Hello,

I need help with with Return of the Tallahassee Beancounters Case (the 2010 version). The solution and teachers handouts for the 2003 version have already been made available, however it's different from the 2010 version. Please provide the 2010 solution manual from the American Accounting Association.

ISSUES IN ACCOUNTING EDUCATION Vol. 25, No. 2 2010 pp. 279-321 American Accounting Association DOI: 10.2308/iace.2010.25.2.279 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting Carol Callaway Dee and Cindy Durtschi ABSTRACT: Your rm has been engaged to conduct a forensic investigation of the Tallahassee BeanCounters TBC, a privately owned minor league baseball team in Tallahassee, Florida. Team owner Franklin Kennedy has told employees that the audit is related to the mortgage TBC obtained for the recently constructed training facility. However, Mr. Kennedy tells you privately that the investigation is not due to loan requirements; rather, it is due to his concerns arising from an anonymous tip he received in the mail. The assignment requires you and your investigative team to 1 analyze the nancial and background data provided; 2 brainstorm the possible ways in which a fraud could be perpetrated and concealed within the organization; 3 determine the additional information you need to conrm or disprove your suspicions; and 4 request this information from the appropriate party at TBC. When your investigation is complete, you will present your written results to the owner, including 1 who committed the fraud, 2 how it was committed, 3 the economic impact of the fraud to TBC, and 4 the nancial benet your suspects received from committing the crime. Keywords: fraud detection; forensic accounting; auditing; problem-based learning. Data Availability: The authors are willing to share any data as well as Excel versions of all student and teacher handouts. Please contact Professor Durtschi. PART I: CASE MATERIALS INTRODUCTION our rm has been hired to conduct a forensic investigation of the Tallahassee BeanCounters TBC, a minor league baseball team in Tallahassee, Florida. TBC has never before been audited. Franklin Kennedy, the team's owner, has told employees that the audit is a requirement of the bank, which provided the mortgage loan for the recently completed training facility. However, Mr. Kennedy privately tells your audit team that he received an anony- Y Carol Callaway Dee is an Associate Professor at University of Colorado Denver, and Cindy Durtschi is an Associate Professor at DePaul University We thank Special Agent Joseph Cornwell, FBI now retired, and Anthony Carro, former Chief Investigator of the Manhattan District Attorney's ofce for their input and review of the case. We also thank Robert Dosch University of North Dakota, Thomas Buckhoff Georgia Southern University, William Hillison Florida State University, Kevan L. Jensen University of Oklahoma, Patricia Johnson Canisius College, Chih-Chen Lee Northern Illinois University, David O'Brien Pittsburg State University, and Susan Swanger Western Carolina University for helpful comments and assistance in implementing early versions of this case. We also thank participants at the 2007 and 2009 Fraud and Forensic Accounting Education Conferences held in Savannah and Atlanta, Georgia. Published Online: April 2010 279 280 Dee and Durtschi mous note below in the mail leading him to suspect that someone within the company is committing fraud. The envelope, addressed to Mr. Kennedy, had a Tallahassee postmark and no return address. Because Mr. Kennedy lives in Boston, he has entrusted the running of this franchise to his long-time associate Phil Ackers. Mr. Kennedy had assumed that things were running efciently until the note arrived. TBC has no formal procedures to accommodate whistleblowers and the employees of TBC are unaware of the true nature of your engagement. Mr. Kennedy: I think there is something funny going on here at TBC. Numbers that do not add up, lots of whispers in the hallways and closed-door discussions have me suspicious. If I were you I would check it out. A long-time friend. The owner has asked you to focus your investigation on the last ve months May through September. This is the time period during which the training facility was constructed. As you familiarize yourself with the company, you note that in addition to revenue from ticket sales, TBC generates funds from parking, fundraising, and sales of concessions and game programs. Franklin Kennedy also gives TBC some start-up money at the beginning of the season to assist with expenses until the team starts earning revenue from games. He withdraws that money over the course of the season. Operating expenses consist primarily of payroll, equipment bats, balls, etc., team travel, programs, and concession inventory. Any fees due to the baseball league, such as franchise fees, are paid by the Boston Sox Franklin Kennedy's major league team on behalf of TBC. Payroll is processed by an outside service company. Other ofce expenses are similar to those of most small businesses. Student Handout SH 1 provides an organizational chart for TBC. Ofce manager Ben Hill oversees daily operations of the organization. Michelle Shelton provides support for management and handles most of the bookkeeping, including accounts payable, cash receipts, and equipment purchase orders. Candace Candie Larson, receptionist, answers phones and compiles time sheets for processing. Julie Roper, assistant to the president, assists with donor relations and is also responsible for concessions ordering and inventory as well as accounts receivable collections. President Phil Ackers oversees fundraising activities and supervised the building of TBC's newly completed training facility. To familiarize yourself with TBC, you attend a night game and chat with some of the employees. The three women who work in the ticket booth seem particularly eager to chat. Myrna Myers, their supervisor, tells you the three women have worked together in the booth for 20 years. Their husbands