Second Chance Homeless Shelter: A Fraud Exercise for Introductory and Survey Courses in Accounting

Abstract

Purpose

This exercise should make apparent to introductory accounting students the importance of internal controls both as a deterrent and as an early detector of fraud. We use the fraud triangle (PCAOB, 2010) framework to help students understand and evaluate this fraud. We believe completing this exercise will give students a better understanding of fraud in general, the fraud triangle, and internal controls and their use in preventing and detecting fraud.

Methodology/approach

This exercise presents an actual embezzlement committed by a long-tenured employee of a local not-for-profit organization. Each component of the exercise contains a series of questions to facilitate classroom discussion.

Findings

Student surveys confirm that students learn about detecting and preventing fraud. Students also indicate that they find the not-for-profit setting interesting and would use the principles in the exercise if they become affiliated with a not-for-profit organization.

Originality/value

To our knowledge, this is the first fraud exercise directed at educating students in introductory and survey courses in accounting where students likely have only a minimal understanding of accounting and internal controls.

Citation

Nicholls, C.M. and Mastrolia, S.A. (2015), "Second Chance Homeless Shelter: A Fraud Exercise for Introductory and Survey Courses in Accounting", Advances in Accounting Education: Teaching and Curriculum Innovations (Advances in Accounting Education, Vol. 17), Emerald Group Publishing Limited, Leeds, pp. 1-24. https://doi.org/10.1108/S1085-462220150000017001