Issues in

Accounting Education Vol. 23, No. 4

November 2008

SPECIAL ISSUE ON EDUCATION IN FRAUD, FORENSIC ACCOUNTING, AND FINANCIAL CRIMES A Model Curriculum for Education in Fraud and Forensic Accounting MARY-JO KRANACHER, BONNIE W. MORRIS, TIMOTHY A. PEARSON, and RICHARD A. RILEY, JR. The Psychology and Sociology of Fraud: Integrating the Behavioral Sciences Component Into Fraud and Forensic Accounting Curricula SRIDHAR RAMAMOORTI Legal and Regulatory Environments and Ethics: Essential Components of a Fraud and Forensic Accounting Curriculum GEORGE E. CURTIS Fraud and Forensic Accounting in the Digital Environment TIMOTHY A. PEARSON and TOMMIE W. SINGLETON Incorporating Forensic Accounting and Litigation Advisory Services Into the Classroom LESTER E. HEITGER and DAN L. HEITGER West Virginia University: Forensic Accounting and Fraud Investigation (FAFI) A. SCOTT FLEMING, TIMOTHY A. PEARSON, and RICHARD A. RILEY, JR. The Model Curriculum in Fraud and Forensic Accounting and Economic Crime Programs at Utica College GEORGE E. CURTIS Forensic Accounting and FAU: An Executive Graduate Program GEORGE R. YOUNG The Saint Xavier University Graduate Program in Financial Fraud Examination and Management WILLIAM J. KRESSE

A PUBLICATION OF THE AMERICAN ACCOUNTING ASSOCIATION

AMERICAN ACCOUNTING ASSOCIATION The members of the 2008–2009 Executive Committee of the Association are as follows: President Susan F. Haka, Michigan State University President-Elect Nancy A. Bagranoff, Old Dominion University Vice President P. Jane Saly, University of St. Thomas Vice President–Education Philip M. J. Reckers, Arizona State University Vice President–Finance Christopher J. Wolfe, Texas A&M University Vice President–International Sidney J. Gray, University of Sydney Vice President–Professional Relations Robert J. (Bob) Daugherty, PricewaterhouseCoopers LLP Vice President–Publications David C. Burgstahler, University of Washington Vice President–Research Gregory B. Waymire, Emory University Vice President–Sections and Regions Bruce K. Behn, The University of Tennessee Past President Gary John Previts, Case Western Reserve University

Membership in the Association is available at the following annual rates: Full membership: The membership dues include online selection of one, two, or all three of the following Association-wide journals: The Accounting Review, Accounting Horizons, and Issues in Accounting Education. (This does not include Section journals.) Select one Association-wide journal ....................... U.S. $175.00 ....................... Select two Association-wide journals ....................... U.S. $185.00 ....................... All three Association-wide journals ....................... U.S. $195.00 ....................... Student membership: The print option is not available for student members. Select one Association-wide journal ......................... U.S. $25.00 Select two Association-wide journals ......................... U.S. $35.00 All three Association-wide journals ......................... U.S. $45.00

with Print Option $215.00 with Print Option $225.00 with Print Option $235.00

In addition, full members may belong to one or more Sections of the Association: Accounting, Behavior and Organizations; Accounting Programs Leadership Group; American Taxation Association; Auditing; Diversity; Financial Accounting and Reporting; Gender Issues and Worklife Balance; Government and Nonprofit; Information Systems; International Accounting; Management Accounting; Public Interest; Strategic and Emerging Technologies; Teaching, Learning and Curriculum; and Two-Year College. Each Section assesses its own annual dues, which are collected by the Association.

Manuscripts to be submitted for publication in Issues in Accounting Education should be sent to Kent St. Pierre, Editor, Issues in Accounting Education, 220 Purnell Hall, University of Delaware, Newark, DE 197162715. Please include one hard-copy and one electronic copy and a $75 member or $100 nonmember submission fee, payable to the American Accounting Association. Include an email address for contact author of paper. Books to be submitted for review in Issues in Accounting Education should be sent to Khondkar E. Karim, E. Philip Saunders, College of Business, Rochester Institute of Technology, Rochester, NY 14623-5608 ([email protected]). Issues in Accounting Education (ISSN 0739-3172 print and ISSN 1558-7983 online) is published four times a year in February, May, August, and November by the American Accounting Association, 5717 Bessie Drive, Sarasota, Florida, 34233-2399. General subscriptions are available at the annual rates of $285 for a print copy or at $315 for both a print and electronic copy. The member subscription rate for a hard-copy is $30. Electronic access is included with membership dues. Periodicals Postage Paid at Sarasota, Florida and additional mailing offices. POSTMASTER: Send address changes to Issues in Accounting Education, 5717 Bessie Drive, Sarasota, Florida 34233-2399. © 2008 American Accounting Association. All rights reserved. Printed in the United States of America.