come to every game, and the six often socialize together as well. Myrna is happy to talk to you about the other TBC employees, especially those in the front ofce. Below is a summary of Myrna's opinions. Company Overview: Things have changed a lot this last year. Mr. Ackers cut down on excess employees, particularly some of the game-day employees because it's expensive to build a new training facility. I don't mind because this new building is great. It's state-of-the-art and I hope it will help us recruit and keep our players in shape. We've had a great season this year, and all of the ladies here would love to see that continue. A lot of people complained during the building because of the mess and there was some tension because Mr. Ackers was on us to be efcient and cut expenses so we could qualify for a good rate on the mortgage loan, but we qualied and I think it was worth it. Phil brought in food and drinks for all of us the day we got the loan and everything was set. It was a lot of fun. Phil Ackers Company President: Phil's a nice guy; he oversees the fundraising, and seems to know everyone everywhere. That's probably because he was a professional ballplayer years ago. He was pretty tense during the building of the new training facility, but now that it's completed, he's getting back to his old self. He's really close to his family; in fact, he even hired his niece Julie Issues in Accounting Education American Accounting Association Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting 281 Roper to take the place of Terri Hughes who had been his assistant forever when she left to go take care of her mother. Julie Roper Assistant to the President: She's a great change from Terri Hughes, Mr. Acker's former assistant. Terri guarded Mr. Ackers' ofce to the point it was impossible to get hold of Mr. Ackers to ask even the simplest question. Anyway, Terri's mother got sick and Terri left, then Mr. Ackers hired his niece, Julie. Like I said, she's a welcome change. She works very hard, even has taken over some jobs that Terri wouldn't touch, like the ordering for concessions and group ticket sales. She also took over accounts receivable collections from Michelle, who was thrilled to get rid of that job. Tucker Johnson General Manager: The players love Tucker. He has an interesting coaching philosophynever raises his voice to the players or uses foul language. We've sent many players up to the majors, so he still gets the job done even without the four-letter words. Tucker can't stand paperwork, so he has Sam do most of the ordering as well as taking care of all the equipment. Ben Hill Ofce Manager: Ben still thinks it's 1979 and disco is king. He dresses like John Travolta in Saturday Night Fever and is always hitting on the women in the ofce. He has several ex-wives; most of whom he started dating while still married to a previous one. When TBC qualied for its bank loan, Ben got a nice bonus which he blew on a new car. He calls it his \"chick magnet.\" He keeps things running smoothly in the ofce though, so Mr. Ackers pretty much lets him run day-to-day operations however he wants. Candace Larson Receptionist: Candie is a sweet young girl. She's good with the phones, and everyone likes her. She's the reigning Queen of the Taylor County Crab Festival. We were all real proud when she won. She's always at the practice eld after worksometimes I think she's more interested in dating players than in doing her job, but overall she's a good worker. Michelle Shelton A/P Clerk: Michelle is really hard working. She handles all the bookkeeping and paperwork, like the purchase orders and stuff. She's also going to school part time. To begin your audit, your team does a walk-through of each process at TBC. SH 2 describes your observations of those processes and how employees handle their responsibilities. You also collect a copy of the team game schedule SH 3 and copies of the last ve months of nancial information SH 4 through SH 17. ASSIGNMENT Your instructor will divide the class into teams. Working with your team, your assignment is to determine whether fraud has been committed at TBC, and, if so, to gather and present evidence sufcient to prove the guilt of the suspects. This is a competitive exercise. It is essential that you keep the information that your team has gathered private. Leaks provide other teams with cheap information, and will put your team at a disadvantage at the time of grading. Procedure The rst step is to review the background and nancial information provided. Then, working with your team, brainstorm.1 Given the company, its employees, and processes, how could a fraud be committed and concealed? Remember the \"fraud triangle:\" to commit fraud, a perpetrator must have pressure, opportunity, and a rationalization for his or her behavior AICPA, para. 33. Are there weaknesses in controls that could be exploited by an unscrupulous employee? Which em- 1 Statement on Auditing Standards SAS No. 99 requires the audit team to brainstorm \"...about how and where they believe the entity's nancial statements might be susceptible to material misstatement due to fraud, how management could perpetrate and conceal fraudulent nancial reporting, and how assets of the entity could be misappropriated\" AICPA 2002, para. 14. Generally SAS No. 99 does not apply to forensic investigators unless they are certied public accountants engaged to render an opinion on nancial statements. Issues in Accounting Education Volume 25, No. 2, 2010 American Accounting Association 282 Dee and Durtschi ployees have the incentive to do so? Review the given nancial data. Do relationships between nancial and non-nancial information seem reasonable? Are there any unusual trends, postings, or transactions about which your group is curious? As in a real audit or forensic investigation, your group is not provided, initially, with all the information needed to solve the case. Once your group has reviewed the materials provided and completed your brainstorming session covering the questions listed above, compile a list of additional information you would like to receive. You will request this information via your instructor. To obtain the additional information you need, send an email to your instructor, but address your request to the appropriate employee of TBC, or the appropriate outside party. For example, \"Michelle Shelton: Please provide us with copies of the phone invoices for May.