Course description
In this course, students will gain an understanding of the institutional and organizational conditions that lead to fraudulent financial reporting, failure of sound corporate governance practice and finally to share-price collapse in stock markets. Both the causes of these failures and their effects on business communities and society as a whole will be discussed. These issues will be examined through case studies of actual incidents of financial misreporting and stock market fraud that have occurred in a variety of organizations including private and publicly-traded corporations, government, and not-for-profit organizations. Reference will be made to standard ethical theories which will be reviewed. Students are recommended to take PHIL 1122 and BUSN 1320 prior to taking this course.
Course content
1. Introduction to the ethical, moral and legal problem of fraudulent Financial Reporting.
2. Making ethical decisions in the business world; study of major philosophical frameworks for analyzing ethical dilemmas, as well as the most frequent “false exits”.
3. Improper recording of contingent sales and other unethical organizational behaviours.
4. Moral and ethical dilemmas facing Accounting professionals invoved in holding books open after end of period, entering in multiple element contracts, recording fictitious revenue, improper Valuation of Revenue, submitting misleading Cash Flow Statements, and other professional unethical conduct including employee and employer conflicts.
5. Improper use of Business Combinations and capitalization of expenses.
6. Immoral and unethical professional decisions such as those relating to deferral of expenses, failure to record expenses, overstating ending inventory, understating reserves for bad debts, failure to record asset impairments, and off-Balance Sheet arrangements.
7. Inadequate Disclosure in MD&A and related party transactions.
8. Unethical leadership as demonstrated during the Mortgage Crisis.
9. Signals that may indicate possible fictitious reporting in financial statements.
Learning activities
In-class lectures and/or on-line
Means of assessment
Evaluation will be carried out in accordance with the Douglas College Evaluation Policy.
Assignments and Case studies 30%
Participation 10%
Mid-term 25%
Final Exam 35%
Students may conduct research as part of their coursework in this class. Instructors for the course are responsible for ensuring that student research projects comply with College policies on ethical conduct for research involving humans, which can require obtaining Informed Consent from participants and getting the approval of the Douglas College Research Ethics Board prior to conducting the research.
Textbook materials
Detecting Accounting Fraud: Analysis and Ethics. Cecil W. Jackson. Pearson/Prentice Hall
Current copy of the CPA Code of Professional Conduct
And/or other textbook and materials approved by the department