Cutting-Edge Case Study Zeroes in on Financial Reporting Fraud

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In the fight against financial reporting fraud, members of the financial reporting supply chain have a new tool to advance their fraud deterrence and detection capabilities.

The Anti-Fraud Collaboration – the Center for Audit Quality (CAQ), Financial Executives International (FEI), the Institute of Internal Auditors (IIA), and the National Association of Corporate Directors (NACD) – has published the "Hollate Manufacturing Case Study", a study of a potential material fraud at a fictitious public company, in order to raise awareness of environments in which financial reporting fraud might flourish. The case study and a companion discussion guide provide a road map to help audit committees, financial executives, and internal and external auditors engage in interactive discussions on what could have been done to mitigate the risk of fraud.

"Historically, financial reporting fraud is the workplace fraud that has had the highest cost impact on public companies", said CAQ Executive Director Cindy Fornelli. "The new case study, which re-creates the conditions that could allow fraud to occur and provides opportunities to discuss steps that can be taken to mitigate the risks, is an important new resource for the deterrence of such frauds."

The CAQ, FEI, IIA, and NACD formed the Anti-Fraud Collaboration to develop thought leadership, awareness programs, educational opportunities, and related resources to promote the deterrence and detection of financial reporting fraud. The "Hollate Manufacturing Case Study" represents the first in a series of anti-fraud case studies that the Anti-Fraud Collaboration has underway.

To help teach the case, the Anti-Fraud Collaboration has also published a discussion guide that provides a framework for leading a robust interactive dialogue that addresses the key learning objectives of the case. The case study and discussion guide are inspired by the Harvard Business School (HBS) case study method. The Anti-Fraud Collaboration consulted with two HBS faculty members in developing the case study and the discussion guide.

The discussion guide is specially designed for individuals with experience in teaching continuing professional education programs to members of the financial reporting supply chain and college and university instructors and professors.

The Anti-Fraud Collaboration has developed a series of videos on how to effectively lead a discussion using the Harvard case study method. Instructors new to the case method approach will find the content useful; experienced case study teachers will find the information a helpful reminder of some of the key techniques for managing a case discussion.

The videos feature insight from Willis Emmons, senior lecturer and director of the Christensen Center for Teaching and Learning at HBS. The videos also feature V.G. Narayanan, Thomas D. Casserly, Jr. professor of business administration at HBS, leading a discussion of the "Hollate Manufacturing Case Study."

The case study is available on the CAQ's website, where visitors can register for the discussion guide and access the videos and other case method resources. It also may be accessed on the Anti-Fraud Collaboration's website.

Source: March 27, 2013, CAQ News Release

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