end of the semester, hamperingco-operation between team members and the instructor, and often delaying project completion. Toaddress this growing problem, in late 2006 the accounting department chair and the auditing instruc-tor submitted a curricular change proposal to the Perdue School and university curriculum commit-tees. This proposal called for the addition of a three-credit auditing internship course as a corequisitewith the SU auditing course. The proposal was accepted and the change went into effect fall 2007. Asa result, all accounting majors are now automatically co-registered for the auditing internship whenthey register for auditing, both of which are required courses to earn an SU accounting degree. Unlessnoted otherwise, the discussion below reflects the current structure of the internship.

3.3. Internship objectives

The SU auditing internship satisfies the Perdue School ABLE requirement for accounting majors, thusit shares the ABLE professional and personal development objectives denoted above. In addition, theinternship is designed to address calls from various quarters over the past three decades for changesin accounting education designed to enhance the core competencies of accounting graduates.6 For exam-ple, the program aims to provide students with a learning environment in which the students: (1) are ac-tive, independent learners; (2) participate in the search for and dissemination of new knowledge; and, (3)become involved in professional activities to serve the profession and the public. These goals are reflectiveof recommendations dating back to the Bedford Committee Report (American Accounting AssociationCommittee on the Future Content & Scope of Accounting Education (The Bedford Committee), 1986).The program also aims to develop in students long recommended competencies dating to AccountingEducation Change Commission Position Statement No. 1 (Accounting Education Change Commission (AECC),1990) including critical thinking, communication, and listening skills, the ability to work effectively ingroups, the knowledge of the internal workings of organizations (including the interaction of the account-ing function with other organizational areas), and an understanding of the relationship among accounting,business, and society, and professional conduct including professional ethics. Additional SU audit intern-ship goals are to enhance students’ presentation skills, personal deportment, and self-confidence.

4. Program operations

4.1. Structure, scope, personnel, and responsibilities

The auditing internship is organized and run as an actual accounting practice. The auditing instruc-tor serves as the Executive Partner and maintains professional liability insurance. Engagements rangein complexity from specific consulting projects (e.g., to assist clients set up their accounting systems)

6 Coppage and French (2003, p. 107) provide a list of major published works that have addressed these competencies.

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to compilations and reviews to operational and financial audits. In 2011, the practice successfullycompleted an AICPA mandatory peer review for quality of accounting, auditing and attestation ser-vices performed by AICPA members in public practice.7 Referred to as ‘‘The Firm’’ in its System of Qual-ity Control (SQC) document, the program is described as:8

The Firm is a local CPA firm operating in conjunction with an Auditing Internship course under theFranklin P. Perdue School of Business at Salisbury University. Staff is drawn from accounting studentsat the university as part of a course taken near the end of the accounting undergraduate degree program.The Firm provides audit and accounting services for its clients. Professional standards and the require-ments of the AICPA, PCAOB, and other regulatory agencies result in the need for the Firm to implementand monitor certain quality control elements within the Firm.

The SQC document identifies the instructor as the Firm’s Executive Partner whose responsibilitiesare outlined as follows:

� The Executive Partner accepts overall responsibility for the Firm’s system of quality control, promoting aquality-oriented culture, and developing sufficient audit and accounting processes.� The Executive Partner also oversees the Quality Control Reviewer, who monitors and supports the Firm’s

audit and accounting processes as well as risk-assessment processes.� The Executive Partner and the Quality Control Reviewer provide every employee with copies of quality

control documents and procedures, and reviews the documents with them.� The Executive Partner evaluates relationships with clients and selects prospective new clients in such a

way that avoids potential conflict of interest and prevents commercial considerations from being placedahead of quality. This quality-first approach is applied to all areas of the Firm’s practice.� The Executive Partner reflects the Firm’s commitment to quality through actions.� The Firm selects and evaluates personnel based on demonstrated commitment to quality and technical

expertise.� The Executive Partner pursues ethical policies and enforces a strict ethical standard among all Firm

employees.� The Firm’s policies for quality control are reviewed annually at minimum and updated as deemed

appropriate.

The SQC document specifies the practice’s staffing policy as follows:

� The Firm Partners comprise accounting professors from Salisbury University possessing a wide range ofexpertise relevant to the unique nature of the Firm’s clientele.9

� The Engagement Managers10 and other staff are drawn from predominantly third- and fourth-yearaccounting undergraduate students who have enrolled in an accounting internship course. The Firmensures that all such individuals have the appropriate skills and qualifications through a system of

7 As noted on the Maryland Association of Certified Public Accountants (MACPA) website, a 2005 law was passed requiring allCPAs in Maryland who perform a compilation, review, audit, or other attest services to undergo mandatory peer review.Specifically, the SU auditing internship practice underwent a system review defined on the MACPA website as ‘‘A system review isa study and appraisal by an independent evaluator(s), known as a peer reviewer, of a CPA firm’s system of quality control toperform accounting and auditing (‘‘A&A’’) work. The quality control system represents the policies and procedures that the CPAfirm has designed, and is expected to follow, when performing its work. The peer reviewer’s objective is to determine whether thequality control system is designed to ensure compliance with professional standards and whether the firm is following its systemappropriately’’ (http://www.macpa.org/Content/23179.aspx).