Issues in

A ccounting E ducation

VOL. 23, NO. 4 NOVEMBER 2008

SPECIAL ISSUE ON EDUCATION IN FRAUD, FORENSIC ACCOUNTING, AND FINANCIAL CRIMES A Model Curriculum for Education in Fraud and Forensic Accounting MARY-JO KRANACHER, BONNIE W. MORRIS, TIMOTHY A. PEARSON, and RICHARD A. RILEY, JR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Psychology and Sociology of Fraud: Integrating the Behavioral Sciences Component Into Fraud and Forensic Accounting Curricula SRIDHAR RAMAMOORTI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Legal and Regulatory Environments and Ethics: Essential Components of a Fraud and Forensic Accounting Curriculum GEORGE E. CURTIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fraud and Forensic Accounting in the Digital Environment TIMOTHY A. PEARSON and TOMMIE W. SINGLETON . . . . . . . . . . . . . . . . . . . . . . . . . . Incorporating Forensic Accounting and Litigation Advisory Services Into the Classroom LESTER E. HEITGER and DAN L. HEITGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . West Virginia University: Forensic Accounting and Fraud Investigation (FAFI) A. SCOTT FLEMING, TIMOTHY A. PEARSON, and RICHARD A. RILEY, JR. . . The Model Curriculum in Fraud and Forensic Accounting and Economic Crime Programs at Utica College GEORGE E. CURTIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Forensic Accounting and FAU: An Executive Graduate Program GEORGE R. YOUNG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Saint Xavier University Graduate Program in Financial Fraud Examination and Management WILLIAM J. KRESSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

505

521

535 545

561

573

581 593

601

BOOK REVIEWS Fred Phillips, Robert Libby, and Patricia A. Libby, Fundamentals of Financial Accounting MARVIN L. BOUILLON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609 Charles T. Horngren, Srikant M. Datar, George Foster, Madhav Rajan, and Christopher Ittner, Cost Accounting: A Managerial Emphasis JEAN HAWKINS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 610 Charles T. Horngren, Gary L. Sundem, William O. Stratton, David Burgstahler, and Jeff Schatzberg, Introduction to Management Accounting ZABIHOLLAH REZAEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 611

Peter D. Easton, Robert F. Halsey, Mary Lea McAnally, and Al Hartgraves, Financial & Managerial Accounting for MBAs WILLIAM STAMMERJOHAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 612 Meg Pollard, Sherry K. Mills, and Walter T. Harrison Jr., Financial and Managerial Accounting THOMAS J. TRIBUNELLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613 EDITOR’S REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615 INFORMATION TO AUTHORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 617 ANNUAL INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 623

Editorial Staff of ISSUES IN ACCOUNTING EDUCATION Editor E. KENT ST. PIERRE, UNIVERSITY OF DELAWARE Associate Editors ROBERT D. ALLEN, THE UNIVERSITY OF UTAH JAMES L. BIERSTAKER, VILLANOVA UNIVERSITY JOHN M. HASSELL, INDIANA UNIVERSITY–PURDUE UNIVERSITY INDIANAPOLIS CAROLYN STRAND NORMAN, VIRGINIA COMMONWEALTH UNIVERSITY WILLIAM R. PASEWARK, TEXAS TECH UNIVERSITY MICHAEL P. RIORDAN, JAMES MADISON UNIVERSITY PAMELA A. SMITH, NORTHERN ILLINOIS UNIVERSITY PAULA B. THOMAS, MIDDLE TENNESSEE STATE UNIVERSITY DONALD E. WYGAL, RIDER UNIVERSITY

