An anti-fraud group has released the first of a series of new case studies aimed at teaching audit committees, financial executives and auditors where and how fraud can arise.

The Anti-Fraud Collaboration -- a partnership of Center for Audit Quality, Financial Executives International, the Institute of Internal Auditors and the National Association of Corporate Directors -- has published the Hollate Manufacturing Case Study, a report of a potential material fraud at a fictitious public company in order to raise awareness of environments in which financial reporting fraud might flourish.

The case study and a companion discussion guide provide information designed to help audit committees, financial executives and internal and external auditors engage in interactive discussions on what could have been done to mitigate the risk of fraud.

The CAQ, FEI, the IIA and NACD formed the Anti-Fraud Collaboration to develop thought leadership, awareness programs, educational opportunities and related resources to promote the deterrence and detection of financial reporting fraud. The Hollate Manufacturing Case Study represents the first in a series of anti-fraud case studies that the collaboration has underway.

“Historically, financial reporting fraud is the workplace fraud that has had the highest-cost impact on public companies,” said CAQ executive director Cindy Fornelli. “The new case study, which recreates the conditions that could allow fraud to occur and provides opportunities to discuss steps that can be taken to mitigate the risks, is an important new resource for the deterrence of such frauds.”

The collaboration has also developed a series of videos on how to effectively lead a discussion using the Harvard case study method. The videos feature insight from Harvard Business School senior lecturer Willis Emmons and Harvard Business school Professor V.G. Narayanan, who discuss the Hollate Manufacturing Case Study. 

The case study is available on the CAQ Web site.