Fraud Risk Brainstorming at Tesla – Part 2 Read the

 

Fraud Risk Brainstorming at Tesla – Part 2

Read the following case study:

Hess, M. F., & Andiola, L. M. (2018). Fraud risk brainstorming at Tesla Motors. Issues in Accounting Education, 33(2), 19–34.

Case Requirements:

In a paper, address the following questions.

  • Fraud risks related to revenue recognition at
    • What does Tesla sell and how does the company account for revenue, accounts receivable, and COGS? (See ‘‘Tesla’s 2015 Annual Report,’’ Item 1 Business, Item 7 MD&A, and Item 8 Financial Statements and Supplementary Data, Note )
    • How might these revenue-recognition practices create opportunities, incentives, and/or rationalizations for fraud?
  • Fraud risks related to Tesla’s business and operating
    • Review the business risks disclosed by the company (see Tesla’s 2015 Annual Report, Item 1A Risk Factors, Item 8 Financial Statements, Supplementary Data, Note 2, and Note 13). How might some of these business risks from the external environment also create fraud risks within Tesla?
    • What fraud risks are posed by Tesla’s expansion plans and the company’s ability to operate as a going concern? (See Tesla’s 2015 Annual Report, and refer to Item )
    • What related-party transactions support Tesla’s financial performance? (See Tesla’s 2015 Annual Report, Item 1 Manufacturing.) How might these transactions create opportunities for fraud?
  • Fraud risks indicated by the results of preliminary analytical
    • What fraud risks may be indicated by the year-to-year comparisons of Tesla’s financial statements (refer to Exhibits 1 and 2 in the case study)?
    • How does the company perform relative to its peers (refer to Exhibit 4 in the case study)? Do these ratios and trends seem reasonable?

Assignment Paper Requirements:

  • Write a paper (memo) of a minimum of six double-spaced pages, not counting the title and reference pages (which you must include).
  • Copy and paste each one of the questions into your paper in bold type to ensure you have answered each of the assignment
  • Use terms, evidence, and concepts from class readings, including professional business language.
  • Cite at least three credible, academic, or professional sources for this assignment. The TAMUCT Library is a great place to find resources, as well as the FASB
  • Format your paper according to APA

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