Description
The purpose of this paper is to explore the possibility of using a movie to teach auditing
students about internal controls.
Accounting Research Journal
Rogue Trader: using a movie to teach a large auditing class
Warren Maroun Tasneem J oosub
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To cite this document:
Warren Maroun Tasneem J oosub, (2012),"Rogue Trader : using a movie to teach a large auditing class",
Accounting Research J ournal, Vol. 25 Iss 2 pp. 100 - 112
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Rogue Trader : using a movie
to teach a large auditing class
Warren Maroun and Tasneem Joosub
School of Accountancy, University of the Witwatersrand,
Johannesburg, South Africa
Abstract
Purpose – The purpose of this paper is to explore the possibility of using a movie to teach auditing
students about internal controls.
Design/methodology/approach – A ten-point questionnaire and Chi-square test are used to
explore self-perceived cognizance of control awareness, design, testing, and application.
Findings – A movie dealing with practical internal control issues may be a valuable part of audit
instruction techniques.
Research limitations/implications – The research is exploratory and non-longitudinal. No effort
is made to quantify changes in assessment or post academic work performance.
Practical implications – Given the increased relevance of a sound system of internal controls, audit
and accounting educators have a practical and moral duty to provide sound instruction on internal
control design, testing and application. Using a movie to complement traditional lectures may be
useful in this regard.
Originality/value – Noting the growing relevance of a sound system of internal controls for
organizations, the research explores a means of making lectures on internal controls “come alive”
by introducing practical considerations into the audit classroom.
Keywords South Africa, Universities, Accounting, Auditing, International standards,
Teaching methods, Lectures, Film, Large classes
Paper type Research paper
1. Introduction
Many of South Africa’s universities have a far greater number of undergraduate than
post-graduate students with enrolments in commerce courses, in particular, expected
to grow over the next several years. Programmes aimed at training the next generation
of Chartered Accountants are not exceptions, leading to a number of challenges for
accounting lecturers (South African Institute of Chartered Accountants (SAICA), 2010;
Hesketh, 2011; Steenkamp et al., 2009; Joosub et al., 2012).
Most relevant is the need to manage the practical dif?culties of dealing with classes
in excess of 200 students while maintaining a suf?ciently high level of teaching quality
(Bongey et al., 2005). Unlike smaller classes where the lecturer may be able to afford
each student speci?c attention and personal support, larger classes make this a virtual
impossibility. The issues of maintaining discipline, ensuring a reasonable level of class
participation (Cope and Staehr, 2005; Toth, 2002; Wachtel, 1998; Bongey et al., 2005),
and being able to engage with a multitude of different learning styles are well
documented challenges for teaching large classes (Schlee, 2005; Stork, 2003).
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1030-9616.htm
The authors would like to acknowledge the invaluable feedback which they received from the
attendants of the Teaching Large Classes Symposium, Johannesburg, November 2011.
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25,2
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Accounting Research Journal
Vol. 25 No. 2, 2012
pp. 100-112
qEmerald Group Publishing Limited
1030-9616
DOI 10.1108/10309611211287297
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Making these issues all the more urgent is the emphasis placed on quality-training
by SAICA. Accounting education is no longer about rote learning in experimental
settings far removed from the realities of life as a Chartered Accountant. The
competency framework (SACIA, 2010) makes it clear that students need more than just
a basic level of understanding of each of the core disciplines, namely: Financial
Accounting, Auditing, Taxation, and Managerial Accounting and Finance. What is
learned at university must place the student in good stead for three years of practical
training and, eventually, life as a professional accountant. As a result, a sound level of
technical competency is required, characterised by both an awareness of relevant
principles, as well as the ability to apply actively those principles in different settings.
At the same time, a set of pervasive qualities or skills, including professionalism,
ethics, leadership and a commitment to life-long-learning, needs to be instilled in the
accounting graduate (Hesketh, 2011; SAICA, 2010; Steenkamp et al., 2009).
Within this context, this research examines howa movie, Rogue Trader, can be used
as a complementary aid for teaching large accounting classes. Savage et al. (2008)
explore how a movie can be used to inform students of the consequences of a weak
control environment, and make a valuable contribution to students’ understanding of
key auditing issues. This paper concurrently con?rms the ?ndings of prior research
while also extending on it by exploring the use of a movie for teaching large classes
of students in an African setting. An experimental sample involving 480 ?nal-year
auditing students is used to explore how the same movie, Rogue Trader, can be used to
enhance students’ learning experience in an auditing context by making what may
otherwise appear only as abstract or esoteric principles, “come alive” in a real-world
setting. The research ?nds that using a movie to complement the traditional approach
of employing lectures and tutorials as a formal means of instruction adds to students’
understanding of formal auditing principles and provides an appreciation of how these
principles may be relevant in a professional setting. This ?nding appears to hold in the
context of teaching large classes, implying that a movie may be a cost effective means
of engaging with students without requiring a massive shift in mindset on the part of
either educators or learners. Accordingly, the research may be relevant for accounting
academics and lecturers grappling with meeting the demands of the competency
framework (SAICA, 2010) within the limitation of dealing with large classes.
2. Literature review
Prior research provides valuable insights to how to vary the structure of a “traditional”
lecture in order to make the learning experience more informative, relevant, and
interesting. For example, Healy and McCutcheon (2008) in a qualitative study, examine
accounting students’ experiences of active learning approaches. They document a
number of advantages associated with this teaching strategy, including a greater
propensity for life-long learning, better team-work and communication skills and an
improved ability to engage in “self-learning”.
Brickner and Etter (2008) provide another example of the successful application of
more interactive instruction techniques. An experimental research style is used to
document the effect of using “guidance notes”. These notes are given to students and
effectively constitute an incomplete set of lecture notes which they are expected to
complete during the lecture. For this purpose, Brickner and Etter (2008) recommend
decomposing the lecture into short sections or components, each lasting approximately
Using a movie
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15 minutes, to allow students an opportunity to re?ect on the material, ask relevant
questions, and complete the notes. “Mini-quizzes”, the use of short question and answer
sessions, quick summaries of the class provided by students at the end of the lecture,
and short homework assignments are other examples of how varied approaches to
instruction are incorporated into the otherwise formal lecture.
Out-of-class active learning activities complement this approach and include
attending business student organization meetings, preparing article summaries,
and reviewing annual ?nancial reports of different listed companies (Brickner and Etter,
2008) each of which may be effectively supported by anIT-platform. Lavoie and Rosman
(2007), for instance, make use of a variety of IT-supported functions in an online
postgraduate accounting course. Courses are designed to accommodate multiple
learning styles, maximize the learners’ experience and, ultimately, ensure that a range of
learning objectives is met. Activities include group tasks involving information-sharing
such as online threaded discussions, short course assignments and “pop quizzes”.
Greenawalt and Stinnett (1992) provide an accounting and auditing speci?c
example of using out-of-class learning activities. They require their students to ?nd
a “client” for their auditing course. The students are expected to apply the relevant
audit theory, to which they were exposed in lectures, in a case-study environment.