\" As this is a forensic investigative exercise, you have greater latitude than in most audit situations to gather information in any legal manner you see t. For example, you can question TBC employees, their friends, relatives, and business associates. If you have enough evidence to give probable cause, you can obtain a subpoena from a judge enabling you to acquire private information such as credit reports or bank accounts. If requesting evidence from outside of TBC, be clear in your request. For example, \"If I examine public records, what will I learn about cars owned by Sam McCarty?\" or \"If I attend the TBC fundraising event on April 3, what will I see?\" You can also conduct other information gathering exercisesfor example, surveillance of TBC employees. Interviewing Suspects If time allows, your instructor may provide your team an opportunity to interrogate your suspects near the end of your work on the case. The goal of the interrogation is to obtain a confession from your suspects. You can include any confessions you obtain as additional evidence in your nal fraud report. You will question any suspects as a team, so think of ways you can use your team effectively. The interviews are generally short 10 to 20 minutes, so consider the following: 1. 2. 3. Be prepared. The more information you have gathered toward solving the case, the higher the likelihood you can induce an admission of guilt from your suspect. For example, if you know who did it, how they did it, why they did it, and can show that they beneted from the crime, you can box your suspects into a corner and obtain a confession. Have a plan. Organize your information and decide on a method of presentation that will best demonstrate to the perpetrator that denial of guilt is futile. However, do not treat your pre-planned questions as a script to which you must adhere. You will want to modify your approach as the interview progresses based upon the responses of the suspect. Have a theme for your interview. How will you behave toward the suspect? Will you be empathetic and understanding, allowing the suspect to rationalize his or her behavior? Or will you act as if resistance to questioning is fruitless, as you have all the information you need and are just letting the suspect state his or her side? Will you team up to play \"good-cop, bad-cop\"? Make certain that all members of your team are using the same line of reasoning. Final Fraud Report Your team will be graded based upon your written nal fraud report. Your report should be convincing and include the following for each fraud your group uncovers: 1. 2. 3. The names of the perpetrators of the crime. How the perpetrators committed the fraud. The dollar magnitude of the fraud. Issues in Accounting Education American Accounting Association Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting 283 4. The personal gain received by the perpetrators from the fraud. In your report, you should include evidence to back up your assertions in the four areas above. This evidence might include documentation you have gathered from your emails, information summarized from interviews and other sources such as surveillance, and analysis based on data from the student handouts. Finally, experience has shown that the most successful teams are those that work together. Each team member's point of view is valuable. Divide this case and work alone, at your own peril. Issues in Accounting Education Volume 25, No. 2, 2010 American Accounting Association 284 Issues in Accounting Education American Accounting Association Dee and Durtschi Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting Issues in Accounting Education 285 Volume 25, No. 2, 2010 American Accounting Association 286 Issues in Accounting Education American Accounting Association Dee and Durtschi Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting Issues in Accounting Education 287 Volume 25, No. 2, 2010 American Accounting Association 288 Issues in Accounting Education American Accounting Association Dee and Durtschi Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting Issues in Accounting Education 289 Volume 25, No. 2, 2010 American Accounting Association 290 Issues in Accounting Education American Accounting Association Dee and Durtschi Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting Issues in Accounting Education 291 Volume 25, No. 2, 2010 American Accounting Association 292 Issues in Accounting Education American Accounting Association Dee and Durtschi Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting Issues in Accounting Education 293 Volume 25, No. 2, 2010 American Accounting Association 294 Issues in Accounting Education American Accounting Association Dee and Durtschi Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting Issues in Accounting Education 295 Volume 25, No. 2, 2010 American Accounting Association 296 Issues in Accounting Education American Accounting Association Dee and Durtschi Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting Issues in Accounting Education 297 Volume 25, No. 2, 2010 American Accounting Association 298 Issues in Accounting Education American Accounting Association Dee and Durtschi Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting Issues in Accounting Education 299 Volume 25, No. 2, 2010 American Accounting Association 300 Issues in Accounting Education American Accounting Association Dee and Durtschi Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting Issues in Accounting Education 301 Volume 25, No. 2, 2010 American Accounting Association 302 Issues in Accounting Education American Accounting Association Dee and