8 Various excerpts from the SQC document appear below to illustrate key aspects of the practice’s structure and operations.Space limitations preclude inclusion of the entire document as an attachment to this paper. Interested readers are encouraged tocontact the senior author for additional information about the SQC document or any other aspects of the Firm’s operations.

9 Firm Partners are drawn from CPA-holding SU accounting professors who have both broad accounting knowledge andindividual expertise to assist in resolving client-specific issues.

10 Engagement Managers are students selected based on their prior academic performance, communication skills, and teamworkskills (as evaluated by faculty members who have previously taught these students) to serve as team leader. In this capacity, theEngagement Manager is responsible for taking all actions necessary to ensure that the team is progressing satisfactorily towardcompletion of its assigned engagement.

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pre-requisites. To enroll in the associated accounting internship course and its co-requisite auditing coursestudents must complete many rigorous courses in the fields of accounting, finance, business law andaccounting ethics, information systems, statistical analysis, and operations management. In addition,students are required to pass a gateway accounting exam.

In addition to the Executive Partner, Firm Partners, Engagement Managers, and Engagement Teamstaff, the practice engages two to four carefully screened students to serve as members of the QualityControl Team (QCT).11 One of the responsibilities of the QCT is to review all forms and official documentsto be sent by staff to clients to ensure compliance with professional standards. Any required changes aremade prior to distribution of said documents to the client and inclusion in the final working papers. QCTteam members also work with the Executive Partner to ensure that: (1) the nature, timing, and extent ofthe approach described, and the procedures performed, are consistent with risk assessments and theplanning documentation—exceptions are appropriately approved and documented; (2) the appropriate-ness of planned procedures are reconsidered if significant changes in risk factors occur or are identifiedbetween the planning phase of the engagement and the execution of procedures; and, (3) firm-prescribed forms, checklists, and questionnaires, tailored as appropriate, are used in performing andreporting on the engagement. QCT members also represent resources that Engagement Team Managersmay consult when the latter encounter difficult accounting or auditing matters during the conduct oftheir engagements. In addition, QCT members review the final engagement files and reports preparedby each of the Engagement Teams to ensure compliance with professional standards and applicableregulatory requirements. Finally, QCT members, working under the supervision of the Executive Partner,help to ensure that significant issues are promptly addressed before final reports are released.

4.2. Client selection

The Executive Partner assumes responsibility for initial contact with potential clients. However, inrecent years, virtually all new clients have sought out the Firm. The Executive Partner typically meetspotential new clients prior to the start of the semester to assess the nature and extent of the reques-tor’s needs, ensure that the scope of the requestor’s service does not exceed the Firm’s personnelcapacity, and ensure that the experience will be valuable to the staff. In the case of viable potentialclients, the Executive Partner then briefs client representative(s) on the nature, objectives, and proce-dures of the service to be provided, the timing of the engagement, and the requested service fee. TheExecutive Partner also assures the client that, during the actual conduct of the engagement, he willpersonally be available to consult with the staff as needed. If a ‘‘meeting of the minds’’ occurs duringthis meeting, an appropriate client engagement is scheduled for an upcoming semester that corre-sponds to the timing of the client’s needs or availability of the Firm.

All Firm clients are not-for-profit organizations and entities.12 These organizations represent the cli-ent base because of the relatively limited scope of their operations, and the fact that their resources arelimited often precludes them from engaging the services of outside CPA firms. They include:

� university extension advisory councils,� professional and educational sororities/fraternities,� churches, religious, and welfare organizations,� county and town government councils and activities (e.g. human services, arts, economic

development),

11 From this point forward in the description of Program Operations, the Auditing Internship Program is referred to as the Firm,the auditing instructor as the Executive Partner, and the students on each Engagement Team as the staff.

12 Government and Not-for-Profit Accounting is one of three elective courses that accounting majors at SU may take to satisfytheir accounting coursework requirement for graduation. During the three consecutive academic years ending spring 2012, 123students completed this course while 160 completed the auditing internship course, thus allowing a rough (due to possibletemporal asymmetry between matriculation in each course) estimate that approximately 77% of students who took the auditinginternship had either taken or were concurrently enrolled in the governmental accounting course. Regardless, historically amajority of the students on every Engagement Team have already completed the Government and Not-for-Profit Accountingcourse.

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� homeowners associations,� historical and environmental organizations,� other (e.g., retired, veteran, fraternal, library, and pet support organizations).