Learners, in accordance with the relevant auditing standards, are required to gain an
understanding of their “client”, its business and risk environment and internal
control systems. This task is followed by formal documentation of relevant controls
and designing techniques for testing the design, the implementation and the operating
effectiveness of the controls. The assignment “culminates” in a type of “report to
management”, as well as working papers available for “review” by the lecturer.
In each of the above examples, accounting instructors are faced with the challenge
of making potentially complex and abstract principles more manageable and
stimulating for students while demonstrating relevance in a real-world setting.
A practical approach is especially important as many auditing concepts tend to be
dif?cult for accounting students to grasp due to a lack of business experience and
dif?culty in physically “demonstrating” auditing practice, techniques, and principles
(Fernandes, 1994). For example, how can an auditing lecturer “show” students what
internal controls are, actively highlight how these controls should be tested, and
illustrate the effect of an internal control failure? Greenawalt and Stinnett (1992) provide
one possible solution. According to Savage et al. (2008), using a movie to make an
auditing lecture “come alive” may be another alternative.
2.1 Why students need to have an understanding of internal controls
In terms of the International Standard on Auditing (ISA) 200 (International Auditing
and Assurance Standard Board (IAASB), 2010a), the objective of an audit is to express
an opinion on a client’s ?nancial statements. Doing so requires the auditor to gather
suf?cient appropriate audit evidence to support any conclusions reached on the extent
to which?nancial statements comply, inall material respects, withthe respective ?nancial
reporting framework (IAASB, 2010a). As part of this process, ISA 315 (IAASB, 2010b)
requires auditors to gain a thorough understanding of the client, its business and risk
environment and internal control systems operating at both the entity and transactional
level. Following this analysis, the auditor is expected to respond to the assessed risk
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of misstatement, whether due to fraud or error, which would likely necessitate formal
testing of a client’s controls, at least to some extent (IAASB, 2010c; Cohen et al., 2002).
Outside the external audit arena, the relevance of internal controls continues to hold,
with risk assessment and management being an integral part of sound corporate
governance (Integrated Reporting Committee of South African (IRC), 2011; European
Commission, 2010; Solomon, 2010; Botten, 2009; King III, 2009; PwC, 2009a, b). In terms
of the Committee of Sponsoring Organizations’ (COSO) internal control framework,
entities have three objectives: good operations, compliance with rules and regulations
and good ?nancial reporting. To achieve these objectives and minimise business risks
an entity must have a sound internal control system in place (Messier and Boh, 2007;
Solomon, 2010). For example, good internal controls ensure ef?ciency and reliability
of operations, minimisation of costs, reliable internal and external reporting,
compliance with laws and regulations and mitigation of the risk of misappropriation
of assets or fraud (Botten, 2009; IAASB, 2010b; Cohen et al., 2002).
With the introduction of codes on corporate governance (Solomon, 2010), most
notably King III (2009), organizations are increasingly expected to broaden their
appreciation and application of internal control systems. Comprehensive internal
control frameworks are no longer about ensuring ?nancial ef?ciency but need to be
cognizant of risks relating to safety, social, health, environmental, and economic factors
(IRC, 2011; Solomon, 2010; King III, 2009). This broad approach to control design,
assessment, and testing is also fully consistent with the literature on governance and
agency theory (Solomon, 2010; Cohen et al., 2002). The IRC (2011), the European
Commission (2010), Lin and Liu (2010), Seifert et al. (2010), Solomon (2010), McMillan
(2004) and Roberts (2001) are examples of the more recent sources pointing to the
growing complexity of principal-agent relationships and the need for ever more
comprehensive control systems. Ultimately the professional and academic literature
highlights the growing importance of systems of checks and balances that organizations
ignore at their peril (Solomon, 2010; Messier and Boh, 2007).
Accordingly, educators have a responsibility to train accounting and auditing
students to be able to appreciate both the relevance of internal controls and, hence,
design and test these controls (SAICA, 2010; Low et al., 2008; Savage et al., 2008).
In South Africa, this must be done against the backdrop of having to deal with class
sizes often in excess of 200 students. At the same time, educators must grapple with
expanding syllabi (SAICA, 2010) and ever more complex business environments
of which students need to be made aware (consider: Low et al., 2008; McMillan, 2004).
These challenges inevitably necessitate innovative techniques for ensuring a rich
learning environment. As summarised by Gorman and Hargadon (2005, p. 77):
[. . .] during the next decade we [will see a] continued and accelerated shift from primarily
content based education to one that puts heavy emphasis on skill development in conjunction
with the content. Since it is not feasible to teach or learn all of the content in the accounting
discipline in a four-or ?ve year program, it is imperative to equip students with the research
skills and problem solving capabilities to deal with an ever-expanding knowledge base.
2.2 Using a movie as an example of active learning in an auditing context
It is often said that the one way of improving the quality of the learning experience is by
reducing the class size (Herington and Weaven, 2008; Bryant, 2005; Johnson et al., 2003;
Ehrenberg et al., 2001; Carbone, 1999). While this may be the case, there are a number
Using a movie
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of important policy considerations which need emphasis. For example, reducing class
sizes in the context of growing student numbers means more classes, which invariably
amounts to having to increase the number of lecturers. This means that universities
must either re-deploy staff fromresearch pursuits or, alternately, increase the number of
lecturing academics. In both cases, there are ?nancial implications. More staff translates
into higher salary costs. Less research results in loss of grants and prestige, directly
correlated with placement demands and fees, as an opportunity cost (Dillard, 2008;
Harmon, 2006; Ehrenberg et al., 2001). In addition, many institutions have become more
mindful of increased learner volumes and the practical dif?culty of ?nding larger
numbers of suitably quali?ed lecturers (Ehrenberg et al., 2001). As a result, the optimal
solution for improving student learning may not necessarily be smaller classes.
Pedagogically, prior research has not de?nitively con?rmed that smaller class sizes
necessarily produce materially higher quality graduates (Dillard, 2008; Harmon, 2006;
Ehrenberg et al., 2001). Accordingly, this study takes a different approach to improving
students’ understanding of the content and importance of a client’s control environment.
There is considerable evidence of the possible bene?ts of a less traditional
means of instruction for enhancing student learning (Herington and Weaven, 2008;
Bryant, 2005; Ehrenberg et al., 2001), as discussed above. Using a movie to complement
lectures and tutorials may be one such approach (Savage et al., 2008). As explained
by Savage et al. (2008), and alluded to by Herington and Weaven (2008), integrating
a topic-speci?c movie into traditional instruction models may be a means of engaging
business students and demonstrating the practical relevance of lecture material so that
students view time spent at university as a precursor to a meaningful career and
integral to professional development (SAICA, 2010).
The researchers surmised that using a movie as a medium of instruction in an
audit-speci?c setting could achieve comparable results. The approach should provide
a modern and interactive learning strategy that ought to resonate with young auditing
students (SAICA, 2010). The chosen movie, Rouge Trader, by virtue of its ?nancial
and corporate setting, should situate students in the “front lines” of daily professional
life, allowing the control environment lecture material to make sense beyond a purely
academic context (SACIA, 2010; Johnson et al., 2003; Kreber, 2001; Maltby, 2001).
