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Teaching Investigative Skills to Combat Business Fraud
Susquehanna University

March 27, 2017

Every year, thousands of businesses and investors are the victims of fraud, a growing problem nationally. Students at Susquehanna University in the course Fraud and Forensic Accounting are learning how to spot crimes such as fraud, embezzlement, money laundering and larceny.

"We need to have suspicious minds," said Professor of Accounting Barbara McElroy, who co-taught the class recently with Associate Professor John Pendley. "Suspicion is just a tad beyond skepticism."

In class on this day, students studied the case of the "Craft Cash Theft," a simulation that investigated fraud in a small business.

The case involved a small craft store whose owner received an anonymous note accusing an unnamed employee of a nonspecific theft. The students received some information, such as a monthly income statement, and details about staff, security and protocols at the store.

After studying the case, they identified key facts that could indicate financial control issues at the business, like the fact that all store employees have access to cash.

"That's the thing people are most likely to go after," McElroy said.

Students then floated theories as to what might be going on-everything from skimming to voiding transactions or inflating discounts-and made requests for more information from Pendley.

"We have to think like fraud investigators," Pendley told the class, "as well as summarize what the business' internal control issues are."

A study recently released by Kessler International, a global forensic accounting firm, found that demand for forensic accounting services has grown significantly over the past 40 years. 

The study revealed that the growth stems from:

  • An increasingly litigious atmosphere
  • The growth of fraudulent activity
  • Advances in technology that make fraud harder to identify

"What we're trying to do is increase their intuition," McElroy said. "We want students to be able to notice things almost subconsciously."

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