Assessment 1: investigative accounting practices


Write 4-5 pages in response to the items listed for each of the four case studies included in this assessment.


Despite increased exposure, better corporate governance, and general increased awareness, financial, and other types of fraud are not going away. While financial fraud includes the increasing problem of identity theft and other nontraditional crimes, the focus of investigative accounting remains on the uses of accounting systems and circumventing controls to achieve personal financial gain at the expense of the organization.

Investigative accounting cannot be undertaken without some knowledge of accounting principles. That is the main reason this course is placed near the end of the specialization, so you can take advantage of previous learning and apply the concepts to analyzing and solving investigative accounting issues.

In this initial assessment, we will be exploring a piece of the investigative accounting world by looking at the role of forensics as an auditing tool, its place in the accounting world, and identifying opportunities and organizations that support the work of investigative accounting. We will also explore the accounting legal environment.


For this assessment, you must analyze four case studies and write responses to the listed items for each case study. Reviewing the resources for this assessment will give you a good start toward preparing for the assessment.

Case Studies

Case 1

Southeast Ag Supply Company is looking into a merger with another Ag supply company in a neighboring territory. Southeast’s Internal Auditor has hired a forensic accounting firm to investigate the merger candidate. In relation to this scenario, write responses to the following questions:

  • What types of investigations should the forensic accounting firm conduct? 
  • What types of outside assistance might help the forensic accounting firm conduct a thorough investigation? 
Case 2

Write responses to the following:

  • Are there differences in the investigations a forensic accountant would undertake for a civil matter versus a criminal matter? 
  • What are the similarities in the nature of the investigations? 
  • Are the expected outcomes of the investigations the same? What are the similarities, and what are the differences?
  • What specialized training would the forensic accountant need to conduct the different investigations? Explain.
Case 3

Reasonable assurance is a concept that relies heavily on internal control, but Amber Johnson, the chief compliance officer of the Holly Company, has doubts about the effectiveness of reasonable assurance. She has demanded complete compliance with all processes related to the compilation of the financial statements. She said, “As long as I am the compliance officer here, we will have a perfectly monitored system that absolutely prevents fraud or misstatements in our financial statements.” Derek Lodge, the controller, disagrees with Amber Johnson. He feels that requiring more than reasonable assurance costs too much and is impossible to implement.

Write responses to the following:

  • Do you agree with Derek Lodge or Amber Johnson? Explain.
  • Is preventing all financial statement fraud or misstatement an unattainable goal? Explain.
  • Suppose the internal auditor reports to the CEO. Does that complicate the goal of preventing all financial statement fraud or misstatements? Explain.
Case 4

Total Fresh Products manufactures and distributes snack foods. Total Fresh Products is being audited for the first time by Rachel Fancy, a partner in a local CPA firm. Early in the audit, Rachel uncovered that the CEO had acquired a home media system, a Mercedes Benz, and an exercise pool for his personal use. These items were delivered to the CEO’s home, and they were recorded in the accounting records as professional services. On Total Fresh Products’ most recent federal tax return, the items were included in deductible business expenses.

Write responses to the following:

  • What should Rachel Fancy do with the information she has uncovered? 
  • What impact should the discovery have on how she proceeds with the audit? 
  • How should the findings be reflected in her audit opinion report?

Additional Requirements

  • Written communication: Written communication should be free from errors that detract from the overall message.
  • Length: 4–5 pages.
  • Font and font size: New Times Roman, 12-point.

Competencies Measured

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

  • Competency 1: Analyze the environment surrounding financial and forensic auditing.
    • Analyze special training a forensic accountant would need to conduct civil and criminal investigations.
    • Evaluate the effectiveness and practicality of reasonable assurance versus complete compliance for internal control procedures.
    • Analyze the effect of reporting relationships on the attainment of complete compliance for internal control procedures.
    • Evaluate how the discovery of business funds used for a CEO’s personal purchases should affect decisions about client engagement and an audit opinion report.
  • Competency 2: Assess the background, practice, and methods of conducting an audit.
    • Analyze the types of investigations a forensic auditor would conduct and outside assistance the auditor might seek to evaluate a merger candidate.
  • Competency 3: Examine various types of forensic and non-forensic audits.
    • Compare the investigations a forensic accountant would conduct and expected outcomes in a civil versus a criminal matter.
  • Competency 5: Communicate in a manner that is professional and consistent with expectations for professionals in the field of accounting.
    • Communicate in a manner that is professional and consistent with expectations for professionals in the field of accounting.
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