Approximately two-thirds of all internship engagements are with recurring clients. These engage-ments occur either annually or bi-annually depending on the respective charter, bylaw, or regulatoryrequirements to which they are subject. For other recurring clients, subsequent engagements have re-sulted from Executive Partner courtesy contacts.

4.3. Staff selection

The staff selection process transpires during the first 2 weeks of the semester. Given that all audit-ing students matriculate in the internship and the capabilities of individual students vary, it is criticalthat individual teams are properly staffed. To facilitate this process, the Executive Partner distributesthe audit internship class list to key departmental faculty members approximately a month before thefirst day of class. Typically, the recipients are the faculty members teaching Intermediate Accounting I,Intermediate Accounting II, and Cost Accounting.13 Each faculty member evaluates the capabilities ofindividual students using a three-point scale where a score of ‘‘1’’ indicates that the student is knowl-edgeable and mature enough to be an Engagement Manager, ‘‘2’’ indicates that the student is a capableworker, and ‘‘3’’ designates more uncertainty surrounding the student’s capabilities.

The Executive Partner incorporates the individual student ratings provided by the faculty and thedemands of specific client engagements as inputs to the initial team assignments. Engagement Man-agers are selected first. In matching Engagement Managers with specific clients, the Executive Partnertakes into account logistical and personal considerations.14 That is, a potential Engagement Managerwhose permanent residence is in the proximity of a specific client (e.g., Caroline County, Maryland)might be matched with that specific client (e.g., the Caroline County Arts Council). When feasible, specificpreferences of potential Engagement Managers are also given consideration.

Once the Executive Partner selects the Engagement Managers, he then asks them to select three tofour other students to participate on their respective teams. The Executive Partner evaluates the sug-gestions of each Engagement Manager with the aim of ensuring that there is sufficient talent on eachteam to fulfill the needs of its assigned client. The Executive Partner accommodates the requests of theEngagement Managers to the extent possible and then makes the initial team assignments. In theevent that conflicts arise, they are resolved by the Executive Partner.15 Team sizes vary between threeand seven students based on the size and complexity of the client, with four to five students being theaverage team size.

4.4. Staff training and development

Training transpires in the co-requisite auditing course via topic coverage and reference to specificclient issues. The auditing instructor, serving in dual capacity as the Executive Partner, also maintainsongoing interaction with Engagement Managers to resolve any knowledge or procedural issues thatarise during the conduct of each engagement. The Executive Partner also provides guidance to Engage-ment Managers and staff during the audit class by means of informational anecdotes about previousengagements that have relevance to issues likely to arise during current client engagements.

All managers and staff who are assigned to audit and attest engagements have access on theirpersonal computers to the Firm’s audit manuals. In addition, the Firm also subscribes to professionalstandards promulgated by the Financial Accounting Standards Board (FASB), the American Institute of

13 The auditing instructor has found that the evaluations of individual students by each faculty member have generally beenquite consistent.

14 On occasion, potential Engagement Managers have personal commitments that preclude them from serving in this capacity,thus necessitating the substitution of other qualified individuals in this role.

15 On occasion team member swaps become necessary during the conduct of the engagements due to various factors (e.g.,personality conflicts, personal emergencies, etc.).

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Certified Public Accountants (including Auditing Standards Board pronouncements and Industry AuditGuides), and the Public Company Accounting Oversight Board (PCAOB). All staff members have Inter-net access to the professional standards. The Firm maintains a separate office on-campus in the vicin-ity of the Executive Partner’s faculty office that houses all documentation from prior engagements aswell as selective reference material.

4.5. Sequence of operations

Exhibit A presents the current course syllabus for the auditing internship. The assignments andactivities listed for each week illustrate the sequence of operations throughout the semester. As is evi-dent, the program is structured so that each engagement can be properly completed within the semes-ter timeframe.16 However, it should be noted that in reality the actual timing of activities may deviateslightly due to the specific demands of individual engagements.

During the first class, the Executive Partner holds an informational session for all internship partic-ipants to discuss the nature of the services performed, and the significance and professional implica-tions of the practice. Of particular emphasis is the need for discretion. At this session the ExecutivePartner also asks the participants to start thinking about the client they wish to service.

During the second and third weeks, the process of assigning participants to Engagement Teams andthe QCT transpires, and the Executive Partner charges the Engagement Managers to work with theirstaff to develop work plans and prepare engagement letters for their respective clients. (Exhibit Billustrates an engagement plan for one of the Firm’s compilation and review clients.) The ExecutivePartner also directs all engagement staff members to engage in research on the Web, using informa-tion in the audit room (for recurring clients), etc., to gain a preliminary understanding of the natureand operations of their respective clients. Staff members are also directed to conduct research to findresearch audit rules for not-for-profit organizations similar to their clients. To assist in the preparationof engagement letters, staff members examine letters from previous engagements, AICPA template let-ters, and other Wed-based resources. Each Engagement Team forwards its engagement letter to theExecutive Partner for review and comment. Those letters needing modification are sent back tothe respective Engagement Team Managers. Letters with final approval are printed out, signed bythe Executive Partner on Firm letterhead, and sent out to the client.

