Fraud examination training via MOOCs

According to the ACFE’s latest Report to the Nations, the majority of organizational frauds over the last several years were discovered via tips that weren’t necessarily provided by internal or external auditors. Tipsters, who can be any employee, are prime sources of information about frauds that have occurred or are continuing to occur in organizations.

Therefore, all employees should be educated on fraud basics and how to detect schemes before they dramatically affect companies. As educators, we can make future employees more aware of the ill effects of fraud and how to detect and even prevent it. We eventually may be able to do this for thousands of students via a new powerful tool — massive open online courses (MOOCs).

WHAT ARE MOOCs?

MOOCs contain recorded lectures and automated evaluation methods such as quizzes and testing. Students either study on their own or form self-guided groups to complete assignments and projects. One type of MOOC fosters student leadership by awarding points to students who correctly answer questions posed by other students. (If a student amasses enough points, he or she can be elevated to teaching assistant.)

Coursera, currently the largest provider of MOOCs, has become a full-fledged, tuition-free digital campus since its launch in April 2012. Two Stanford University computer science professors, in partnership with five universities, founded the educational technology company with just a few courses. It now has more than three million students (dubbed “Courserians”) from more than 190 countries and offers more than 300 courses from 62 (and counting) different universities and organizations across the globe. More than 100,000 students have taken some of the more popular courses available in five different languages.

In January 2013, Coursera announced that the American Council on Education (ACE) had approved five courses for college credit at the University of California, Irvine, Duke University and the University of Pennsylvania. Cousera favors elite educational institutions as course providers, but it hasn’t ruled out partnering with other universities that aren’t members of the Association of American Universities, according to “Coursera’s Contractual Elitism,” by Ry Rivard, March 22, “Inside Higher Ed.”  

Another smaller MOOC provider, Udacity, was created by a three-person team headed by Sebastian Thrun, a tenured professor of artificial intelligence at Stanford University, and funded by venture capital. After completing an Udacity course, like Coursera, students receive a certificate of completion signed by their instructors.

Another provider is EdX, which MIT and Harvard University jointly created. EdX works closely with other institutions by providing source code and development resources to improve its platform, according to “EdX builds community of developers for its online — and blended-learning platform,” June 5, MIT News.

Even though ACE has approved five courses, the University of California, Irvine, and Duke aren’t yet granting credit to students. California and Florida state legislature representatives recently introduced bills that would require, in some circumstances, public colleges and universities to grant college transfer credits for MOOCs. The bills’ futures are uncertain, but the message is clear: Universities and colleges could, at some point in time, grant course credit for certain approved courses offered by MOOCs. (See “Outsourcing Public Higher Ed,” by Paul Fain and Ry Rivard, March 13, “Inside Higher Ed,” and “Taking on Accreditors and Faculty,” by Ry Rivard, April 11, “Inside Higher Ed.”)

ADVANTAGES OF USING MOOCs

MOOCs offer almost unlimited enrollment, free or inexpensive tuition, no attendance requirements at physical locations and studying at participants’ paces, all of which encourage students to take courses of different types, including fraud examination.

Students of any major in this generation chafe at the requirement to sit in classrooms for four years to receive their formal higher education. Instead they take extended internships (some lasting an entire academic year), pick and choose electives that appeal to them, build their own startup companies and tinker with projects that hold their attention and passion so they can set structured classes on the back burner. Hence one of the most likely ways to broaden the reach of fraud examination to non-accounting/criminology students is to launch anti-fraud education through MOOC platforms.

Now, as of publication, none of the MOOC platforms have anti-fraud courses, though Harvard has offered an open financial accounting course online for some time for a nominal fee. However, anti-fraud education could become standardized if fraud examination courses are included on platforms like Coursera. Also, when credit is eventually granted for MOOCs they could become elements of hybrid courses that combine online and in-class education.

Though some believe that MOOCs threaten the traditional university structure (see the PDF “The Troubled Future of Colleges and Universities,” by Gary King and Maya Sen), others believe that use of this new learning tool will likely increase because of mounting costs for higher-education students. (See “The Professors Who Make the MOOCs,” by Steve Kolowich, The Chronicle of Higher Education.)

