Fraud Risk Brainstorming at Tesla Motors

Case Overview

This instructional case offers students the opportunity to explore the fraud risk assessment process and to participate in a simulated fraud brainstorming session as required by AS 2401 (formerly SAS 99) for financial statement audits. Drawing on publicly available information about Tesla Motors, the revolutionary company behind the popular Model S all-electric vehicle, the case materials guide students through multiple learning objectives. These objectives include learning how to: (1) recognize the factors that contribute to financial statement fraud risk; (2) identify and evaluate the likelihood and severity of fraud risks; (3) analyze the ways that fraud risks can lead to material misstatements in the financial statements; (4) understand the purpose of and how to conduct a fraud brainstorming session; and (5) develop audit procedures that respond to assessed fraud risks. In a post-case learning assessment, students reported significant improvement in their knowledge, comprehension, and application of these learning objectives. Students also indicated that they enjoyed learning about these concepts in the context of this popular company. This case has both an individual and a group component, and it is designed for use in an auditing or forensic accounting course at either the undergraduate or the graduate level.

Learning Outcomes for Students

  • Can recognize the factors that contribute to financial statement fraud risk.

  • Can identify and evaluate the likelihood and severity of fraud risks for a particular organization.

  • Able to analyze the ways that fraud risks can lead to material misstatements in the financial statements.

  • Can understand the purpose of and how to conduct a fraud brainstorming session as a team.

  • Able to develop audit procedures that respond to assessed fraud risks.

Access to Case Materials

Citation: Hess, M., and Andiola, L. M. 2018. Fraud risk brainstorming at Tesla Motors. Issues in Accounting Education 33 (2): 19-34.

Access case materials: 
https://doi.org/10.2308/iace-51973

2023 Case Update: The background information for the case has been updated to reflect a 2023 brainstorming session for Tesla. See the original case and teaching notes for additional supporting documents.

Access 2023 update:
https://docs.google.com/document/d/1EeLU8o9G281f6v7DazciLce8hWnErEdt/edit?usp=sharing&ouid=116303155046069647492&rtpof=true&sd=true