KHONDKAR

Department Editors Book Reviews E. KARIM, ROCHESTER INSTITUTE

OF

TECHNOLOGY

AMERICAN ACCOUNTING ASSOCIATION Executive Director TRACEY E. SUTHERLAND Communications Department BEVERLY HARRELSON DIANE HAZARD LISA HABBLITZ KATHY CASPER JUDY COTHERN DEIRDRE HARRIS SONJA LANGLEY JAN KOVARIK (SUBCONTRACTOR) ANNE DEMPSEY (SUBCONTRACTOR) SARA LINDA (SUBCONTRACTOR) Other AAA Staff ROLAND LATULIP BARBARA BRADY JAMES SZELMINSKI PAT STEIN DIANE LEGER ARLENE OLIVER MAN FONG KATHLEEN GWINN JODIE MORRILL KATHLEEN MCNEIL DEBORA GARDNER DAVID BOYNTON PEGGY TURCZYN

PAST EDITORS 1983–1985 1986–1988 1989–1991 1992–1995 1996–1998 1999–2001 2002–2004 2005–2007

Richard J. Murdock Robert W. Ingram Daniel L. Jensen Frederick L. Neumann Wanda A. Wallace David E. Stout Thomas P. Howard Sue Pickard Ravenscroft

Notes Regarding Case Submissions Articles submitted as case studies to Issues in Accounting Education should provide some evidence of classroom validation and/or peer evaluation of their contents. That is, each case submission must provide evidence regarding the efficacy of the case in terms of accomplishing a clearly identified set of planned-for educational objectives. This empirical evidence need not be derived from rigidly controlled experimental studies. However, it should address matters such as the context in which the case has actually been used in accounting education; the author’s experience in using the case; its perceived benefits (e.g., from data obtained from students and outside reviewers); implementation costs; and recommendations for its effective employment based on the author’s experience. Optimally, at least two faculty users of the case material should provide experiential feedback. Case submissions should comprise three self-contained parts: the case material itself (denoted ‘‘Case’’), a section containing implementation guidance and case efficacy information (denoted ‘‘Case Learning Objectives and Implementation Guidance’’), and a section containing ‘‘Teaching Notes.’’ To help prevent student access to case solution material, only the ‘‘Case’’ and ‘‘Case Learning Objectives and Implementation Guidance’’ sections will be published in the journal. Only subscribers to Issues in Accounting Education who are full members of the American Accounting Association will be able to access the ‘‘Teaching Notes’’ associated with a particular case. Authors should begin each of the three sections on a new page. The abstract of the case should be written for the student-user audience. The section labeled ‘‘Case Learning Objectives and Implementation Guidance’’ should be directed to instructors/ potential case users. As noted above, the third section of the case should be labeled ‘‘Teaching Notes’’ and will not be printed in this journal. Teaching Notes will be available only through the American Accounting Association’s electronic publications system to subscribers to Issues in Accounting Education who are full members of the AAA. Each of the three sections may have its own footnotes and list of references. (Please see prior issues of the journal for examples in this regard.) Kent St. Pierre Editor

Editorial Board 2008–2009 Joseph D. Beams, University of New Orleans Joe Bittner, Federal Reserve Bank of New York Ervin L. Black, Brigham Young University Bruce C. Branson, North Carolina State University Peter C. Brewer, Miami University John W. Briggs, James Madison University Steve Buchheit, Texas Tech University Gary D. Burkette, East Tennessee State University Tina D. Carpenter, University of Georgia Jie Ping Chen, City University of Hong Kong Douglas B. Clinton, Northern Illinois University Denton L. Collins, University of Memphis Teresa L. Conover, University of North Texas Susan V. Crosson, Santa Fe Community College Andrew D. Cuccia, University of Oklahoma Billie M. Cunningham, University of Missouri Mark C. Dawkins, University of Georgia Dan S. Deines, Kansas State University Stephen J. Dempsey, University of Vermont Mary S. Doucet, California State University, Bakersfield Jonathan E. Duchac, Wake Forest University Randal J. Elder, Syracuse University Allan W. Graham, University of Rhode Island W. Ken Harmon, Millsaps College Terri L. Herron, The University of Montana–Missoula Peggy A. Hite, Indiana University Karen L. Hooks, Florida Atlantic University Richard W. Houston, The University of Alabama Mohamed E. A. Hussein, University of Connecticut Kathryn J. Jervis, Florida International University Debra C. Jeter, Vanderbilt University