BEST USE OF MOOCs

How can we best use MOOCs so that the fraud examination profession, potential students and professors benefit? We readily accept that anti-fraud coursework is beneficial to accounting and criminology students because they need this specialized knowledge to fulfill their responsibilities as auditors and fraud examiners. But the average businessperson most likely doesn’t know that in 2012, only 17.7 percent of all fraud cases were discovered by internal and external auditors combined, according to the ACFE Report to the Nations. If we compare that to the 57.9 percent of cases that were discovered through a tip and management review combined, one can begin to understand that all employees (and, preferably, all business students) need to understand the basics of fraud and how to detect it because, unfortunately, those trained in accounting and criminology probably aren’t going to find these crimes.

The accounting profession has responded by offering courses in fraud and forensic accounting, and the criminal justice community has offered similar programs of study. However, the general business academic community has done little to react to the increasing trend of fraud. The business profession, of course, could benefit from hiring students who are knowledgeable about fraud. (“Providing students with fraud education benefits both students and employers,” by Bonita K. Peterson, Journal of Education for Business, May/June, 2003.)

Most business programs today — both graduate and undergraduate — barely address anti-fraud topics. Even though a majority of schools that have accounting and/or criminology programs offer fraud examination education, business degree candidates — including accounting and criminal justice majors — remarkably aren’t required to take the classes to earn their graduate or undergraduate degrees. Most fraud examination courses are electives, and many might not have space in their degree plans to take them.

Given rampant fraud around the globe, wouldn’t society benefit if all employees — not just graduates of business and criminal justice programs — took anti-fraud courses?

So, two distinct populations could benefit from taking courses in which fraud prevention and detection is discussed: 1) students who aren’t accounting or criminal justice majors and might not have access to fraud examination courses because they don’t meet the prerequisites or aren’t aware of these courses and 2) accounting and criminology majors who aren’t required to take fraud examination courses.

Students who aren’t accounting or criminal justice majors

Schools could use MOOCs to expose all students to fraud education without rewriting or disturbing much of the existing business degree curricula.

The next generation of fraud finders or examiners can come from any field of study, just as white-collar criminals aren’t always those who know how to cook the books. As our global economy becomes more interconnected, fraud can stem from any desk in any department and from any company.

Courses for students in all majors could focus less on examination tools and more on making them aware of types of fraud, red flags, consequences of fraud, preventative approaches (especially good for managers) and potential punishments for perpetrators. (The attained knowledge also works well in job interviews.)

Schools wouldn’t have to require all students to take anti-fraud courses, but MOOCs could be perfect electives because of the low or free tuition and schedule flexibility.
And it’s often easy to convince them to take anti-fraud courses; we know how interesting fraud examination (especially cases) can be to laypeople.

Accounting and criminology majors who don’t take a fraud examination course

Most business degrees require 120 credits of course work before a degree is conferred. Regrettably, many accounting and criminology majors who take a fraud examination class might have to forfeit elective classes that they believe will more directly benefit them in job searching or add to their personal development and enrichment. Thus, a MOOC that addresses fraud prevention, detection and examination can increase the value for these students without causing them to extend their educational timeline.

MOOC TSUNAMI 

Anti-fraud MOOCs can lengthen the reach of fraud education and thus benefit employers, students and society by increasing the likelihood that resources are effectively utilized to produce goods and services.

However, this new approach threatens some educators who are skeptical about the effectiveness of this innovation. The question shouldn’t be whether to incorporate MOOCs into existing curricula, but how we can best use them to enhance our current programs. According to Stanford president, John Hennessy, online education, such as MOOCs, is the coming disruptive “tsunami”; universities and colleges must be ready to take advantage of this technology or face being left behind (See “John L. Hennessy on ‘The Coming Tsunami in Educational Technology,’ ” by Jack Rosenberger, July 23, 2012, “Communications of the ACM.”). Let’s embrace this coming change so that all of us — students, faculty, employers and society — benefit.