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KPMG and The University of Illinois
Business Measurement Case
Development and Research Program
Case Grant Recipients
April 1998

KPMG and the University of Illinois at Urbana-Champaign recently announced case development grants under the Business Measurement Case Development and Research Program. This ongoing competitive program provides funding and other administrative support for the development of case materials and follow-on research on issues related to the assessment of client business risks, the evaluation of business controls, and the measurement of strategic and business process performance during a financial statement audit. Case development projects funded under the program are collaborative arrangements between KPMG's engagement teams and teams of professors who specialize in accounting, auditing, and business strategy.

During the Program's first submission period, thirty-two proposals were received requesting grants totaling approximately $870,000. The program will disburse a total of $246,346 in support funds to eight case development teams awarded funding during the 1998 submission period. Completed cases and accompanying teaching notes will be distributed to business educators on a worldwide basis at no charge. Case development teams can apply for follow-on research grants of up to $50,000 after case projects have been completed.

"This is a timely project that will benefit not only KPMG and the professional services field, but all of business," said Bernard J. Milano, KPMG Peat Marwick's partner in charge of university relations, diversity and alumni programs. "The Program is intended to encourage scholarly research and case study development that builds upon and advances the strategic-systems auditing framework that is the foundation for KPMG's Business Measurement Process (BMP) audit methodology."

Grant recipients were selected by a Program Advisory Board consisting of four leading members of the academic community--William R. Kinney, Jr., University of Texas at Austin; Krishna G. Palepu, Harvard University; Katherine Schipper, University of Chicago; and Ira Solomon, University of Illinois at Urbana-Champaign--and KPMG's Timothy B. Bell, the Program's Executive Director and KPMG's Director of Assurance Services. Speaking about the importance of this program from the scholar's viewpoint, Ira Solomon, the Program's Managing Director-Academic, said "This program, by drawing on expertise from leading practitioners and professors, promises to both significantly advance knowledge of how audits must evolve to address the challenges of the 21st century and to empower educators to incorporate such innovations into their classrooms on a timely basis."

The eight case development projects selected for funding during the 1998 submission period are described below.

Researchers Shawn Davis
Ronald R. King
Washington University in St. Louis
Project Title Auditing Firms in the Pharmaceutical Industry Using A Strategic-Systems Framework
Funding $26,500
A case study focusing on the relationship between business risk and audit risk in the pharmaceutical industry.

Researchers Brian Ballou
Richard Tabor
Mustafa Uzumeri
Auburn University
Project Title Identifying and Integrating Business Process Knowledge: A Strategic-Systems Approach to Auditing
Funding $25,600
A case study illustrating how knowledge of the client's business and industry is translated into audit evidence.

Researchers Roger D. Martin
Michigan State University
Fred Phillips
University of Saskatchewan
Michael D. Shields
Michigan State University
Project Title Chains, Linkages & Cars: Business Process Analysis and Performance Measurement In An Industrial Products & Automotive Audit
Funding $28,000
A case study focusing on how business process analysis and process performance measurement provides evidence about the validity of key assertions.

Researchers Mahendra Gupta
Washington University
George Foster
Stanford University
Richard Palmer
University of Tennessee at Martin
Project Title The Strategic Utilization of Electronic Commerce: Business Risks, Business Controls, and Audit Considerations
Funding $40,000
A case study of the use of electronic commerce in procurement, with analysis of business risk and audit implications using a strategic-systems audit approach.

Researchers Royston Greenwood
University of Alberta
Steven Salterio
University of Alberta and University of Waterloo
Project Title A Comparison of the Transactions-Cycle and Strategic-Systems Audit Approaches: The Case for Complex Analytical Procedures
Funding $27,500
A case study that demonstrates how the strategic-systems audit approach overcomes some limitations to the transactions-cycle audit approach.

Researchers Stephen Asare
Richard McGowan
Greg Trompeter
Arnold Wright
Boston College
Project Title Variations in Business Strategy and Complex Analytical Procedures
Funding $30,000
A case study that demonstrates how variation in business strategy affects the development of auditor expectations.

Researchers Anne Ilinitch
Linda S. McDaniel
University of North Carolina at Chapel Hill
Project Title Competitive Advantage and Business Risk: Strategic-Systems Audits in the Managed Health Care Industry
Funding $33,800
A case study that applies a strategic-systems audit approach to the dynamic environment of the managed health care industry.

Researchers Merle M. Erickson
University of Chicago
Brian W. Mayhew
Georgia State University
William L. Felix, Jr.
University of Arizona
Project Title Application of a Strategic-Systems Knowledge Acquisition Framework to the Lincoln Savings and Loan Audits
Funding $35,000
A case involving the retrospective application of KPMG's Business Measurement Process to the Lincoln Savings and Loan audits.

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