Durtschi Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting Issues in Accounting Education 303 Volume 25, No. 2, 2010 American Accounting Association 304 Issues in Accounting Education American Accounting Association Dee and Durtschi Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting Issues in Accounting Education 305 Volume 25, No. 2, 2010 American Accounting Association 306 Issues in Accounting Education American Accounting Association Dee and Durtschi Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting Issues in Accounting Education 307 Volume 25, No. 2, 2010 American Accounting Association 308 Issues in Accounting Education American Accounting Association Dee and Durtschi Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting Issues in Accounting Education 309 Volume 25, No. 2, 2010 American Accounting Association 310 Issues in Accounting Education American Accounting Association Dee and Durtschi Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting Issues in Accounting Education 311 Volume 25, No. 2, 2010 American Accounting Association 312 Issues in Accounting Education American Accounting Association Dee and Durtschi Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting Issues in Accounting Education 313 Volume 25, No. 2, 2010 American Accounting Association 314 Dee and Durtschi PART II: LEARNING OBJECTIVES AND IMPLEMENTATION GUIDANCE Introduction and Objectives This is a new problem-based learning PBL case using the setting of a ctitious minor league baseball team, the Tallahassee BeanCounters TBC.2 This latest case has been developed for three reasons. First, instructors using the rst Tallahassee BeanCounters case TBC I have made numerous requests for additional versions of the case in order to allow for project rotation between semesters. Those who have used TBC I will nd this case TBC II easy to adapt, as the basic accounting processes are similar. However, the cases are entirely independent, with completely different frauds in each case.3 Therefore, instructor knowledge of TBC I is not needed to apply this version of the case. Second, studies show that completion of a fraud class increases \"hiring potential\" for accountants Mounce and Frazier 2002 and that coverage of fraud on the major accounting professional exams has increased Peterson and Reider 2000. A survey conducted by the Auditing Section Education Committee of the American Accounting Association AAA nds that universities are responding to these trends by incorporating fraud detection into the auditing curriculum Johnson et al. 2003. This trend creates a need for more pedagogical materials in fraud detection. Third, critics argue that accounting educators need to focus more on development of students' problem-solving abilities and less on detailed content. For example, in a critique of accounting education, Albrecht and Sack 2000, 64 write: it is time that we, in accounting education, move away from our reliance on lecture and move toward teaching approaches that convey critical KSAs knowledge, skills, and abilitiescases that teach dealing with uncertainty and analytical skills, oral and written communication assignments, and quizzes immediately after mini-lectures or videos to teach communication and listening skills. Our pedagogy needs to include some elements of group work to teach leadership and working together, role playing to teach negotiation, technology assignments to teach technology, and larger projects to teach project management.4 Similarly, in their discussion of auditing education after Sarbanes-Oxley, Arens and Elder 2006 note the importance of experiential learning in providing students with practice in detecting fraud. They call for development of more experiential learning cases, particularly relating to the detection of nancial reporting fraud. Savery 2006, 12 denes PBL as \"an instructional and curricular learner-centered approach that empowers learners to conduct research, integrate theory and practice, and apply knowledge and skills to develop a viable solution to a dened problem.\" The primary objective of PBL is to foster problem-solving skills in students Barrows 1983; 1986. Norman and Schmidt 1992 describe three problem-solving skills developed by PBL: learning and recalling information; transferring information learned in one setting to another; and enhancing the ability to solve problems based on similarity or pattern recognition.5 While PBL began as a teaching tool in the medical profession, its use has since expanded to other areas.6 2 3 4 5 6 For the original case, see Durtschi 2003. The original version of this case won the 2006 Innovation in Auditing and Assurance Education Award from the auditing section of the American Accounting Association AAA, and has been used in universities across the country. A complete list of the differences between the two cases is included in the Teaching Notes, which cannot be accessed by students. This monograph is the result of a project sponsored by the American Institute of Certied Public Accountants AICPA, the Institute of Management Accountants, the AAA, and the then Big 5 professional service rms Arthur Andersen, Deloitte & Touche, Ernst & Young, KPMG, and PricewaterhouseCoopers. See also Boshuizen and Schmidt 1992 and Bransford and Johnson 1972. Savery 2006 discusses the use of PBL in other educational settings. For more information on using PBL to teach accounting topics, see Johnstone and Biggs 1998, Durtschi 2003, and Durtschi and Fullerton 2005. Issues in Accounting Education American Accounting Association Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting 315 This case is designed to utilize the strengths of PBL to help develop several skills delineated in the AICPA's Core Competency Framework.7 Many of these competencies, particularly the \"personal competencies,\" are difcult to address using traditional teaching approaches. Specically, the case is intended to develop students' skills in the following areas: Problem solving and decision making. The AICPA 2003 states that \"individuals entering the accounting profession should display effective problem-solving and decisionmaking skills, good insight and judgment, as well as innovative and creative thinking.