An Instructional Case For Courses In Financial Accounting, Auditing, Managerial Accounting, Ethics, And Fraud Examination

Abstract

This case study describes an account in which a student run business venture at a university faces the prospect of loosing control of a segment (Café) of its business due to the impending reporting of an operating loss in the current period. The CEO is adamant that the financial statements must not reflect a loss and suggests ways in which the CFO might make this happen. While the case is set in an environment that is familiar to most students it can serve as a vehicle for the examination of the broader real world issues relating to inappropriate operating and accounting choices which lead to the practice of earnings manipulation or possibly intentional fraud. Students have the opportunity to (a) identify the key stakeholders, (b) comment on the operational, accounting, and ethical issues raised by the case, (c) examine relevant accounting standards related issues (d) reason out alternative courses of action with respect to the facts of the case and (e) propose a course of action to resolve the problem(s) and defend it in either a written submission or in class discussions. This case can serve as an excellent tool for a deeper level of instruction, at various levels in an accounting program, about the critical role of accounting in the economy and in society.