ABSTRACT: This case, which is derived from an actual fraud occurrence, provides an opportunity for students to employ fraud theory and assess the three conditions generally present when fraud occurs, i.e., incentive, opportunity, and ability to rationalize. Specific applications include the major provisions of SAS No. 99 (American Institute of Certified Public Accountants [AICPA] 2002), e.g., professional skepticism, brainstorming, risk assessment, and communication of findings. The case is designed with a scientific perspective, proceeding through the five sequential steps of a fraud examination (validate the suspicion, create a hypothesis, test, refine, and communicate). The case also provides an opportunity for students to employ financial statement analysis, journal entry testing, indirect methods of income reconstruction, and other evidence-gathering techniques in a realistic context. Additional topics include business valuations, ethics, professional standards, types of engagements, internal control, agency theory, and alternative dispute resolution. This case is suitable for use in an upper-level undergraduate or graduate course in auditing or forensic accounting, as well as practitioner education.
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Research Article| February 01 2011
Mountain State Sporting Goods: A Case of Fraud? A Case Study in Fraud Examination
Issues in Accounting Education (2011) 26 (1): 201–217.
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Robert J. Rufus, William Hahn; Mountain State Sporting Goods: A Case of Fraud? A Case Study in Fraud Examination. Issues in Accounting Education 1 February 2011; 26 (1): 201–217. doi: https://doi.org/10.2308/iace.2011.26.1.201
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