\" PBL helps develop these skills by assigning students a problem to solve without initially providing enough information to complete the task Savery 2006; Semerci 2006. In TBC II, the learning process involves analyzing the initial set of facts provided to nd red ags that could indicate fraud. Students must then reason forward to determine the additional information needed to accurately determine whether fraud exists Patel and Groen 1986. They must determine where, or from whom, the desired information can be gleaned and then synthesize their ndings in order to solve the case. 2. Interaction and professional demeanor. Students solve the case in teams, requiring them to coordinate their efforts to achieve a common goal. Further, as in a real audit or forensic investigation, requests for additional evidence to solve the case must be worded clearly and sent to the appropriate TBC employee in order to elicit the desired information. Finally, during the interviews of the \"suspects,\" students gain experience in interviewing techniques and communicating with clients. 3. Communication and reporting. The end result of the students' efforts in the case is their nal written report. To completely solve a fraud, the students must identify the perpetrator, describe commission of the fraud, present evidence of intent, quantify the economic impact, and demonstrate how the suspect beneted from the fraud. The report must be clear, concise, and convincing. From the instructor's point of view, the case is not nearly as complex as the abundance of materials may suggest. Most of the materials provided in the student handouts are supporting documentation for the nancial statements. The instructor does not need to be familiar with every transaction and business process in the case; it is sufcient to understand the nature of the frauds committed outlined in the Teaching Notes. 1. IMPLEMENTATION Beginning the Case This is a competitive case that students solve in teams. Teams are graded against each other, with the team solving the most frauds most convincingly receiving the highest score, and the other teams graded comparatively against the top team. It is important to emphasize that student teams keep their information private. Since teams are graded against each other, collusion between teams will be detrimental to other teams. Teams of three or four students work best; however, in larger classes, teams as large as ve students have been used. Some instructors have assigned teams randomly, though sometimes students with similar time constraints are grouped together. Other instructors have allowed students to select their own teams. We have run the case in classes with as many as 40 students eight teams of ve students and as few as ve students. To get started, students are given the Case Notes which contain the nancial records of TBC as well as pertinent 7 The AICPA 2003 describes its Core Competency Framework as \"...a set of skills-based competencies needed by all students entering the accounting profession, regardless of the career path they choose public/industry/government/ nonprot or the specic accounting services they will perform.\" Issues in Accounting Education Volume 25, No. 2, 2010 American Accounting Association 316 Dee and Durtschi information on the nancial processes within the rm and introductory background information on the TBC employees. The Case Notes also contain a series of questions students should discuss in teams as a brainstorming exercise to begin the case.8 Because a PBL exercise does not initially provide students with all the information they need to solve the case, the core of the case lies in the interaction between the student teams and the role-playing instructor. After reviewing materials in the student packet, teams decide which additional pieces of information they need and from whom they need to request it. Information requests are made via email sent to the instructor. The students are instructed in the Case Notes that any email inquiries should be specic, and addressed to the appropriate person inside or outside of TBC. The Teaching Notes contain solutions to the case as well as materials to help the instructor easily answer student inquiries i.e., the materials students typically request and suggested instructor responses. Managing Instructor Workload Due to the interactive nature of the case, answering student inquiries can be time consuming. Instructors using the case have found the following methods to be very effective in limiting their workload: 1. 2. 3. 4. 8 9 Limit the time period during which the students work on the case. Students should be able to complete the case in three weeks assuming no additional assignments are given during that time period. Some instructors have allocated as little as two weeks or as many as ve weeks to the case. Assign a graduate assistant to answer inquiries and coordinate implementation of the case. Because many of the inquiries are answered simply by sending information contained in the Teaching Notes, the assistant can take care of the routine requests for information and consult with the faculty member as needed.9 Reduce or eliminate lectures through the duration of the case and treat this portion of the course as an online learning exercise. One instructor required students to come to class, where she took attendance and then dismissed them to work in their groups. In general, we have found that if students know the instructor will be at his or her computer quickly responding to inquiries during the designated class period, student teams will gather in separate computer laboratories during that time to work on the case. Since accounting education has been criticized for its heavy reliance on lecture Albrecht and Sack 2000, we feel this interaction is as productive as time spent in the classroom. Impose a cost to information by