Drinking Up the Profits: A Forensic Accounting Case

By Shea, Vincent; Waldrup, Bobby et al. | Journal of the International Academy for Case Studies, October 2012 | Go to article overview

Drinking Up the Profits: A Forensic Accounting Case


Shea, Vincent, Waldrup, Bobby, Slater, Robert, Journal of the International Academy for Case Studies


CASE DESCRIPTION

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.

CASE SYNOPSIS

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.

INSTRUCTOR NOTES

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.

CASE OVERVIEW

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.

Learning Objectives

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. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Drinking Up the Profits: A Forensic Accounting Case
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.