At or around this time, all staff members must sign independence and confidentiality agreementsthat are maintained in the workpapers for their respective clients. To facilitate the educational expe-rience for students, the Executive Partner informs each client prior to the signing of the engagementletter that the one exception to the confidentiality agreement is that staff on different teams will beallowed to consult one another to help resolve specific substantive and/or procedural issues that arisein the conduct of their respective engagements. Exhibit C illustrates the Employee ConfidentialityAgreement; Exhibit D the Independence, Integrity, and Objectivity Representation.

The next phase entails preparation for, and conduct of, initial meetings with each client. In prepa-ration for the actual visit, the Executive Partner reviews proper dress (i.e., business) and personaldeportment issues (e.g., the use of proper salutations, the need to speak in full sentences using properEnglish when addressing the client, etc.) during an auditing class session. Staff members are also di-rected to use the occasion of the initial meeting to ask the client unresolved questions about the nat-ure and mechanics of its operations. Actual meetings typically transpire in a conference room oncampus attended by the Executive Partner and most if not all members of Engagement Team. Duringthe actual meeting, the Executive Partner oversees the question and answer process, and in the case ofrecurring clients, inquires of the client if there have been any changes in the nature or scope of theiractivities since the previous engagement.

After their respective initial client meetings, each Engagement Team arranges a site visit to the cli-ent. In preparation for this visit, team members obtain additional information on their client to assistin the preparation of the audit plan. Varied data sources may be utilized, but pre-visit calls to key

16 There has only been one incidence in the past five years where an engagement could not be completed by the end of thesemester. In that instance, the Engagement Team Manager and staff, working with the Executive Partner, completed theengagement during the following month.

Exhibit A.

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personnel and review of prior audits (in the case of recurring clients) are important procedures at thisstage.

All staff members are trained to ask for an introduction to the client staff and a tour of the facilitiesat the initial site visit. They are also trained to pay careful attention to physical activity transpiringduring the visit.17 The Executive Partner typically accompanies Engagement Teams on this visit. These

17 For example, a common practice for church clients is for all staff members to attend church service to observe the collectionprocess.

Exhibit B.

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visits provide input for the development of preliminary internal control questionnaires for new clients,and a basis for determining the testing of controls for accounts established as a result of prior engage-ments in the case of recurring clients. The information gathered at the initial meeting also helps teammembers determine if follow-up site visits are required to adequately assess the existence and adequacyof specific internal control practices.

Exhibit C.

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After visiting the client, Engagement Teams develop their internal control programs to evaluatetheir respective client’s internal control systems. Staff members follow procedures set forth in Thomp-son Reuters’ PPC practice tools and related industry manuals and AICPA Industry Audit Guides duringthis and subsequent phases of the engagement. At this stage, the realization often dawns on staffmembers that textbook internal controls are often lacking at their non-profit clients, thus forcing themto carefully review the inherent and detection risks associated with various client practices.

Exhibit D.

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Based on the internal control evaluation, each Engagement Team prepares the audit program totest controls and perform preliminary substantive tests. Since 2010, the risk assessment, control,and substantive testing processes have been greatly enhanced and standardized as a result of theFirm’s receipt of a series of complimentary audit program templates from a large national publicaccounting firm. These templates replicate those utilized by the donor firm to audit the Statementof Financial Position for not-for-profit entities.

Once the above-referenced audit programs are reviewed and approved by the QCT and the Execu-tive Partner, the Engagement Teams proceed to the actual internal control and substantive testing ofaccounts. Bank confirmations, testing income sources, examining receipts for recorded expenses, andassessing whether fund restrictions are being followed are but a few examples of the varied activitiesthat transpire during this phase of the engagements. The Firm has designated accounting departmentfaculty who are available to assist Engagement Teams with resolving audit and accounting issues

Exhibit D. (continued)

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within the scope of their expertise. Staff members are encouraged to use Firm Partners to help identifyrelevant facts and professional standards to propose resolutions to problems.

Throughout the data-gathering and testing phases, Engagement Teams maintain well-documentedworkpapers using Thomson Reuters PPC SMART Practice AIDS software: Not-for-Profit OrganizationAudit Guides, Risk Assessment, and WorkPapers. These teams also utilize the above-referenced soft-ware supplied by an auditing firm, information gathered from clients, and documents gathered fromother relevant sources. The workpapers help teams organize and prepare their draft report of findings.Each team presents its draft report and recommendations to the Executive Partner for review andcomment. Once the Executive Partner ‘‘signs off’’ on each report, meetings with the client are arrangedat which time staff members present their final findings and recommendations.