reducing a team's score if the number of their inquiries exceeds a certain limitfor example, 1 percent off the nal report grade for each three inquiries over 25. One appeal of this is that it mimics situations students will face in their professional future, as information can be costly to obtain. Some disadvantages of this approach are that teams may feel so constrained by the limit they fail to send enough inquiries to solve the case, or may have incentive to collude with another team to lower the overall cost of inquiries. The authors typically remain exible about the number of inquiries, to avoid discouraging motivated students who are determined to uncover all of the fraudulent activity. Statement on Auditing Standards SAS No. 99 AU 316, Consideration of Fraud in a Financial Statement Audit, requires audit engagement teams to discuss methods the client could use to conduct and hide a fraud. SAS No. 99 applies only to nancial statement audits, not forensic investigations. One instructor uses this method regularly with TBC I. She also has her graduate assistant maintain an archive of responses, which helps in subsequent uses of the case. Issues in Accounting Education American Accounting Association Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting 317 Require each team to choose a single student the \"corresponding investigator\" who corresponds with the instructor. This requires team members to work together as in a real audit or forensic investigation, makes it easier for the instructor to monitor team progress, and eliminates duplicate requests from the same team. This method is particularly effective for larger class sizes. As every class is different, it is difcult to estimate the average amount of instructor time required to use the case. We nd that student emails come in waves. An instructor may spend two or three hours one day answering student inquiries, then no time for several days as students digest the information they received. There is a learning curve for the instructor; subsequent usage of the case will require less instructor time, as he or she becomes familiar with the case and typical student inquiries. However, instructors should set aside adequate time approximately ve hours per week during the case to respond to student requests for information. Having said this, most faculty members tell us they enjoyed using the case and the experience of answering student inquiries. 5. Interrogation of Suspects Assuming a fraud has occurred, the ultimate goal of a forensic audit is to gather enough evidence to convict the perpetrator of the crime. At the culmination of the case, we have often made \"suspects\" available for students to interrogate. While real suspect interviews are typically evidence-gathering exercises, in this case student teams have had ample opportunity to communicate with the perpetrators via email prior to this meeting. Thus, we view these interrogations as an opportunity for students to practice communication skills as they present their evidence against the perpetrator. While the interrogations are not necessary to implement the case, we nd them to be an excellent method for addressing the communication component of the AICPA's Core Competency Framework, and students often report the interrogations as being a particularly enjoyable part of the case.10 By the close of the case, when the interrogations occur, most of the teams will have gathered enough evidence to prove at least one fraud has been committed. Therefore, we emphasize throughout the case that the goal of the interrogation is to obtain a confession, not gather more information. To this end, we recruit volunteer \"actors\" to play the parts of the suspects. In the past we have used doctoral students, faculty, family members, and business school staff to play the parts of the perpetrators. The actors do not need to be familiar with accounting, nor do they need to be trained performers. Their time commitment is primarily limited to the interrogation sessions roughly one 75-minute class period per actor. To prepare for their role, actors need only to familiarize themselves with the background of their character and, in general, the frauds their character has committed. This can be accomplished by supplying the actors with a copy of the solutions at the time you begin the case, and sending a \"blind copy\" to the actors of your responses to student inquiries that relate to the character they play. Thus, the actors go into the interview knowing the fraud they committed as well as what they have \"told\" the accountants. However, we have had actors who did an excellent job even though their entire preparation consisted of a 20-minute discussion with the instructor prior to the interviews. The students' questions and presentation are the most important part of the interrogations, not the actors' responses. 10 The communication component is described by the AICPA as follows. \"Accounting professionals are called upon to communicate nancial and non-nancial information so that it is understood by individuals with diverse capabilities and interests. Individuals entering the accounting profession should have the skills necessary to give and exchange information within a meaningful context and with appropriate delivery. They should have the ability to listen, deliver powerful presentations, and produce examples of effective business writing.