Audit Risk Simulator: an interactive learning approach to enhance students’ understanding of materiality, audit risk and audit evidence

Auditing is a core subject in accounting education that requires a strong understanding of fundamental concepts such as materiality, audit risk, and audit evidence. However, students often struggle to comprehend the relationship among these concepts due to their abstract nature and reliance on professional judgement. Traditional lecture-based teaching methods are often insufficient in helping students apply these concepts in real-life audit situations, leading to weak conceptual understanding and low confidence in making audit decisions. To address this issue, the Audit Risk Simulator: The Fraud Case Game is introduced as an interactive learning innovation that integrates simulation-based learning, gamification, and case-based approaches. This tool enables students to assume the role of auditors and make decisions on materiality levels, audit risk assessment, and the selection of appropriate audit evidence within a simulated fraud scenario. The system is designed with a structured decision-based flow and provides immediate feedback to illustrate the consequences of each decision. The simulator focuses on three key components: materiality, audit risk, and audit evidence. Through the simulation, students can clearly observe the relationship among these elements, particularly how lower materiality thresholds and higher audit risk require more extensive and reliable audit evidence. This approach promotes deeper conceptual understanding rather than rote memorization. The implementation of this innovation has improved students’ understanding, increased engagement, and enhanced their critical thinking and decision-making skills. Overall, the Audit Risk Simulator transforms auditing education into a more interactive and student-centered experience, with strong potential for wider application in accounting education.