Recommendations typically address internal control deficiencies uncovered at various stages of theengagement. Using internal control checklists, audit staff members conduct risk assessments andoften find significant deficiencies that warrant further investigation, i.e., substantive testing. For

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example, risk assessments have revealed that too many client personnel had access to assets, records,and/or accounting systems. There have been multiple instances where substantive tests revealed weakinternal controls, a few of which led to material weaknesses in the financial statements due to grosserrors, misappropriation of assets, or fraudulent behavior on the part of client personnel.18,19 Depend-ing on the extent to which fair presentation of financial statement information was compromised as aresult of these client actions, the Firm has had to consider issuing a qualified or an adverse opinion.While client actions in response to Firm findings have avoided adverse opinions, the Firm has on occasionissued qualified opinions to clients. On one occasion, inability to gather sufficient evidence from a clientforced the Firm to issue a disclaimer of opinion. On these occasions, staff members have used the finalclient debriefing to explain internal control procedures that could mitigate the risk and resulting conse-quences of future recurrences of the uncovered deficiencies.20

4.6. Engagements, costs, and revenue: 2009–2012

During the three academic years spanning the period fall 2009 through spring 2012, the Firm com-pleted 33 client engagements. These engagements consisted of one compilation, three reviews, fourcomprehensive audits, six compilation and reviews, and 19 assessments. The assessments entailedthe performance of a number of agreed upon procedures between the Firm and the client. The natureof these procedures can be gleaned from the following Firm Responsibilities section of a representativeclient engagement letter:

We will assess (Name Withheld) Organization’s Financial Statements, including the Statement ofActivities and Statement of Financial Position. Our assessment will include tests of your accountingrecords, as well as confirmations of transactions and account balances and other procedures weconsider necessary. Our procedures will include tests of documentary evidence supporting thetransactions recorded in the accounts, tests of the physical existence of inventories, and direct con-firmation of receivables and certain assets and liabilities by correspondence with selected individ-uals, funding sources, creditors, and financial institutions. We will recommend any appropriatefinancial statement adjusting entries.

We will also assess (Name Withheld) Organization’s financial management system and procedures,and the internal controls related to the authorization and recording of financial transactions, thepreparation of financial statements, and the custody of assets.

Engagement Team staff who worked on assessments gained significant experience performingaudit-related procedures.

Table 2 presents a schedule of cash flows for the Firm for the three most recent academic years. Thenumber of clients serviced and the complexity of each client determined the fees collected each year.The Firm utilized the new full-time departmental assistant commencing 2011–2012 to perform dutiesformerly performed by paid student assistants. Duplication fees dropped substantially in 2011–2012due to a concerted effort to digitize client documentation that had formerly been preserved in hardcopy. The Firm does not reimburse staff members for trips to client locations.21 Finally, no attempthas been made to allocate fixed costs associated with operating the practice (utilities, administrativesupport, etc.) as the university does not charge these overhead costs back to the Department.

It should be noted that all costs and revenues from operating the practice are processed throughthe Department of Accounting & Legal Studies University Foundation account. In addition to paying

18 Given that the teams maintain dialogue with their respective clients and the Executive Partner throughout the term of theirengagements, deficiencies and suggested changes are communicated on a timely basis to allow clients to consider correctiveactions prior to the issuance of final reports.

19 On one occasion the review of client documentation and procedures uncovered a misappropriation by the organization’sfinancial manager in the amount of just under $50,000.

20 Due to the relatively simple nature of the clients served by the Firm, every staff member gains experience in all aspects of theengagement.

21 The practice of not reimbursing staff members for trips to clients in consistent with the Perdue School policy for other ABLEinternships wherein participants are responsible for all costs associated with commuting to and from their sponsoring employers.

Table 2Schedule of SU auditing internship program cash flows – academic years 2009–2010 to 2011–2012.

Academic year 2009–2010 (8Clientsa)

2010–2011 (13Clientsb)

2011–2012 (12Clientsc)

Client fees collected $6700.00 $10200.00 $7600.00

Expense paymentsStudent Assistant Wages $1578.40 $495.20 NAd

AICPA Professional Liability Insurance $398.00 $398.00 $428.00Maryland Association of CPAs (MACPA)Dues

$150.00 $155.00 $155.00

MACPA Peer Review Evaluation Fee $275.00Fees to Peer Reviewer $3423.84FASB Codification Fee $150.00 $150.00 $150.00AICPA Membership Duese $630.00 $620.00PPC Audit Practice Aids and Tools $1622.54 $1309.95MACPA Annual Peer Review AdministrationFee

$60.00 $60.00

Duplication Fees (client documentation) $1027.73 $216.19Total expense payments $5975.24 $4538.47 $2744.14Net Cash Flow $724.76 $5661.53 $4855.86

a The Firm serviced four clients in the fall with 28 students, and four clients in the spring with 31 students.b The Firm serviced five clients in the fall with 21 students, and eight clients in the spring with 26 students.c The Firm serviced five clients in the fall with 28 students, and seven clients in the spring with 18 students.d The Department of Accounting & Legal Studies at SU hired its first full-time administrative assistant in fall 2011. This is a

fully-funded permanent position. Among this person’s duties is to assist the Executive Partner in administering the auditinginternship program, thus obviating the need to utilize the services of paid student assistants.

e Commencing the fall 2010 semester, the department chair authorized reimbursement to the Executive Partner and one ofthe Firm Partners for their annual AICPA membership dues.

