An area that auditors and accountants should be keenly aware of is fraud. Recognizing the “red flags” (i.e., behavioral and accounting indicators of the potential) for fraud is essential to detecting, and perhaps limiting, the opportunities for fraud. Examples of red flags that could indicate the potential for fraud include living a lifestyle more lavish than what could be supported by a person's income, refusing to take vacation time, working after hours, avoiding answering questions, changing behavior/mood, or brushing off offers to help.
Cases that require students to identify the potential for fraud are in short supply. We developed a teaching case that revolves around our personal experience with a subdivision's homeowners' association (HOA).1 The purposes of this case are to develop the student's ability to recognize indicators of potential fraud and to develop measures to mitigate the risk of fraud. Students can relate to this case because it...