This practical base is complemented by the opportunity for an out-of-class cooperative
assignment which promotes interaction with peers, as well as a sharing of perceptions
and ideas, and is expected to directly enhance the quality of learning for large classes
(Bryant, 2005). Concurrently, the approach demonstrates that the lecturer expects a more
thorough, practical awareness of the control environment (HeringtonandWeaven, 2008).
3. Methodology
3.1 The movie
Rogue Trader is a British movie produced by Miramax (1999). It is approximately
100 minutes in length, is set in an accounting-speci?c context and employs a relatively
simple plot that makes it ideal for teaching a large class (Savage et al., 2008).
The movie is based on the collapse of Barings Bank due to fundamental control
weaknesses. The ?lm demonstrates a classic agency-theory problem. Employee,
Nick Leeson, is vested with certain trading responsibilities on behalf of the bank
but places self-gain before the interests of his employer and distant shareholders.
A failure to introduce a system of checks and balances to manage divergent interests
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(Solomon, 2010; Jensen and Meckling, 1976), led to loss by shareholders and, ultimately,
the collapse of the bank.
Students were lectured on internal controls using ISA 315 (IAASB, 2009b) as their
prescribed reading. To supplement their knowledge students were then required to watch
Rogue Trader outside of class. Three viewing arrangements were, however, made for
students who could not access the DVD. The instructions for the homework assignment
were given to students at least one week prior to viewing the movie. Students were
encouragedtostudythe case material beforehandsoas to be able to understandthe salient
features of the movie. Students were also advised to take notes during the screening.
3.2 Method and data collection
The study was conducted in three stages spanning ?ve weeks with ?nal-year auditing
students at a South African University. A questionnaire was used to determine students’
awareness of internal controls before the lecture andexposure tothe DVD. The surveywas
tailored to “measure” quantitatively the students’ perception of internal control.
The questionnaire also allowed students to remain anonymous. A ?ve-point Likert scale
was employed to measure the responses to ten questions on internal controls. Survey
questions were based on the content of ISA 315 and prior literature, and were designed
toassess students’ “base” knowledge of controls andtheir perceivedimportance (Lowet al.,
2008; Savage et al., 2008). Each question required a response ranging from “1” (strongly
disagree) to “5” (strongly agree) (adapted from Creswell, 2009; Savage et al., 2008).
Of a total class size of 480, an average of 331 students participated in this exercise
(69 percent response rate). The survey was piloted with 17 students for appropriateness
and was subject to review for ethical suitability (Creswell, 2009; Leedy and Ormrod,
2001). No material changes to the survey were required. The survey questions (adapted
from Savage et al., 2008) appear below:
(1) Do you as a student appreciate the importance of internal controls?
(2) Do you know what makes up a client’s control environment?
(3) Do you know what COSO is and how it relates to the South African context?
(4) Could you identify which controls are best able to safeguard speci?c
transactions/balances/resources?
(5) Would you be able to identify control implementation weaknesses?
(6) Could you design appropriate tests of controls?
(7) Can you differentiate between controls over business risks and audit risk?
(8) Can you identify controls to achieve more reliable ?nancial reporting?
(9) Do you understand how controls can be used to drive business strategy?
(10) Can you identify controls to achieve improved sustainability?
Following the ?rst survey, students were provided with an introductory lecture, lasting
two hours, on internal controls. The requirements of ISA 315 were discussed at an
introductory level. The lecture was a “traditional” one, meaning that students received
hand-outs, attended the lecture, took notes, and responded to introductory level
questions posed by the instructor.
Students were then told to watch Rogue Trader during their study break. They were
given details of their “homework assignment” and informed that the assignment would be
Using a movie
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assessed and count 5 percent towards their year mark. To motivate further a deep
approachto learning, the assignment was speci?callyconstructed to examine the material
covered in the movie. Asimilar approach is employed by Savage et al. (2008) to encourage
meaningful participation. The participation rate for the assignment was 73 percent
although only 69 percent of students completed the assignment and both surveys.
The deliverable was made available three weeks in advance (Creswell, 2009;
Savage et al., 2008; Cohen et al., 2002) and was piloted to ensure that it addressed the
issues inherent in ISA 315 and was suf?ciently rigorous for entry-level professional
accountants (Creswell, 2009; Leedy and Ormrod, 2001). A second survey, identical to
the ?rst, was then conducted among the same group of students. The purpose of the
second survey was to explore the effect, if any, that the movie had on students’
appreciation of the relevance of controls.
Tables in the next section showmean responses before and after the movie is viewed,
with x
2
test results comparing responses among students before and after viewing the
movie. This method is appropriate for dealing with responses for non-equal ordinal
samples not necessarily distributed normally. The research assumes that students who
did not respond initially were a randomsubset of all the students and that non-responses
are not related to students’ understanding of internal controls. For the purposes of this
study, the signi?cance level for test results is p-values less than 0.05.
4. Results
The results of the surveys are summarised below.
4.1 Control awareness
The ?rst three survey questions concentrated on a broad awareness of control
relevance:
(1) Do students appreciate the importance of internal controls?
(2) Do students know what makes up a client’s control environment?
(3) Do students knowwhat COSOis and howit relates to the South African context?
Responses to these three survey questions before movie (BM) and after movie (AM)
exposure to the DVD are summarised in Table I.
Table I shows a general improvement in control awareness. The mean responses
to questions and 3 increased by 15 and 83 percent, respectively, and these differences are
statistically signi?cant. This result implies that, overall, the movie served as an effective
Question
Mean
response –
BM
Mean
response –
AM
Percentage
change
Descriptive
statistics Comments
Q1. Appreciation of
internal controls
4.20 4.24 1 x
2
(4,954) ¼ 5.94,
p ¼ 0.203
Not
signi?cant
Q2. Composition of control
environment
3.28 3.77 15 x
2
(4,944) ¼ 28.6,
p , 0.001
Signi?cant
Q3. Awareness of COSO
and relevance for
South Africa
1.75 3.21 83 x
2
(4,941) ¼ 49.0,
p , 0.001
Signi?cant
Table I.
Survey questions 1-3
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technique for improving awareness of what makes up a control environment and how
COSO relates to the South African context. Interestingly, results for the ?rst question
(do students appreciate the importance of internal controls) were not statistically
signi?cant, showing only a marginal increase (1 percent) in mean responses before and
after viewing the movie.
The seemingly contradictory results suggest that the students were aware of the
importance of internal controls at the outset, as indicated by the high scores for
question 1 before exposure to the DVD. The results for questions 1-3 are largely
consistent with the ?ndings of Savage et al. (2008) who found a positive correlation
between viewing the movie and a general awareness of the importance of controls.
4.2 Control design and testing
Survey questions 4-6 concentrate on the design and testing of controls to determine:
(4) Could students identify which controls are best able to safeguard speci?c
transactions/balances/resources?
(5) Would students be able to identify control implementation weaknesses?
(6) Could students design appropriate tests of controls?
Results for questions 4-6 are presented in Table II and show that mean responses
increasing between 16 and 20 percent. For all three questions the change is statistically
signi?cant implying that, overall, viewing the movie assisted students in identifying
control weaknesses, identifying controls best suited to safeguard speci?c
transactions/balances/resources, and how these controls should be tested.