\" AICPA 2003; emphasis added. Issues in Accounting Education Volume 25, No. 2, 2010 American Accounting Association 318 Dee and Durtschi The actors are not responsible for providing information to the students. Rather, it is up to the students to lead the \"perpetrator\" into a confession. They do this by laying their case out for the perpetrator, showing him or her that the team has gathered all necessary evidence and that denial of guilt is futile. The actor's main job is to deny and obfuscate. We have had actors all nonprofessionals ask to consult with legal counsel, stonewall, drone on about baseball, act distracted or belligerent, avoid addressing the question asked, try to throw the blame on others, and even burst into tears. While entertaining, these experiences nevertheless help student teams focus and show them the weaknesses in their case. We tell the actors not to confess unless the team clearly understands how the crime was committed and convinces them that their character 1 had pressure, opportunity, and rationalization for the crime; 2 exhibited intent; and 3 personally beneted from the crime. We do not recommend telling the students at the beginning of the case who they will be interrogating, as this leads them to the perpetrators. Rather, as the interview date approaches, students should provide the instructor with the names of TBC employees they wish to interrogate. If the students are prepared, they will have narrowed the list of possible suspects down to the actual perpetrators. Thus, instructors need only to obtain actors to play the parts of perpetrators, not all TBC employees. If a team asks to interrogate an employee who is not a perpetrator, we simply tell the team that the employee is unavailable for questioning and to reconsider their evidence.11 This usually leads the team to request an interview with the appropriate TBC employee. Depending upon the number of groups, we allow each team approximately 10 to 20 minutes to interrogate each suspect. Prior to the interrogations, students feel that will be too much time; afterwards, they usually report that it was too little. We do not recommend giving more than 30 minutes, as companies often have rules about the length of time employees are allowed to be questioned during business hours, and there is no point in allowing students to browbeat the suspects. Fifteen minutes is ample time to obtain a confession if the student team is completely prepared. We require each member of a team to participate in the questioning, and the students usually role-play the part of a forensic investigator. It is important that each student team interview the suspects separatelythat is, not in the presence of the other teams. This ensures that the evidence gathered by each team up to the interview date is not compromised. Any \"confessions\" obtained by student teams can be included as evidence in their nal fraud report. We typically have the interrogation sessions videotaped so that students can go back and review their sessions. Most universities have a media center that provides this service. As an alternative to live interviews, the instructor could consider recording interviews of various TBC employees and vendors in advance and providing web-based links to the interviews in answer to some student inquiries. While we have not used this approach, it would be an innovative extension of the current case.12 Student Preparation We have used the case in both forensic accounting and graduate auditing classes. However, in the graduate auditing course, approximately one-third of the classroom material was focused on forensic accounting and fraud detection. Thus, in an auditing class, students may need advanced 11 12 When we say an employee is unavailable for questioning, students usually understand they suspect the wrong individual and they need to take a new approach. Of course, in a real investigation, the perpetrator may be reluctant to consent to an interview. For instructors interested in incorporating videos in the classroom, PricewaterhouseCoopers PWC has an excellent simulation \"Auditing Alchemy, Inc.\" that is available to faculty upon request. We thank an anonymous referee for this suggestion. Issues in Accounting Education American Accounting Association Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting 319 preparation in forensic accounting techniques because these methods differ to some extent from those of the auditor.13 During the course of a nancial statement audit, if an auditor discovers evidence of material fraud committed by senior management, the auditor would report the fraud to those responsible for corporate governancetypically, the audit committee. The auditor would consider the effect of the fraud on the nancial statements and may need to withdraw from the engagement. It is not the auditor's responsibility to make a \"legal determination\" of whether fraud exists SAS No. 99, para. 0.05. Additionally, in most cases the auditor is precluded by standards of condentiality from reporting the fraud to authorities outside of the company SAS No. 99, para. 0.82.14 However, unless they are certied public accountants conducting a nancial statement audit, Statement on Auditing Standards SAS No. 99 does not apply to fraud investigators. In TBC II, students act as forensic investigatorsnot auditorsand thus have authority to investigate and follow evidence trails to their ultimate conclusion. Therefore, when the case is used in an auditing class, instructors may need to remind students that they can gather information from legal sources not traditionally used in auditing surveillance, for example. CLASSROOM EXPERIENCE This new version has been applied successfully in nine universities across the United Statesin both forensic accounting and graduate auditing classes. Student feedback has been very positive. Table 1 presents results from 81 student surveys, with responses given on a seven-point scale 7 strongly agree; 1 strongly disagree.15 The statements with which the students most strongly agreed were 1 \"I used a variety of skills to solve the case\" mean 6.38, median 6; 2 \"I was glad to have worked on the case in teams\" mean 6.27, median 7; 3 \"the project was engaging and interesting\" mean 6.20, median 6; and 4 \"I found the case to be a good learning experience\" mean 6.19, median 6. Students felt least strongly that, after the case, they had a better understanding of how to ask a client for additional documentation mean 5.63, median 6. Table 1 also shows separate means for classes that incorporated the interviews versus those that did not. When the case included interviews with suspects, the student responses were