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Two Small Fraud Cases
Carol J. Normand,
University of Wisconsin - Whitewater
ABSTRACT. This paper presents two small cases that explore different aspects of fraud auditing. In the Arochem case, students must decided if an Arochem executive is innocent but using aggressive accounting practices, guilty of fraudulent financial statement reporting, or if they would request more information. Additionally, students must write the journal entries they would use to record the purchase of crude oil, the refining costs, and the sale of the finished products so that profit is recognized before the refining of the oil and the actual sale – the accounting treatment Arochem used. In the “George Chapman” case, students must decide if there are enough red flags to warrant opening an investigation into the allegation that Chapman embezzled $100,000. To make this determination, students must review the case information and eight documents they “obtain” from the county recorder’s office concerning the local real estate transactions of George Chapman.
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