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the Firm expenses denoted in Table 2, funds from this account are used in part to treat Firm staff to anappreciation dinner, sponsor a formal reception for accounting graduates, their families, and account-ing faculty, fund an annual picnic for accounting majors and faculty, and partially defray costs of BetaAlpha Psi officers who attend the organization’s annual meeting.22

5. Assessment

Assessment of the Firm’s practice and staff occurs at five levels: (1) the above-referenced AICPAmandatory peer review of quality control; (2) formal surveys of Firm staff members after completionof the internship; (3) informal survey of clients; (4) feedback from recruiters; and, (5) self and peerreview of staff performance.

Maryland law requires peer review for CPAs performing compilations, reviews, and other at-test services under AICPA Auditing and Attestation Engagement standards (SASs & SSAEs). Ourinitial peer review took place in March 2010. The reviewer selected three prior-year engage-ments to examine, two with advance notice, and one at the time of the site visit. In additionto the examination of all client documentation, the reviewer interviewed the Executive Partner,the Engagement Team Managers, and selected staff on the respective engagements underexamination.23

22 The heterogeneous mix of students who participate in the Program precludes reasonable estimation of the number of hoursrequired to complete specific engagements. Thus, we have not tracked these data. This has not presented a problem given thelimited size and relative simplicity of operations among the clients served, and the nature of the Program as a community serviceactivity as opposed to being a for-profit enterprise.

23 As the Executive Partner informed the peer reviewer in advance of the site visit, due to the staffing structure the practiceexperiences 200% staff turnover a year. To overcome this obstacle, the Executive Partner and department chair gathered contactinformation of the students who participated in the engagements potentially subject to review in advance of the site visit by thepeer reviewer.

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The reviewer submitted the peer review findings to the Maryland State Board of Accountancy,which subsequently directed the Executive Partner to add a number of provisos to the practice.Those requirements included requiring all staff to complete 8 h of Continuing Professional Educa-tion (CPE) credits,24 documenting engagements using Thomson Reuters PPC SMART Practice AIDSsoftware, creating a separate practice quality control document, and periodically engaging anotherpracticing CPA to provide an independent quality control review. These features were incorporatedinto all engagements commencing the fall 2010 semester and reviewed by another CPA firm inearly 2011. The Firm provided the peer review administrator in Maryland, i.e., the MACPA, withdocumentation of all these activities in early 2011. The MACPA notified the Firm shortly thereafterthat these program modifications were accepted and program was in compliance. In addition to theabove-referenced practice changes, the Firm initiated the practice of staffing a QCT to ensure thatthe Engagement Teams meet performance and documentation standards during the conduct of theirengagements.

The Audit Internship Survey consists of nine questions and a comments section designed to assessindividual perceptions regarding the acquisition of various skills and abilities denoted as objectives forthe program. In June 2012 we solicited responses from the 271 participants in the program between2007 and 2012.25 One hundred nineteen usable responses (44%) came back within 4 weeks of the initialsolicitations. We used Oppenheim’s (1966, p. 34) early-late hypothesis to assess non-response bias byconducting independent sample t-tests on the mean scores for each of the nine questions between thefirst 20 and final 20 respondents. No statistically significant mean score differences emerged from theseanalyses (at p < 0.05), thus providing reasonable assurance that there was no significant non-responsebias associated with the ensuing analysis.

Table 3 presents the mean scores and standard deviations for the full sample and the subpopula-tions of participants who matriculated in the program both before and after the MACPA practicechanges went into effect in Fall 2010. As the full sample mean scores indicate, alums report enhance-ment in all nine skills and abilities surveyed. The same holds true for both the pre- and post-PeerReview participant groups. As is evident, the mean scores are higher for the post-Peer Review groupfor all except questions 7 and 8, but only on question 3 is the inter-group mean score differencestatistically significant. For this question, the post-Peer Review alums report a higher mean score thantheir predecessors in terms of the enhancement in their understanding of the importance of ethicalstandards as a result of dealing with confidential client information. We speculate that the additionalstructure and standardization of procedures to which the ‘‘post’’ group has been exposed may havecontributed to this difference, and as the cohort of participants in this group grows, we look forwardto evaluating their perceptions as to program effectiveness.

At the close of every engagement, the Executive Partner debriefs the client. As part of thisdebriefing, the Executive Partner asks the client representatives for feedback on the performanceof every staff member on the team that conducted their engagement using factors outlined onthe Self and Peer Review Evaluation Form discussed below (Exhibit E). In addition, the ExecutivePartner solicits feedback from each client on their overall satisfaction with the service providedby the Firm. Client feedback has been generally been very positive, evidenced in part by the factthat the Firm has grown to the point that it has 18 recurring clients and continues to take onnew clients every year.