signicantly higher more positive for all questions, although marginally so for the question about team interaction. However, regardless of whether the interviews were conducted, students largely found the case to be a rewarding learning experience. All faculty who eld-tested this case had previously used the original TBC case. This repeated usage, along with multiple requests for new case versions, indicates that faculty members believe the extra effort required due to the interactive nature of the case is more than compensated for by the valuable student learning experience the case provides. We did not formally survey faculty who ran test versions of this case; however, all gave feedback that is incorporated into this nal version. Sample comments from faculty include the following: I really like both cases. This time, I invited two friends to role play the suspects who will be interviewed by students. My students found this case to be more challenging than the rst case, but had a lot of fun. 13 14 15 There are many sources that discuss forensic accounting investigative techniques. Two good examples are Golden et al. 2006 and Hopwood et al. 2008. In audits of publicly traded companies, if the auditor discovers a material illegal act committed by the client, he or she must report it to the board of directors. The board must then inform the Securities and Exchange Commission SEC of the illegal act within one day of its discovery. The auditor is required to report the illegal act to the SEC if the board of directors fails to do so. Four instructors, one of whom is an author, administered the student surveys. Responses from the author's classes were not signicantly different from those of the other classes. Issues in Accounting Education Volume 25, No. 2, 2010 American Accounting Association 320 Dee and Durtschi TABLE 1 Results of Student Survey (n )18 Mean When Case Does Not Include Interviews (n )46 Mean I used a variety of skills to solve the case. I'm glad I worked on this project as a member of a team rather than individually. This project was engaging and interesting. Overall, this project was a good learning experience. My team interacted well together. I have a better understanding of how an auditor would search for fraud. I have a better understanding of how to ask for documentation from the client. I have a better understanding of interviewing techniques. Median Range Mean When Case Includes Interviews (n )71 6.38 6.00 2-7 6.94 6.23 0.001 6.27 7.00 1-7 6.76 6.14 0.001 6.20 6.00 1-7 6.94 6.00 0.001 6.19 6.00 3-7 7.00 5.97 0.001 5.98 6.00 1-7 6.29 5.89 5.90 6.00 1-7 6.56 5.83 0.001 5.63 6.00 1-7 6.29 5.45 0.001 6.53 7.00 1-7 6.53 N/A p-value for t-test of Difference in Means 0.0989 N/A Response scale: Strongly Disagree 1 to Strongly Agree 7. They are having so much fun! I am having so much fun! Other faculty members are hearing them talking about it in the halls telling their friends how much fun they are having and that their friends MUST take this class. TEACHING NOTES Teaching Notes are available only to full-member subscribers to Issues in Accounting Education through the American Accounting Association's electronic publications system at http:// aaapubs.aip.org/tnae/. Full-member subscribers should use their usernames and passwords for entry into the system where the Teaching Notes can be reviewed and printed. If you are a full member of AAA with a subscription to Issues in Accounting Education and have any trouble accessing this material, then please contact the AAA headquarters ofce at ofce@aaahq.org or 941 921-7747. REFERENCES Albrecht, W. S., and R. S. Sack 2000. Accounting Education: Charting the Course through a Perilous Future. Available at: http://aaahq.org/pubs/AESv16/toc.htm. Issues in Accounting Education American Accounting Association Volume 25, No. 2, 2010 Return of the Tallahassee BeanCounters: A Case in Forensic Accounting 321 American Institute of Certied Public Accountants AICPA. 2002. Consideration of Fraud in a Financial Statement Audit. Statement on Auditing Standards No. 99. New York, NY: AICPA. -. 2003. AICPA Core Competency Framework. Available at: http://www.aicpa-eca.org/library/ccf/ default.asp. Accessed March 27, 2010. Arens, A., and R. Elder. 2006. Perspectives on auditing education after Sarbanes-Oxley. Issues in Accounting Education 21 November: 345-362. 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Leiner, and G. R. Young. 2008. Forensic Accounting. New York, NY: McGraw-Hill Irwin. Johnson, E., J. Baird, P. Caster, W. Dilla, C. Earley, and T. Louwers. 2003. Challenges to audit education for the 21st century: A survey of curricula, course content, and delivery methods. Issues in Accounting Education 18 August: 241-263. Johnstone, K. M., and S. F. Biggs. 1998. Problem-based learning: Introduction, analysis, and accounting curricula implications. Journal of Accounting Education 16 3/4: 407-427. Mounce, P., and J. Frazier. 2002. The effect of forensic accounting education on an accountant's employment potential. Journal of Forensic Accounting 3: 91-102. Norman, G. R., and H. G. Schmidt. 1992. The psychological basis of problem-based learning: A review of evidence. Academic Medicine 67: 557-565. Patel, V. L., and G. J. Groen. 1986. Knowledge-based solution strategies in medical reasoning. Cognitive Science 10: 91-116. Peterson, B. and B. Reider. 2000. Fraud coverage on the major disclosed professional accounting certication exams during the 1990s. Journal of Forensic Accounting 1: 3-16. Savery, J. 2006. Overview of problem-based learning: Denitions and distinctions. The Interdisciplinary Journal of Problem-Based Learning 1: 9-20. Semerci, N. 2006. The effect of problem-based learning on the critical thinking of students in the intellectual and ethical development unit. Social Behavior and Personality 34: 1127-1136. Issues in Accounting Education Volume 25, No. 2, 2010 American Accounting Association Copyright of Issues in Accounting Education is the property of American Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use