Students commented that the movie had been worthwhile because it provided them
with “real-world” examples of the issues that they were exposed to in lecture materials
and the professional standards. In other words, the movie helped clarify the audit
of controls, providing the students with practical insights that they could then apply in
different contexts.
As with the control awareness question results, these results imply that using
a movie improved students’ ability to identify, evaluate the design of and testing
operating effectiveness of controls. These results are also consistent with Savage et al.
(2008) who found that control design, identi?cation and test abilities improved after
students viewed Rogue Trader. This ?nding is also important for SAICA and
Chartered Institute of Management Accountants (CIMA), who state that case studies
and exposure of students to more practical issues can assist in “demystifying” controls
and risk management aspects of the respective syllabi.
Question
Mean
response –
BM
Mean
response –
AM
Percentage
change
Descriptive
statistics Comments
Q4. Identi?cation of
suitable controls
3.14 3.63 16 x
2
(4, 942) ¼ 17.1,
p ¼ 0.002
Signi?cant
Q5. Identi?cation of
controls
3.16 3.78 20 x
2
(4, 948) ¼ 23.6,
p , 0.001
Signi?cant
Q6. Control design 2.84 3.39 19 x
2
(4, 947) ¼ 15.3,
p ¼ 0.004
Signi?cant
Table II.
Survey questions 4-6
Using a movie
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4.3 Control application
The ?nal four questions explore the applicationof controls, consideringwhether students
appreciate the relevance of controls outside of an external audit context, as follows:
(7) Can students differentiate between controls over business risks and audit risks?
(8) Can students identify controls to achieve more reliable ?nancial reporting?
(9) Do students understand how controls can be used to drive business strategy?
(10) Can students identify controls to achieve improved sustainability?
Table III presents the results for the four control application questions.
The mean responses for questions 8-10 increased by 15, 15, and 14 percent,
respectively, before and after viewing the movie, and these differences are statistically
signi?cant. Overall, this ?nding indicates that control application was improved by
using a movie as part of the instructional process. In particular, students seem to be
better able to identify controls that form a basis for ensuring reliable ?nancial
reporting and to appreciate how controls interact with business strategy. The same
is true of identifying controls that can improve the sustainability of a ?rm.
Question 7, however, showed only a marginal increase in mean response (4 percent)
suggesting that the effect of the movie with respect to students’ ability to differentiate
between audit and business risks was not material. In considering possible explanations
for this result, one reason could be that the plot of Rogue Trader was not totally
conducive to differentiating between audit and business risks. This highlights one of
the practical challenges of using a movie as part of auditing instruction: no single movie
addresses all of the issues that the lecturer may wish to deal with. Nevertheless, students
reported that the movie assisted in “internalizing” the relevant theory. Most importantly,
and as found by Savage et al. (2008), it showed students that auditing, and in particular,
internal controls, are not just academic concepts.
5. Conclusion
Prior literature points to the increased importance of internal controls both for
organizations as part of the drive for improved corporate governance and as part of the
external audit process. This means that it is paramount that young accounting
graduates, as prospective employees of these organizations, or as future auditors,
Question
Mean
response –
BM
Mean
response –
AM
Percentage
change
Descriptive
statistics Comments
Q7. Identi?cation of controls
over business or audit
risks
3.66 3.80 4 x
2
(4, 947) ¼ 2.80,
p ¼ 0.593
Not
signi?cant
Q8. Controls for reliable
?nancial reporting
3.25 3.73 15 x
2
(4, 948) ¼ 16.7,
p ¼ 0.002
Signi?cant
Q9. Understanding of controls
driving business strategy
3.25 3.73 15 x
2
(4, 943) ¼ 10.1,
p ¼ 0.038
Signi?cant
Q10. Identifying controls to
improve sustainability
3.03 3.46 14 x
2
(4, 952) ¼ 16.8,
p ¼ 0.002
Signi?cant Table III.
Survey questions 7-10
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have a sound understanding of the relevance of internal controls. For this reason,
SAICA is placing increasing emphasis on the ability of students to design, analyze, and
test a client’s ?nancial reporting control system.
Savage et al. (2008) ?nd that using a movie, Rogue Trader, improved their students’
appreciation of the importance of internal controls. This study, as with so many others
in the education ?eld, was carried out with relatively smaller class sizes than those
encountered by South African lecturers. The purpose of this paper was, therefore,
to explore whether using a movie can still have a positive effect on students’
appreciation of internal controls where class sizes are very large.
Based on a sample of students at a leading South African university, this study used
the same movie as part of the process of instructing students on the importance of
controls, as well as on the design, testing and application of controls. The results
appear consistent with those found by Savage et al. (2008). By providing insights into
a quasi-real world functioning of internal controls, movies like Rouge Trader, have the
potential to reinforce the relevance of internal controls for students. At the same time,
they provide a contextually and practically rich account of how internal controls
function in organizations, reinforcing lecture material on the design and testing
of internal controls. In a similar vein, students appear to have developed an improved
appreciation of internal control application, reporting an enhanced understanding of
how controls can be used to drive business strategy or sustainability, and to a lesser
extent, the key difference between controls over audit and business risks. As such,
the research reinforces the arguments raised by Savage et al. (2008) – that using
a movie can improve students’ understanding of auditing issues.
Unlike this prior research, however, this paper has examined the relevance of using
a movie as a medium of instruction with considerably larger classes. The research
?ndings imply that using a movie provides lecturers with a means of engaging
students in a practical setting. It also requires a limited investment in terms of time
and capital, offering an affordable, realistic approach for challenging larger bodies of
students and reinforcing relatively generic lectures and tutorials. Perhaps most
important, using a movie does not require a paradigm shift in terms of use of
technology by either the educator or learner. For these reasons, it may prove highly
useful for lecturers wishing to introduce students to alternate means of instruction.
These conclusions should, however, be considered in light of the inherent limitations
of this research. Most importantly, the learning process is also a highly complex one.
This paper has taken a relatively simple approach to exploring whether or not using
a movie, in conjunction with formal lecturers, can make a valuable contribution for
students. No effort has been made to test how results differ when gender, age,
socio-economic level, or cultural come into play. In addition, Rogue Trader is a fairly
dated movie. Whether or not a more modern movie, including the use of additional
information technology to complement the use of a movie, would have materially altered
the ?ndings was not speci?cally considered.
The research is, therefore, more exploratory in nature, merely highlighting
expectations and implying trends in student learning. Future research may seek to test
the relationship between varied instructional instruments and student learning in
a more controlled setting. Replicating this study in different South African universities
and with different courses could also prove insightful.
Using a movie
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Finally, the need for more interpretive research should not be lost sight of.
Methodological or theoretical eclecticism could highlight the operation of additional,
previously overlooked, variables that impact the teaching process. For instance, how
students actually internalize the use of a movie in a traditional tertiary environment
could provide rich and highly interesting perspectives on accounting education. Amore
critical stance may also be possible, such as an exploration of whether or not students
regard the use of alternate means of instruction as useful or simply “technological
grandstanding” on the part of lecturers.