The SU Auditing Internship Program has strong support from CPA firm partners and recruitersbased on feedback received by the Executive Partner and department chair. All on-campus recruitershave knowledge of the program and cite it as a factor in their consideration of SU students forinternship and permanent job positions, corroborating student feedback on the value of the auditing

24 The CPE hours were provided pro bono to the Firm by Becker Professional Education with whom the accounting departmentpartners in administering and staffing the summer Becker CPA Review Fast Pass program. The State of Maryland does not allowstudents to receive CPE credit for coursework taken as part of their degree program.

25 We solicited 179 individuals via email, and 92 by mail (due to lack of a current email address). Unfortunately, the mailingaddresses available to us were those listed as permanent addresses by each person at the time they matriculated in the program.We are uncertain as to how many of the mailed surveys actually reached their intended recipients in a timely manner as it is likelythat a significant percentage of these alums no longer live at home.

Table 3Auditing internship survey results.

Please indicate the level of effect youexperienced regarding each of thefollowinga

All alumni(n = 119)

Pre-peer reviewalumni (n = 80)

Post-peer reviewalumni (n = 39)

t-Value Prob. > tb

l r l r l r

1. How do you feel the auditinginternship client experienceaffected your self-confidence?

5.244 1.235 5.125 0.344 5.487 0.942 �1.701 0.092

2. How did your exposure to liveclients affect your appreciation ofthe client’s perspective?

5.597 0.994 5.487 1.019 5.821 0.914 �1.796 0.076

3. How did dealing with clients’confidential information influenceyour understanding of theimportance of ethical standardsfor accountants?

5.664 1.044 5.500 1.055 6.000 0.946 �2.604 0.011c

4. How was your effectiveness inpresenting, discussing, anddefending views in meetingsaltered over the course of theprogram?

5.297 1.193 5.278 1.260 5.333 1.060 �0.248 0.805

5. How did the group dynamics of theteam experience change youropinion of the value ofinterpersonal skills in the workenvironment?

5.538 1.163 5.450 1.135 5.718 1.213 �1.155 0.252

6. How were your listening skillsmodified by your interactions withclients and other team members?

5.373 1.019 5.300 1.072 5.526 0.893 �1.204 0.232

7. How was your classroomknowledge impacted bypersonally performing client dataanalysis and resolving clientproblems?

5.252 1.277 5.275 1.232 5.205 1.380 0.268 0.789

8. How was your ability to identifyand solve unstructured problemsaffected by program participation?

5.437 1.176 5.450 1.168 5.410 1.208 0.170 0.865

9. Overall, how do you rate yourauditing skill level as a result ofthe auditing internshipexperience?

5.302 1.246 5.195 1.288 5.513 1.144 �1.355 0.179

a Responses are based on a seven-point scale ranging from ‘‘1 = very diminished’’, to ‘‘4 = no change’’, to ‘‘7 = very enhanced’’.b Separate variances t-test statistics are reported as this measure is applicable when the assumption of equal variance is

violated.c Post-peer review alum mean score is significantly higher than that reported by Pre-peer review alums.

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internship experience with regard to job placement.26 In fact, recruiters often make a point of sharingpositive comments with faculty members about the favorable impressions that student make in recount-ing their auditing internship experiences.

The SU Auditing Internship is a graded course. The Executive Partner assigns grades to individualstaff members based on feedback received from clients, QCT members, Engagement Managers, theindividual, and other members of the individual’s Engagement Team. Feedback from each source is re-corded on the above-referenced Self and Peer Evaluation Form illustrated in Exhibit D by the respec-tive evaluators, with the exception of client feedback where the Executive Partner inputs the data onto

26 Over the past several years, a significant percentage of SU accounting students have procured permanent positions before orshortly after graduation. For example, as of mid-October 2012, data for the 32 individuals who earned their accounting degrees inMay 2012 indicate that five had already procured full-time positions with KPMG, six with McGladrey, two with Clifton/Larsen/Allen, seven with regional accounting firms, two at private organizations, and one as a state auditor. In addition, one studentprocured a full-time internship at McGladrey.

Exhibit E.

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the form for each staff member based on client feedback obtained during the aforementioned exitinterview at the close of the engagement. The Executive Partner determines QCT member grades ina similar manner, albeit with input limited to feedback received from direct observation of perfor-mance, and that received from self and peer review of individual QCT members. Though a rare occur-rence, there have been a few occasions where a staff member has failed the internship and had torepeat the course in a subsequent semester.

In summary, the assessment data provide compelling evidence that the SU Auditing InternshipProgram is meeting its objectives. Moreover, student, client, and recruiter comments, as well as

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placement data, indicate that this is a value-added program with a material payoff in terms of the corecapabilities that students obtain and are able to utilize as they transition from the classroom to theworkplace.

