USC Spring 2014– SYLLABUS
ACCT 562: Methods and Motivations of Financial Reporting Fraud
Dr. Cecil W. Jackson
Office: ACC 110.
Office Hours: M/W 2:15-3:30pm
Email: ceciljac@marshall.usc.edu
Section #: 14230D
Day/Time: W 3:30 – 6:20 pm
Phone: (213) 740-5020
Room: JKP 202
SECURITY, ALL EMERGENCIES: (213) 740-4321
EMERGENCY INFORMATION:
(213) 740-9233 OR KUSC RADIO 91.5 FM
Text:
Detecting Accounting Fraud: Analysis and Ethics. Cecil W. Jackson.
Pearson/Prentice Hall. 2015.
Recommended Preparation: A graduate level course in auditing or assurance services.
Course Description:
This 1.5-unit course meets for 170 minutes each week, for 7.5 weeks. It educates students about the
major and most frequently committed kinds of frauds in financial reporting. The major methods of
fraudulently misstating a company’s financial position in its financial statements are examined. Then,
each of these different kinds of frauds is studied by examining the story of a company that committed a
particularly interesting or spectacular incident of that kind of financial-reporting fraud. Students entering
careers in public, private, or governmental accounting will benefit from the knowledge and skills gained
from this class.
The primary text, Business Fairy Tales, describes the accompanying complex accounting mechanisms in
an understandable and thorough way. Students gain an understanding of the institutional and
environmental problems in the financial reporting process that made the potential for corporate
governance failure a calamity waiting to happen. The course presents each of the major philosophical
frameworks for analyzing ethical dilemmas, as well as the most frequent “false exits” that people use to
attempt justify unethical behavior. Finally, students are kept up to date with current issues, as well as the
reforms that are occurring in financial reporting and in corporate governance.
Course Objectives
The Leventhal Master’s Program Student Learning Outcomes are on the final page of this syllabus. For
this course, the primary learning outcome is #4: Ethical Principles and Professional Standards
Requirement: Students will be able to apply ethical principles and professional standards in analyzing
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situations and making informed decisions. In addition to this primary learning outcome, the course will
also deal with outcome #1: Technical, Conceptual, Problem-Solving Requirement.
The specific learning objectives for this course include the following:

Students will be able to review financial statements to identify signals and tell-tale indicators that
the financial statements are fraudulently prepared.

Students will be able to use major philosophical frameworks for analyzing ethical dilemmas.

