Research Spotlight: Virtual reality makes auditing come to life

Using Second Life in the classroom gives students hands-on experience.

February 9, 2016

For accounting students, experience in the field is perhaps the best preparation they can get before entering the job market. But it simply isn’t feasible to turn a couple dozen college students loose in a warehouse to attempt the painstaking process of auditing. That’s why three faculty members from N.C. State University—Frank Buckless, Ph.D.; Scott Showalter, CPA; and Kathy Krawczyk, Ph.D.—brought a warehouse to their students via the online virtual world Second Life.

Using a grant from EY, Buckless, a professor and head of the accounting department (CPA inactive), first introduced Second Life to his students in 2009 along with colleagues Krawczyk, professor and director of the Master of Accounting program (CPA inactive), and Showalter, professor of practice and a retired KPMG partner.

“We created a virtual warehouse for students in Advanced Auditing to conduct an audit of inventory, which in this case, was beer,” Showalter said. “I served in the role of warehouse supervisor, and they had to go into the virtual warehouse, pull data and documents from a virtual administrative office, and make appointments to interview the warehouse supervisor, played by me, in person at my office.” Students, he said, were then “evaluated on whether they could follow instructions, and whether they exhibited a certain amount of professional skepticism.” (View a brief video introducing the virtual warehouse here.)

We spoke to Buckless, Krawczyk, and Showalter about their experiment in virtual reality, described further in their Issues in Accounting Education article “Using Virtual Worlds to Simulate Real-World Audit Procedures.”

EXTRA CREDIT: Why use virtual technology?

BUCKLESS: Most students don’t know what it’s like to walk into a large warehouse with lots of inventory. Once we created this virtual world they could actually immerse themselves in, it became much more concrete.

SHOWALTER: Through this platform, students first establish an avatar, or a virtual version of themselves. Through that virtual presence, they are able to tour the warehouse, virtually walking from room to room to make observations, including making sure all inventory items are properly tagged, evaluating the security of the warehouse, and reviewing how the client controls the movement of inventory. Students can also conduct test counts, opening virtual pallets of beer and kegs to ensure they have the correct number of bottles or gallons of beer, the correct types, and have accounted for any expired or damaged inventory. We also can include small but important details that you’d see in real life, like an open loading dock door that should catch an auditor’s eye. It’s a realistic opportunity to develop observational skills.

EC: Was using Second Life a success? How did it help students?

BUCKLESS: We surveyed students and the data was very positive. It can take some time to really understand Second Life. But once students went into the working world and actually conducted inventory observations in real life, they said they felt much more confident than their peers did.

KRAWCZYK: We have gotten a number of comments and emails saying, “This lesson really reflected what we do in practice. I was so well-prepared for my first inventory count because I did it for you first.”

SHOWALTER: There’s not a semester that goes by that I don’t hear back from a student about how important that exercise was.

EC: Why did you decide to use Second Life as your platform?

BUCKLESS: We thought Second Life was a low-cost entryway. Altogether, the design and setup was less than $50,000, and we can change the details in the model from course to course.

EC: How labor-intensive was it to prepare the virtual world? Was it worth it?

BUCKLESS: It takes a significant time investment upfront, and you have to hire someone to do the programming. But the great thing is once you’ve made the investment, you can replicate it. We use this warehouse a lot.

Students also had to make their own avatar, which does take some time. They also have to learn how to navigate in Second Life, so there’s a real learning curve. But after that initial time, we find it helps enhance engagement.

KRAWCZYK: That’s why we felt it was important to use it in more than one class. We started using it with graduate students in fall courses to give them an introduction so they were more familiar with it by the time they took the spring Advanced Auditing class.

EC: Your experiment with virtual reality was successful, but, as you mention in your article, Second Life has become less popular of late. Are there other “virtual worlds” that faculty could use in class? What’s next for you going forward?

BUCKLESS: I think Second Life is being used less often now, mainly because you don’t really have total control over it, and now there are other animations or simulation technologies that are becoming more cost-effective. We plan to build our own, new virtual reality platform with the same characteristics, but where we have a little more control ourselves.

EC: What advice would you give faculty who want to use virtual worlds in the accounting classroom? If they’re new to this kind of technology, where should they start?

SHOWALTER: Look at what other people have done, and don’t be afraid. It can scare you, but be patient. I want to underscore the fact that you want to make sure that what you do in Second Life is something you can’t do otherwise, in person. You want to make sure you’re giving students an experience they can’t get elsewhere.

EC: Finally, why a beer warehouse?

SHOWALTER: It’s straightforward. The students understand beer.

Samiha Khanna is a freelance writer based in Durham, N.C.

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