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doc_490298068.pdf
The purpose of this paper is to explore the possibility of using a movie to teach auditing
students about internal controls.
Accounting Research Journal
Rogue Trader: using a movie to teach a large auditing class
Warren Maroun Tasneem J oosub
Article information:
To cite this document:
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Accounting Research J ournal, Vol. 25 Iss 2 pp. 100 - 112
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Rogue Trader : using a movie
to teach a large auditing class
Warren Maroun and Tasneem Joosub
School of Accountancy, University of the Witwatersrand,
Johannesburg, South Africa
Abstract
Purpose – The purpose of this paper is to explore the possibility of using a movie to teach auditing
students about internal controls.
Design/methodology/approach – A ten-point questionnaire and Chi-square test are used to
explore self-perceived cognizance of control awareness, design, testing, and application.
Findings – A movie dealing with practical internal control issues may be a valuable part of audit
instruction techniques.
Research limitations/implications – The research is exploratory and non-longitudinal. No effort
is made to quantify changes in assessment or post academic work performance.
Practical implications – Given the increased relevance of a sound system of internal controls, audit
and accounting educators have a practical and moral duty to provide sound instruction on internal
control design, testing and application. Using a movie to complement traditional lectures may be
useful in this regard.
Originality/value – Noting the growing relevance of a sound system of internal controls for
organizations, the research explores a means of making lectures on internal controls “come alive”
by introducing practical considerations into the audit classroom.
Keywords South Africa, Universities, Accounting, Auditing, International standards,
Teaching methods, Lectures, Film, Large classes
Paper type Research paper
1. Introduction
Many of South Africa’s universities have a far greater number of undergraduate than
post-graduate students with enrolments in commerce courses, in particular, expected
to grow over the next several years. Programmes aimed at training the next generation
of Chartered Accountants are not exceptions, leading to a number of challenges for
accounting lecturers (South African Institute of Chartered Accountants (SAICA), 2010;
Hesketh, 2011; Steenkamp et al., 2009; Joosub et al., 2012).
Most relevant is the need to manage the practical dif?culties of dealing with classes
in excess of 200 students while maintaining a suf?ciently high level of teaching quality
(Bongey et al., 2005). Unlike smaller classes where the lecturer may be able to afford
each student speci?c attention and personal support, larger classes make this a virtual
impossibility. The issues of maintaining discipline, ensuring a reasonable level of class
participation (Cope and Staehr, 2005; Toth, 2002; Wachtel, 1998; Bongey et al., 2005),
and being able to engage with a multitude of different learning styles are well
documented challenges for teaching large classes (Schlee, 2005; Stork, 2003).
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1030-9616.htm
The authors would like to acknowledge the invaluable feedback which they received from the
attendants of the Teaching Large Classes Symposium, Johannesburg, November 2011.
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Accounting Research Journal
Vol. 25 No. 2, 2012
pp. 100-112
qEmerald Group Publishing Limited
1030-9616
DOI 10.1108/10309611211287297
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Making these issues all the more urgent is the emphasis placed on quality-training
by SAICA. Accounting education is no longer about rote learning in experimental
settings far removed from the realities of life as a Chartered Accountant. The
competency framework (SACIA, 2010) makes it clear that students need more than just
a basic level of understanding of each of the core disciplines, namely: Financial
Accounting, Auditing, Taxation, and Managerial Accounting and Finance. What is
learned at university must place the student in good stead for three years of practical
training and, eventually, life as a professional accountant. As a result, a sound level of
technical competency is required, characterised by both an awareness of relevant
principles, as well as the ability to apply actively those principles in different settings.
At the same time, a set of pervasive qualities or skills, including professionalism,
ethics, leadership and a commitment to life-long-learning, needs to be instilled in the
accounting graduate (Hesketh, 2011; SAICA, 2010; Steenkamp et al., 2009).
Within this context, this research examines howa movie, Rogue Trader, can be used
as a complementary aid for teaching large accounting classes. Savage et al. (2008)
explore how a movie can be used to inform students of the consequences of a weak
control environment, and make a valuable contribution to students’ understanding of
key auditing issues. This paper concurrently con?rms the ?ndings of prior research
while also extending on it by exploring the use of a movie for teaching large classes
of students in an African setting. An experimental sample involving 480 ?nal-year
auditing students is used to explore how the same movie, Rogue Trader, can be used to
enhance students’ learning experience in an auditing context by making what may
otherwise appear only as abstract or esoteric principles, “come alive” in a real-world
setting. The research ?nds that using a movie to complement the traditional approach
of employing lectures and tutorials as a formal means of instruction adds to students’
understanding of formal auditing principles and provides an appreciation of how these
principles may be relevant in a professional setting. This ?nding appears to hold in the
context of teaching large classes, implying that a movie may be a cost effective means
of engaging with students without requiring a massive shift in mindset on the part of
either educators or learners. Accordingly, the research may be relevant for accounting
academics and lecturers grappling with meeting the demands of the competency
framework (SAICA, 2010) within the limitation of dealing with large classes.
2. Literature review
Prior research provides valuable insights to how to vary the structure of a “traditional”
lecture in order to make the learning experience more informative, relevant, and
interesting. For example, Healy and McCutcheon (2008) in a qualitative study, examine
accounting students’ experiences of active learning approaches. They document a
number of advantages associated with this teaching strategy, including a greater
propensity for life-long learning, better team-work and communication skills and an
improved ability to engage in “self-learning”.
Brickner and Etter (2008) provide another example of the successful application of
more interactive instruction techniques. An experimental research style is used to
document the effect of using “guidance notes”. These notes are given to students and
effectively constitute an incomplete set of lecture notes which they are expected to
complete during the lecture. For this purpose, Brickner and Etter (2008) recommend
decomposing the lecture into short sections or components, each lasting approximately
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15 minutes, to allow students an opportunity to re?ect on the material, ask relevant
questions, and complete the notes. “Mini-quizzes”, the use of short question and answer
sessions, quick summaries of the class provided by students at the end of the lecture,
and short homework assignments are other examples of how varied approaches to
instruction are incorporated into the otherwise formal lecture.
Out-of-class active learning activities complement this approach and include
attending business student organization meetings, preparing article summaries,
and reviewing annual ?nancial reports of different listed companies (Brickner and Etter,
2008) each of which may be effectively supported by anIT-platform. Lavoie and Rosman
(2007), for instance, make use of a variety of IT-supported functions in an online
postgraduate accounting course. Courses are designed to accommodate multiple
learning styles, maximize the learners’ experience and, ultimately, ensure that a range of
learning objectives is met. Activities include group tasks involving information-sharing
such as online threaded discussions, short course assignments and “pop quizzes”.
Greenawalt and Stinnett (1992) provide an accounting and auditing speci?c
example of using out-of-class learning activities. They require their students to ?nd
a “client” for their auditing course. The students are expected to apply the relevant
audit theory, to which they were exposed in lectures, in a case-study environment.