Eric N. Johnson, Indiana University– Purdue University Indianapolis Julia N. Karcher, University of Louisville Mark J. Kohlbeck, Florida Atlantic University Stacy E. Kovar, Kansas State University Margarita M. Lenk, Colorado State University Timothy J. Louwers, James Madison University R. David Mautz, Jr., North Carolina A&T State University Annie S. McGowan, Texas A&M University Jennifer M. Mueller, Auburn University Donald P. Pagach, North Carolina State University Robert W. Parry Jr., Indiana University Kirk L. Philipich, University of Michigan Dearborn Larry M. Prober, Rider University Robin R. Radtke, Texas Tech University Atul Rai, The University of Alabama Richard L. Rogers, Indiana University– Purdue University Indianapolis Ania M. Rose, Southern Illinois University Carbondale Jacob M. Rose, Southern Illinois University Carbondale Andrew J. Rosman, University of Connecticut Georgia C. Saemann, University of Wisconsin–Milwaukee Douglas K. Schneider, East Carolina University Rebecca T. Shortridge, Northern Illinois University David H. Sinason, Northern Illinois University Monte R. Swain, Brigham Young University John M. Thornton, Washington State University William M. VanDenburgh, James Madison University Valaria P. Vendrzyk, University of Richmond Kenton B. Walker, University of Wyoming Isabel Yanyan Wang, Michigan State University

Terry J. Ward, Middle Tennessee State University Terry D. Warfield, University of Wisconsin–Madison Stephanie F. Watson, University of Central Arkansas Brett R. Wilkinson, Baylor University

Paul F. Williams, North Carolina State University Pete Wilson, Boston College Susan K. Wolcott, WolcottLynch Mark F. Zimbelman, Brigham Young University

Introduction

T

his special issue on Forensic Accounting originated in part due to questions received by the editor on this topic. What we have tried to do in this issue is to provide our readers with information on individual forensic accounting classes and on forensic accounting programs. This approach was taken in order to offer examples for those departments considering one class in forensic accounting and to provide further details for those departments considering a concentration or major in forensic accounting. Different types of schools offering programs/classes at both the undergraduate and graduate levels were included so that our readers could fit their particular situation to the suggestions made by the authors. This issue was coordinated by Richard Riley and Timothy Pearson, both at West Virginia University. I thank them both for their efforts and express my appreciation for their work on behalf of Issues in Accounting Education. Kent St. Pierre Editor

Editor’s Report July 1, 2007 through June 30, 2008 Status of Manuscripts Submitted during This Period

Number Percentage (1) Manuscripts rejected and withdrawn

45

44

(2) Manuscripts awaiting reports on initial submission

13

13

(3) Manuscripts for which a revise / resubmit decision has been rendered

27

26

(4) Manuscripts accepted for publication

17

17

102

100

Total Submissions Average time from submission to final decision was 115 days.

615

Accounting Education An International Journal VOLUME 17 NUMBER 3 SEPTEMBER 2008

ISSN 0963-9284

CONTENTS RICHARD M. S. WILSON Introduction to AE Editorial Essays

227

TIMOTHY J. FOGARTY AE Editorial Essay: Time Tight, Learning Unattainable

229

MAIN PAPERS GRANT SAMKIN and GRAHAM FRANCIS Introducing a Learning Portfolio in an Undergraduate Financial Accounting Course

233

SUE MC GOWAN and MARGARET LIGHTBODY Enhancing Students’ Understanding of Plagiarism within a Discipline Context

273

INDRARINI LAKSMANA and WENDY TIETZ Temporal, Cross-sectional, and Time-lag Analyses of Managerial and Cost Accounting Textbooks

291

CLEMENT CHEN, KEITH JONES and D. DAVID MC INTYRE Analyzing the Factors Relevant to Students’ Estimations of the Benefits and Costs of Pursuing an Accounting Career

313

DARYL GUFFEY and MARK MC CARTNEY The Perceived Importance of an Ethical Issue as a Determinant of Ethical Decision-making for Accounting Students in an Academic Setting

327

ERRATA

349

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Vol. 23, No. 4