A Case Study of Fraud Concerns at a Homeowners' Association

ABSTRACT

This case is based on a series of actual events in a local homeowners' association (HOA). Instructors teaching fraud detection in their courses often use historical cases in which the “answer” to whether fraud has been committed is known. This case is unique because it is based on real incidents that occurred in an HOA. The case starts with the inception of the HOA up to the present, at which time the situation is still evolving. Students are required to recognize the conditions that increase the potential for fraudulent activity in an organization. Then they must analyze the activities in this particular association to identify the “red flags” that indicate that fraudulent activity could occur. Finally, students must develop recommendations to mitigate the identified risk areas. After completing this case, students will be more aware of potential and actual incidents of fraudulent activity and be able to address how these incidents can be prevented. This knowledge will benefit them in any area of accounting they choose to pursue. This case can be used in fraud examination, auditing, accounting information systems, and financial accounting classes.

Keywords: fraud, fraud detection, fraud triangle, “red flags”, risk assessment, case studies, COSO framework

Article Citation:

Constance M. Lehmann and Cynthia D. Heagy (2017) A Case Study of Fraud Concerns at a Homeowners' Association. Issues in Accounting Education: February 2017, Vol. 32, No. 1, pp. 67-77.