Learners, in accordance with the relevant auditing standards, are required to gain an
understanding of their “client”, its business and risk environment and internal
control systems. This task is followed by formal documentation of relevant controls
and designing techniques for testing the design, the implementation and the operating
effectiveness of the controls. The assignment “culminates” in a type of “report to
management”, as well as working papers available for “review” by the lecturer.
In each of the above examples, accounting instructors are faced with the challenge
of making potentially complex and abstract principles more manageable and
stimulating for students while demonstrating relevance in a real-world setting.
A practical approach is especially important as many auditing concepts tend to be
dif?cult for accounting students to grasp due to a lack of business experience and
dif?culty in physically “demonstrating” auditing practice, techniques, and principles
(Fernandes, 1994). For example, how can an auditing lecturer “show” students what
internal controls are, actively highlight how these controls should be tested, and
illustrate the effect of an internal control failure? Greenawalt and Stinnett (1992) provide
one possible solution. According to Savage et al. (2008), using a movie to make an
auditing lecture “come alive” may be another alternative.
2.1 Why students need to have an understanding of internal controls
In terms of the International Standard on Auditing (ISA) 200 (International Auditing
and Assurance Standard Board (IAASB), 2010a), the objective of an audit is to express
an opinion on a client’s ?nancial statements. Doing so requires the auditor to gather
suf?cient appropriate audit evidence to support any conclusions reached on the extent
to which?nancial statements comply, inall material respects, withthe respective ?nancial
reporting framework (IAASB, 2010a). As part of this process, ISA 315 (IAASB, 2010b)
requires auditors to gain a thorough understanding of the client, its business and risk
environment and internal control systems operating at both the entity and transactional
level. Following this analysis, the auditor is expected to respond to the assessed risk
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of misstatement, whether due to fraud or error, which would likely necessitate formal
testing of a client’s controls, at least to some extent (IAASB, 2010c; Cohen et al., 2002).
Outside the external audit arena, the relevance of internal controls continues to hold,
with risk assessment and management being an integral part of sound corporate
governance (Integrated Reporting Committee of South African (IRC), 2011; European
Commission, 2010; Solomon, 2010; Botten, 2009; King III, 2009; PwC, 2009a, b). In terms
of the Committee of Sponsoring Organizations’ (COSO) internal control framework,
entities have three objectives: good operations, compliance with rules and regulations
and good ?nancial reporting. To achieve these objectives and minimise business risks
an entity must have a sound internal control system in place (Messier and Boh, 2007;
Solomon, 2010). For example, good internal controls ensure ef?ciency and reliability
of operations, minimisation of costs, reliable internal and external reporting,
compliance with laws and regulations and mitigation of the risk of misappropriation
of assets or fraud (Botten, 2009; IAASB, 2010b; Cohen et al., 2002).
With the introduction of codes on corporate governance (Solomon, 2010), most
notably King III (2009), organizations are increasingly expected to broaden their
appreciation and application of internal control systems. Comprehensive internal
control frameworks are no longer about ensuring ?nancial ef?ciency but need to be
cognizant of risks relating to safety, social, health, environmental, and economic factors
(IRC, 2011; Solomon, 2010; King III, 2009). This broad approach to control design,
assessment, and testing is also fully consistent with the literature on governance and
agency theory (Solomon, 2010; Cohen et al., 2002). The IRC (2011), the European
Commission (2010), Lin and Liu (2010), Seifert et al. (2010), Solomon (2010), McMillan
(2004) and Roberts (2001) are examples of the more recent sources pointing to the
growing complexity of principal-agent relationships and the need for ever more
comprehensive control systems. Ultimately the professional and academic literature
highlights the growing importance of systems of checks and balances that organizations
ignore at their peril (Solomon, 2010; Messier and Boh, 2007).
Accordingly, educators have a responsibility to train accounting and auditing
students to be able to appreciate both the relevance of internal controls and, hence,
design and test these controls (SAICA, 2010; Low et al., 2008; Savage et al., 2008).
In South Africa, this must be done against the backdrop of having to deal with class
sizes often in excess of 200 students. At the same time, educators must grapple with
expanding syllabi (SAICA, 2010) and ever more complex business environments
of which students need to be made aware (consider: Low et al., 2008; McMillan, 2004).
These challenges inevitably necessitate innovative techniques for ensuring a rich
learning environment. As summarised by Gorman and Hargadon (2005, p. 77):
[. . .] during the next decade we [will see a] continued and accelerated shift from primarily
content based education to one that puts heavy emphasis on skill development in conjunction
with the content. Since it is not feasible to teach or learn all of the content in the accounting
discipline in a four-or ?ve year program, it is imperative to equip students with the research
skills and problem solving capabilities to deal with an ever-expanding knowledge base.
2.2 Using a movie as an example of active learning in an auditing context
It is often said that the one way of improving the quality of the learning experience is by
reducing the class size (Herington and Weaven, 2008; Bryant, 2005; Johnson et al., 2003;
Ehrenberg et al., 2001; Carbone, 1999). While this may be the case, there are a number
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of important policy considerations which need emphasis. For example, reducing class
sizes in the context of growing student numbers means more classes, which invariably
amounts to having to increase the number of lecturers. This means that universities
must either re-deploy staff fromresearch pursuits or, alternately, increase the number of
lecturing academics. In both cases, there are ?nancial implications. More staff translates
into higher salary costs. Less research results in loss of grants and prestige, directly
correlated with placement demands and fees, as an opportunity cost (Dillard, 2008;
Harmon, 2006; Ehrenberg et al., 2001). In addition, many institutions have become more
mindful of increased learner volumes and the practical dif?culty of ?nding larger
numbers of suitably quali?ed lecturers (Ehrenberg et al., 2001). As a result, the optimal
solution for improving student learning may not necessarily be smaller classes.
Pedagogically, prior research has not de?nitively con?rmed that smaller class sizes
necessarily produce materially higher quality graduates (Dillard, 2008; Harmon, 2006;
Ehrenberg et al., 2001). Accordingly, this study takes a different approach to improving
students’ understanding of the content and importance of a client’s control environment.
There is considerable evidence of the possible bene?ts of a less traditional
means of instruction for enhancing student learning (Herington and Weaven, 2008;
Bryant, 2005; Ehrenberg et al., 2001), as discussed above. Using a movie to complement
lectures and tutorials may be one such approach (Savage et al., 2008). As explained
by Savage et al. (2008), and alluded to by Herington and Weaven (2008), integrating
a topic-speci?c movie into traditional instruction models may be a means of engaging
business students and demonstrating the practical relevance of lecture material so that
students view time spent at university as a precursor to a meaningful career and
integral to professional development (SAICA, 2010).
The researchers surmised that using a movie as a medium of instruction in an
audit-speci?c setting could achieve comparable results. The approach should provide
a modern and interactive learning strategy that ought to resonate with young auditing
students (SAICA, 2010). The chosen movie, Rouge Trader, by virtue of its ?nancial
and corporate setting, should situate students in the “front lines” of daily professional
life, allowing the control environment lecture material to make sense beyond a purely
academic context (SACIA, 2010; Johnson et al., 2003; Kreber, 2001; Maltby, 2001).