6. Recommendations for potential adopters

Based on our experience with the SU Auditing Internship Program as it has evolved over the past20 years, we recommend that other schools consider providing similar opportunities for their stu-dents. Potential clients can come from a variety of not-for-profit organizations. Operationally, Execu-tive Partners would need to be professionally qualified, i.e., possess active CPA licenses and sufficientauditing experience with not-for-profit clients.27 If individuals with these credentials are not repre-sented among a school’s regular faculty, a current or recently-retired CPA at the partner or manager levelwith relevant experience might be solicited to serve in this capacity as an adjunct faculty member.Schools might also consider a shared Executive Partnership if more than one qualified faculty memberis on staff to better ensure program continuity in the event of retirement or unanticipated turnover.In addition, appropriate resources as outlined above would be needed to support ongoing operations.Our experience also indicates that the program is more viable structured as a separate course as opposedto structuring it as a supplement to an existing auditing course. The workload on students and the leadfaculty member, as well as the logistics of running the program, justify course status for the internship.

Those daunted by the logistics of setting up and running a program as sophisticated as that at SUare encouraged to consider a more conservative approach. Potential adopters might consider startingwith limited scope consulting projects as we did initially. As experience is gained, program adminis-trators will find that they are gradually be able to service clients with more complex needs. If ourexperience can serve as a guide, with dedication and commitment, other schools can implementand grow audit internship programs that meet their specific needs.

The SU Auditing Internship class size over the past six semesters ending spring 2012 has rangedfrom 18 to 31 students, with mean of just under 26 students. Thus the Department has only had to offeronly one section of the course each semester. However, this should not deter larger schools, e.g., thosewith 100–200 senior accounting students, from considering the adoption of a similar program. Whilethere may not be sufficient faculty and/or support resources to allow all accounting majors to partic-ipate in the program at the outset, larger schools may consider initially offering the course as an elec-tive option. The course, if properly implemented and effectively functioning, should be a great skillenhancer and resume builder for student participants. Similarly, we encourage smaller rural schoolswith fewer potential clients to explore opportunities to service local non-profit organizations. Again,if resource or client availability limitations preclude implementation of a full-scale program, limitedscope projects can still provide excellent practical learning experiences for participating students.28

With respect to legal liability, as noted above, the Executive Partner maintains professional liabilityinsurance. Moreover, engagement letters are written on the Executive Partner’s private letterhead andare signed directly by the Executive Partner and the client representatives. Readers concerned aboutany potential legal issues related to conducting similar programs at their institution are encouraged toconsult their university general council for advice.

7. Summary

Accounting programs face the challenge of providing an educational experience for students thatmeets the evolving needs of the auditing profession. We believe that the SU Auditing Internship Pro-

27 We do not use the term ‘‘professionally qualified’’ in necessarily the same context as defined in Section 10, pp. 45-46 of AACSBInternational’s Eligibility Procedures and Accreditation Standards for Business Accreditation (2012). Case in point, our auditinternship instructor (i.e., Executive Partner) possesses a doctoral degree in accounting and was hired by the university asacademically qualified faculty member.

28 Those concerned about potential ‘‘territorial’’ conflicts with local CPA firms that perform accounting and attest services to areanot-for-profit organizations should note that such issues are not likely to arise if clients are carefully screened and selected. In thecase of the SU program, the client base consists of organizations whose limited financial wherewithal would otherwise precludethe engagement of an outside CPA firm to service their needs.

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gram represents a tested, validated, and cost effective means of meeting that challenge and transition-ing students from the classroom to the workplace. Moreover, the program is designed to impart rel-evant core competencies.29 We believe that an auditing internship program could be implemented invarious forms by other accounting programs. To guide others who might consider an internship pro-grams, we offer a detailed description of all facets or our program including the structure, staffing, oper-ational logistics, resource requirements, cost and fee structure, and assessment.

One final note: skeptics might reason that in-house internship programs of this nature are super-fluous, basing this conclusion on the fact that students at their schools have opportunities to work ininternship positions at external auditing firms. We counter by noting that only a fraction of theaccounting majors at any particular school get to participate in these external auditing internships,whereas in-house programs can be designed to accommodate all accounting majors. Furthermore,the depth and breadth of the hands-on experience obtained in an in-house program can vastly exceedthat in the typical one-semester (or summer) internship at an external firm. In our case, EngagementTeam staff members proceed through the entire engagement process from start to finish, whereas theexperience for our students who intern at outside audit firms is considerably more limited in scope.30

These potential advantages of in-house programs should be given due consideration as part of programadoption decisions.

Acknowledgements

We wish to thank the editor-in-chief, David E. Stout, and the two anonymous reviewers for theirmany valuable comments and suggestions on the manuscript during the review process.

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