An article in Compliance Week discussed the United States Securities and Exchange Commission (SEC) report Mitigating the Risk of Common Fraud Schemes: Insights from SEC Enforcement Actions. The report identified the most common financial fraud themes from the SEC's enforcement actions between January 2014 and June 2019. It is no coincidence that all the areas they identified involve accounting estimates. The report also warned that crises such as COVID-19 can set the stage for many factors that contribute to fraud.

Student A discusses accounting estimates and managerial incentives focusing on improper revenue recognition and reserves manipulation [note that what the Americans call 'reserves' we call provisions or allowances, e.g., provision or allowance for doubtful debts].

Student B discusses accounting estimates and managerial incentives focusing on inventory misstatement and loan impairment deferral.

Important: To answer the decision case, (1) introduce the topic, (2) provide background context, and (3) draw your conclusion. Use the information in the article provided and apply one or more of the theories taught in Module 3 to help you make your case. Students doing their oral presentations may wish to do additional research.