This practical base is complemented by the opportunity for an out-of-class cooperative
assignment which promotes interaction with peers, as well as a sharing of perceptions
and ideas, and is expected to directly enhance the quality of learning for large classes
(Bryant, 2005). Concurrently, the approach demonstrates that the lecturer expects a more
thorough, practical awareness of the control environment (HeringtonandWeaven, 2008).
3. Methodology
3.1 The movie
Rogue Trader is a British movie produced by Miramax (1999). It is approximately
100 minutes in length, is set in an accounting-speci?c context and employs a relatively
simple plot that makes it ideal for teaching a large class (Savage et al., 2008).
The movie is based on the collapse of Barings Bank due to fundamental control
weaknesses. The ?lm demonstrates a classic agency-theory problem. Employee,
Nick Leeson, is vested with certain trading responsibilities on behalf of the bank
but places self-gain before the interests of his employer and distant shareholders.
A failure to introduce a system of checks and balances to manage divergent interests
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(Solomon, 2010; Jensen and Meckling, 1976), led to loss by shareholders and, ultimately,
the collapse of the bank.
Students were lectured on internal controls using ISA 315 (IAASB, 2009b) as their
prescribed reading. To supplement their knowledge students were then required to watch
Rogue Trader outside of class. Three viewing arrangements were, however, made for
students who could not access the DVD. The instructions for the homework assignment
were given to students at least one week prior to viewing the movie. Students were
encouragedtostudythe case material beforehandsoas to be able to understandthe salient
features of the movie. Students were also advised to take notes during the screening.
3.2 Method and data collection
The study was conducted in three stages spanning ?ve weeks with ?nal-year auditing
students at a South African University. A questionnaire was used to determine students’
awareness of internal controls before the lecture andexposure tothe DVD. The surveywas
tailored to “measure” quantitatively the students’ perception of internal control.
The questionnaire also allowed students to remain anonymous. A ?ve-point Likert scale
was employed to measure the responses to ten questions on internal controls. Survey
questions were based on the content of ISA 315 and prior literature, and were designed
toassess students’ “base” knowledge of controls andtheir perceivedimportance (Lowet al.,
2008; Savage et al., 2008). Each question required a response ranging from “1” (strongly
disagree) to “5” (strongly agree) (adapted from Creswell, 2009; Savage et al., 2008).
Of a total class size of 480, an average of 331 students participated in this exercise
(69 percent response rate). The survey was piloted with 17 students for appropriateness
and was subject to review for ethical suitability (Creswell, 2009; Leedy and Ormrod,
2001). No material changes to the survey were required. The survey questions (adapted
from Savage et al., 2008) appear below:
(1) Do you as a student appreciate the importance of internal controls?
(2) Do you know what makes up a client’s control environment?
(3) Do you know what COSO is and how it relates to the South African context?
(4) Could you identify which controls are best able to safeguard speci?c
transactions/balances/resources?
(5) Would you be able to identify control implementation weaknesses?
(6) Could you design appropriate tests of controls?
(7) Can you differentiate between controls over business risks and audit risk?
(8) Can you identify controls to achieve more reliable ?nancial reporting?
(9) Do you understand how controls can be used to drive business strategy?
(10) Can you identify controls to achieve improved sustainability?
Following the ?rst survey, students were provided with an introductory lecture, lasting
two hours, on internal controls. The requirements of ISA 315 were discussed at an
introductory level. The lecture was a “traditional” one, meaning that students received
hand-outs, attended the lecture, took notes, and responded to introductory level
questions posed by the instructor.
Students were then told to watch Rogue Trader during their study break. They were
given details of their “homework assignment” and informed that the assignment would be
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assessed and count 5 percent towards their year mark. To motivate further a deep
approachto learning, the assignment was speci?callyconstructed to examine the material
covered in the movie. Asimilar approach is employed by Savage et al. (2008) to encourage
meaningful participation. The participation rate for the assignment was 73 percent
although only 69 percent of students completed the assignment and both surveys.
The deliverable was made available three weeks in advance (Creswell, 2009;
Savage et al., 2008; Cohen et al., 2002) and was piloted to ensure that it addressed the
issues inherent in ISA 315 and was suf?ciently rigorous for entry-level professional
accountants (Creswell, 2009; Leedy and Ormrod, 2001). A second survey, identical to
the ?rst, was then conducted among the same group of students. The purpose of the
second survey was to explore the effect, if any, that the movie had on students’
appreciation of the relevance of controls.
Tables in the next section showmean responses before and after the movie is viewed,
with x
2
test results comparing responses among students before and after viewing the
movie. This method is appropriate for dealing with responses for non-equal ordinal
samples not necessarily distributed normally. The research assumes that students who
did not respond initially were a randomsubset of all the students and that non-responses
are not related to students’ understanding of internal controls. For the purposes of this
study, the signi?cance level for test results is p-values less than 0.05.
4. Results
The results of the surveys are summarised below.
4.1 Control awareness
The ?rst three survey questions concentrated on a broad awareness of control
relevance:
(1) Do students appreciate the importance of internal controls?
(2) Do students know what makes up a client’s control environment?
(3) Do students knowwhat COSOis and howit relates to the South African context?
Responses to these three survey questions before movie (BM) and after movie (AM)
exposure to the DVD are summarised in Table I.
Table I shows a general improvement in control awareness. The mean responses
to questions and 3 increased by 15 and 83 percent, respectively, and these differences are
statistically signi?cant. This result implies that, overall, the movie served as an effective
Question
Mean
response –
BM
Mean
response –
AM
Percentage
change
Descriptive
statistics Comments
Q1. Appreciation of
internal controls
4.20 4.24 1 x
2
(4,954) ¼ 5.94,
p ¼ 0.203
Not
signi?cant
Q2. Composition of control
environment
3.28 3.77 15 x
2
(4,944) ¼ 28.6,
p , 0.001
Signi?cant
Q3. Awareness of COSO
and relevance for
South Africa
1.75 3.21 83 x
2
(4,941) ¼ 49.0,
p , 0.001
Signi?cant
Table I.
Survey questions 1-3
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technique for improving awareness of what makes up a control environment and how
COSO relates to the South African context. Interestingly, results for the ?rst question
(do students appreciate the importance of internal controls) were not statistically
signi?cant, showing only a marginal increase (1 percent) in mean responses before and
after viewing the movie.
The seemingly contradictory results suggest that the students were aware of the
importance of internal controls at the outset, as indicated by the high scores for
question 1 before exposure to the DVD. The results for questions 1-3 are largely
consistent with the ?ndings of Savage et al. (2008) who found a positive correlation
between viewing the movie and a general awareness of the importance of controls.
4.2 Control design and testing
Survey questions 4-6 concentrate on the design and testing of controls to determine:
(4) Could students identify which controls are best able to safeguard speci?c
transactions/balances/resources?
(5) Would students be able to identify control implementation weaknesses?
(6) Could students design appropriate tests of controls?
Results for questions 4-6 are presented in Table II and show that mean responses
increasing between 16 and 20 percent. For all three questions the change is statistically
signi?cant implying that, overall, viewing the movie assisted students in identifying
control weaknesses, identifying controls best suited to safeguard speci?c
transactions/balances/resources, and how these controls should be tested.
