“Triangle Manufactured Homes” presents a real accounting and auditing situation that is both timely and complex – the off-balance-sheet transfer of financial assets generated by loans to subprime borrowers. The case materials, adapted from two rounds of KPMG’s National Audit Case Competition (KNACC) held in 2007 and 2008, have been designed to simulate a professional judgment/decision-making journey while holding faculty burden and start-up costs to a minimum. Included in the case materials are a detailed set of assignments and extensive feedback that instructors can use in various ways. These materials were made possible with the support of KPMG LLP, the KPMG Foundation, Robert H. Ashton, and Timothy B. Bell.

The fictitious Triangle Manufactured Homes (TMH), a fast-growing retailer of manufactured (“mobile”) homes, is based on a real company that operated in the manufactured housing industry. The company’s financial statements, notes and other SEC-mandated disclosures have been updated to reflect today’s accounting standards. This set of issues is extremely relevant and timely, given the increasing emphasis on fair value accounting and the attention on financial asset transfers, including securitizations and their role in the subprime crisis.

Among the issues students must consider as they work through the case requirements are:

• Gaining an understanding of the business and its environment
• Assessing the risks of material misstatements at the account level
• Evaluating the FAS 140 criteria that determine whether financial asset transfers must be accounted for as sales or as secured borrowings
• Evaluating the company’s approach to measuring the fair values of assets and liabilities resulting from whole loan sales and securitizations of financial assets