The Incremental Benefits of a Forensic Accounting Course on Skepticism and Fraud-Related Judgments

Abstract

This study examines the extent to which providing a course that emphasizes forensic accounting influences students skepticism and fraud-related judgments. We follow a cohort of students (trained students) who have enrolled in a forensic accounting course and examine their fraud judgments at various points in time - the first day of instruction, the last day of instruction, and seven months later. We compare these fraud judgments to a control group of students who have completed a typical audit sequence (untrained students) and to a panel of fraud experts. We find that when confronted with a non-conforming account, trained students provide significantly higher initial risk assessments post-training 1) than they did pre-training and 2) than did the untrained students. This suggests that the specialized course may lead to increased skepticism. We also find, in general, that post-training students assigned somewhat higher relevancy ratings to fraud risk factors than did a panel of experts; while the untrained students ascribed significantly less relevance than the experts did to these same facts. In addition, after exposure to fraud risk factors, trained students provided higher revised risk assessments post-training than they did pre-training. Finally, we find that seven months after the course, the trained students' performance is sustained, suggesting that the effects produced by taking a fraud-specific forensic accounting course persist.