Students commented that the movie had been worthwhile because it provided them
with “real-world” examples of the issues that they were exposed to in lecture materials
and the professional standards. In other words, the movie helped clarify the audit
of controls, providing the students with practical insights that they could then apply in
different contexts.
As with the control awareness question results, these results imply that using
a movie improved students’ ability to identify, evaluate the design of and testing
operating effectiveness of controls. These results are also consistent with Savage et al.
(2008) who found that control design, identi?cation and test abilities improved after
students viewed Rogue Trader. This ?nding is also important for SAICA and
Chartered Institute of Management Accountants (CIMA), who state that case studies
and exposure of students to more practical issues can assist in “demystifying” controls
and risk management aspects of the respective syllabi.
Question
Mean
response –
BM
Mean
response –
AM
Percentage
change
Descriptive
statistics Comments
Q4. Identi?cation of
suitable controls
3.14 3.63 16 x
2
(4, 942) ¼ 17.1,
p ¼ 0.002
Signi?cant
Q5. Identi?cation of
controls
3.16 3.78 20 x
2
(4, 948) ¼ 23.6,
p , 0.001
Signi?cant
Q6. Control design 2.84 3.39 19 x
2
(4, 947) ¼ 15.3,
p ¼ 0.004
Signi?cant
Table II.
Survey questions 4-6
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4.3 Control application
The ?nal four questions explore the applicationof controls, consideringwhether students
appreciate the relevance of controls outside of an external audit context, as follows:
(7) Can students differentiate between controls over business risks and audit risks?
(8) Can students identify controls to achieve more reliable ?nancial reporting?
(9) Do students understand how controls can be used to drive business strategy?
(10) Can students identify controls to achieve improved sustainability?
Table III presents the results for the four control application questions.
The mean responses for questions 8-10 increased by 15, 15, and 14 percent,
respectively, before and after viewing the movie, and these differences are statistically
signi?cant. Overall, this ?nding indicates that control application was improved by
using a movie as part of the instructional process. In particular, students seem to be
better able to identify controls that form a basis for ensuring reliable ?nancial
reporting and to appreciate how controls interact with business strategy. The same
is true of identifying controls that can improve the sustainability of a ?rm.
Question 7, however, showed only a marginal increase in mean response (4 percent)
suggesting that the effect of the movie with respect to students’ ability to differentiate
between audit and business risks was not material. In considering possible explanations
for this result, one reason could be that the plot of Rogue Trader was not totally
conducive to differentiating between audit and business risks. This highlights one of
the practical challenges of using a movie as part of auditing instruction: no single movie
addresses all of the issues that the lecturer may wish to deal with. Nevertheless, students
reported that the movie assisted in “internalizing” the relevant theory. Most importantly,
and as found by Savage et al. (2008), it showed students that auditing, and in particular,
internal controls, are not just academic concepts.
5. Conclusion
Prior literature points to the increased importance of internal controls both for
organizations as part of the drive for improved corporate governance and as part of the
external audit process. This means that it is paramount that young accounting
graduates, as prospective employees of these organizations, or as future auditors,
Question
Mean
response –
BM
Mean
response –
AM
Percentage
change
Descriptive
statistics Comments
Q7. Identi?cation of controls
over business or audit
risks
3.66 3.80 4 x
2
(4, 947) ¼ 2.80,
p ¼ 0.593
Not
signi?cant
Q8. Controls for reliable
?nancial reporting
3.25 3.73 15 x
2
(4, 948) ¼ 16.7,
p ¼ 0.002
Signi?cant
Q9. Understanding of controls
driving business strategy
3.25 3.73 15 x
2
(4, 943) ¼ 10.1,
p ¼ 0.038
Signi?cant
Q10. Identifying controls to
improve sustainability
3.03 3.46 14 x
2
(4, 952) ¼ 16.8,
p ¼ 0.002
Signi?cant Table III.
Survey questions 7-10
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have a sound understanding of the relevance of internal controls. For this reason,
SAICA is placing increasing emphasis on the ability of students to design, analyze, and
test a client’s ?nancial reporting control system.
Savage et al. (2008) ?nd that using a movie, Rogue Trader, improved their students’
appreciation of the importance of internal controls. This study, as with so many others
in the education ?eld, was carried out with relatively smaller class sizes than those
encountered by South African lecturers. The purpose of this paper was, therefore,
to explore whether using a movie can still have a positive effect on students’
appreciation of internal controls where class sizes are very large.
Based on a sample of students at a leading South African university, this study used
the same movie as part of the process of instructing students on the importance of
controls, as well as on the design, testing and application of controls. The results
appear consistent with those found by Savage et al. (2008). By providing insights into
a quasi-real world functioning of internal controls, movies like Rouge Trader, have the
potential to reinforce the relevance of internal controls for students. At the same time,
they provide a contextually and practically rich account of how internal controls
function in organizations, reinforcing lecture material on the design and testing
of internal controls. In a similar vein, students appear to have developed an improved
appreciation of internal control application, reporting an enhanced understanding of
how controls can be used to drive business strategy or sustainability, and to a lesser
extent, the key difference between controls over audit and business risks. As such,
the research reinforces the arguments raised by Savage et al. (2008) – that using
a movie can improve students’ understanding of auditing issues.
Unlike this prior research, however, this paper has examined the relevance of using
a movie as a medium of instruction with considerably larger classes. The research
?ndings imply that using a movie provides lecturers with a means of engaging
students in a practical setting. It also requires a limited investment in terms of time
and capital, offering an affordable, realistic approach for challenging larger bodies of
students and reinforcing relatively generic lectures and tutorials. Perhaps most
important, using a movie does not require a paradigm shift in terms of use of
technology by either the educator or learner. For these reasons, it may prove highly
useful for lecturers wishing to introduce students to alternate means of instruction.
These conclusions should, however, be considered in light of the inherent limitations
of this research. Most importantly, the learning process is also a highly complex one.
This paper has taken a relatively simple approach to exploring whether or not using
a movie, in conjunction with formal lecturers, can make a valuable contribution for
students. No effort has been made to test how results differ when gender, age,
socio-economic level, or cultural come into play. In addition, Rogue Trader is a fairly
dated movie. Whether or not a more modern movie, including the use of additional
information technology to complement the use of a movie, would have materially altered
the ?ndings was not speci?cally considered.
The research is, therefore, more exploratory in nature, merely highlighting
expectations and implying trends in student learning. Future research may seek to test
the relationship between varied instructional instruments and student learning in
a more controlled setting. Replicating this study in different South African universities
and with different courses could also prove insightful.
Using a movie
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Finally, the need for more interpretive research should not be lost sight of.
Methodological or theoretical eclecticism could highlight the operation of additional,
previously overlooked, variables that impact the teaching process. For instance, how
students actually internalize the use of a movie in a traditional tertiary environment
could provide rich and highly interesting perspectives on accounting education. Amore
critical stance may also be possible, such as an exploration of whether or not students
regard the use of alternate means of instruction as useful or simply “technological
grandstanding” on the part of lecturers.
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