Students will be able to discuss and debate current reforms occurring in financial reporting and
corporate governance.
.
Course Requirements:
1.
Assigned Homework:
Preparation for most classes will include readings from the texts as well as readings of
financial statements and Accounting and Auditing Enforcements Releases (AAERs) for a
variety of companies that provide additional examples of the method of fictitious reporting
studied during that class.
All reading and written assignments should be prepared for each class as assigned.
2.
Grades will be based on the following:
10% Case Essay
40% Mid-Term Examination
40% Final Examination
10% Class Participation
Grading standards will be consistent with the grading policies of the Leventhal School of Accounting.
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POLICY ISSUES
Policy Regarding Make-up Exams:
It is to your advantage to take all exams as scheduled. Only at times of well documented, true emergency,
should an exam be missed. Exams missed without prior approval or without adequate documentation will
result in a score of zero for the missed exam. If the mid-term exam is missed due to a legitimate
emergency, the final exam counts extra. There will be no make-up exams.
Retention of Graded Material:
Exams will be retained for one semester subsequent to the one in which you take the course. All other
assignments including homework assignments will be handed back in class. It is your responsibility to
either collect your graded assignments or to make arrangements to pick them up. Any such assignments
not picked up will be retained until one week after the beginning of the summer semester.
Students with Disabilities:
Any student requesting academic accommodations based on disability is required to register with
Disability Services and Programs (DSP) each semester. A letter of verification for approved
accommodations can be obtained from DSP. Please be sure the letter is delivered to me AS EARLY in
the semester as possible. DSP is located in STU 301 ad is open 8:30 am to 5 pm, Monday through
Friday. The number is (213) 740-0776.
Academic Standards:
There will be strict observance of the University and the Leventhal School of Accounting Honor Code
regarding academic integrity. Please see “Leventhal School of Accounting Grading and Academic
Standards” posted in Blackboard and considered part of this syllabus.
The weekly schedule of class topics and reading assignments begins below and should be considered a
part of this syllabus.
Important Dates for Spring 2014
USC Leventhal School of Accounting
Important Dates
Spring 2014
First Day of Class
Monday, January 13
New Student Orientation – ACCT-370 lab time
Friday, January 17, 10am
Martin Luther King Jr. Birthday, University Holiday
Monday, January 20
Last Day to Add or Drop first half ACCT courses w/out a “W”, Session
431
Tuesday, January 21
USC Career Fest
Monday, January 27 - Friday, January 31
Resumes for Spring Resume Book due
Thursday, January 30 at 8am
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Last Day to Add or Drop w/out a “W” (Regular Session)
Friday, January 31
Summer Leadership Info Session (Beta Alpha Psi)
Tuesday, February 4, 6pm
USC Career Day
Thursday, February 6
Meet the Firms – California Science Center (Accounting Society)
Tuesday, February 11, 6-9pm
Presidents' Day, University Holiday
Monday, February 17
Last Day to Drop first half ACCT courses with a "W", (Session 431)
Tuesday, February 18
LSOA Scholarship Applications Due
Monday, February 24 8am
Final Exams for first half ACCT courses, Session 431
Monday, March 3 - Friday, March 7th
First Day of Classes for second half ACCT courses, Session 442
Monday, March 10
Spring Break
Monday, March 17 - Friday, March 21
Last Day to Add or Drop second half ACCT courses w/out a “W”,
Session 442
Monday, March 24
Deadline to register for Commencement
Friday, March 28
Last Day to Drop with a “W” for regular session (001) classes
Friday, April 11
LSOA Annual Scholarship Dinner
Thursday, April 24
Last Day to Drop ACCT courses, Session 442, with a “W”
Monday, April 28
Last Class Meeting for Regular (001) and 442 sessions
Friday, May 2
Study Days
Monday & Tuesday, May 5 & 6
Final Exams for ACCT courses, Regular (001) and 442 sessions
Wed., May 7 – Wed., May 14
Commencement
Friday, May 16
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ACCT 562 Spring 2014 – Class and Assignment Schedule
TOPICS
Date
Mar 12
Financial Reporting and the
Institutional Environment
Improper Timing of Revenue via
Bill-and–Hold and other contingent
sales
Mar 17
Spring Break
Mar 26
Multiple Element Contracts;
Fictitious Revenue;
READINGS
*DAF
Cases and Handouts
Ch. 1
Ch. 3
Sunbeam
Ch. 4
Sensormatic
Xerox
CUC/Cendant
Insignia
Ch. 5
WorldCom
Ch. 5
WorldCom
Improper Valuation of Revenue;
Cash Flow Statements
Misuse of Business Combinations
Apr 2
Use of Business Combinations for
improper accounting
Improper Capitalization of
Expenses
Ethics
Ch 2
Apr 9
Apr 16
Midterm
Improper Deferral of Expenses;
Failure to Record Expenses;
Ch. 6
Livent
Overstating Ending Inventory
Rite Aid
Understating Reserves for Bad
Debts;
Failure to Record Asset
Impairments
Allegheny
The Mortgage Crisis & Securitized
Mortgage Obligations;
Lockheed
Ch9
Countrywide
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Date
Apr 23
Apr 30
TOPICS
READINGS
*DAF
Mortgage Crisis continued
Ch. 9
Improper Use of Off-Balance Sheet
Arrangements to overstate earnings
and understate liabilities
Ch7
Inadequate Disclosure in MD&A;
Ch. 8
Related Party Transactions;
Improper Use of non-GAAP
measures;
Foreign Corrupt Practices Act
Violations;
Cases and Handouts
Countrywide
Enron
Edison Schools
Adelphia
Adelphia
BellSouth
Roundtrip Transactions
Krispy Kreme
Improper Use of Off-Balance Sheet
Arrangements to overstate earnings
and understate liabilities
May 9
FINAL EXAM: Friday, May 9
2:00pm – 4:00pm
*DAF : Detecting Accounting Fraud: Analysis and Ethics. Cecil W. Jackson.
Pearson/Prentice Hall. 2015.
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Student Learning Outcomes
USC Leventhal Masters Programs
1. Technical, Conceptual, Problem-Solving Requirement
Students will be competent in and be able to apply discipline-specific knowledge and skills in the
fields of accounting or taxation. This learning outcome includes the development of critical
thinking and problem solving skills, as well as an understanding of the strategic role of accounting
in business organizations and society.
2. Professional Development Requirement
Students will be able to communicate clearly, and strategically, after considering the relevant
audience, situation, and purpose of the communication. Students will develop the ability to work
productively with others to accomplish established goals.
3. Research/Life-Long Learning Requirement
Students will be able to use relevant research databases and academic/professional literature to
gain new knowledge and analyze business situations.
4. Ethical Principles and Professional Standards Requirement
Students will be able to apply ethical principles and professional standards in analyzing situations
and making informed decisions.
5. Globalization Requirement
Students will be able to demonstrate an international perspective and appreciation for diversity and
cultural differences, along with their significance in global business.
These five Student Learning Outcomes were developed for this program by the USC Leventhal
faculty and administration and filed with the AACSB, the accrediting body for the USC Leventhal
School of Accounting.
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