Academic journal article
By Shea, Vincent; Waldrup, Bobby; Slater, Robert
Journal of the International Academy for Case Studies , Vol. 18, No. 8
This case introduces students to several forensic and cost accounting techniques. Students will read along as Dr. Scott Graham performs a forensic investigation at Sullivan's Bar. Students will be exposed to determining expected sales based on inventory usage, invigilation, observation, and other general accounting techniques. The case is targeted for students in an undergraduate forensic accounting class or cost accounting class. The case may be used as an in class discussion mechanism or assigned as a take home project. The case can be discussed fully within a one hour class if students have pre-prepared for the case. Students should expect to spend about 3-6 hours of preparation time outside of class.
This case is based on happenings at Sullivan's Bar, a drinking establishment owned by Frank Sullivan. Over the past few years Frank has noticed a decline in profits from Sullivan's Operations, even though there seems to be more customers in the bar. Frank asks one of his regulars at the bar, Dr. Scott Graham for help. Dr. Graham is an accounting professor at the local university and teaches accounting information systems. Dr. Graham challenges a few of his graduate students to help determine what could be causing the decline in bar revenues.
The case features Dr. Graham and his students as they explore operations at Sullivan's Bar. To determine where the lost profits may be hiding, Dr. Graham and his students examine the financial records, document operations, brainstorm on ideas, and do an onsite investigation and invigilation at the bar.
CASE OBJECTIVES AND USE
This case illustrates several cost and forensic accounting methodologies that can be used to investigate employee theft and operational compliance. The case takes place in the setting of a local bar where the employees are stealing cash, giving away drinks, and not following company policies on pouring alcohol. The case can be used in cost accounting, fraud, auditing, or forensic accounting classes to demonstrate how failure to follow company policies may impact company profits. The case also demonstrates methodologies used to investigate the theft of assets.
This case follows accounting professor Scott Graham and his graduate students as they offer assistance to bar owner Frank Sullivan. Mr. Sullivan fears that he is losing money in his business as profits just are not what they use to be. Scott Graham and his graduate students begin by performing a forensic cost analysis for Sullivan's as well as conducting covert surveillance and finally an invigilation to determine if Frank Sullivan's employees are stealing from him. Students are exposed to the thought processes of Scott Graham and his students as they work out how to obtain the information they need to conduct the analysis.
SUGGESTED CLASSROOM USE
This case has been specifically designed for use in an undergraduate fraud or forensic accounting class. Before being exposed to the case students should be familiar with the following accounting topics:
* Accounting for Sales and Inventory
* The Fraud Triangle
* Internal Controls
* Invigilation (although this concept is explained in the case)
* General bar terminology.
The case works equally well as a group or individual project. Students should expect to spend about 90 minutes outside of class reading the case. Based on past history student should expect to spend about 3-6 hours working on the case questions.
1. To understand how the cost of goods sold methodology can be used to predict sales.
2. To understand how invigilation may be used to determine the amount of theft a business may be experiencing.
3. To understand the trade-off between cost accounting policies and customer service. …