Win, win, win in fraud-case competition

Drexel University’s Fraud and Internal Control Case Competition (FIC³) lifts anti-fraud concepts off textbook pages and ingrains them into students’ lives. Learn how to help higher-ed institutions develop similar competitions.

In 2014, we (an associate professor of accounting at Drexel University, and the managing director of an accounting firm) first met to devise a program that could practically teach students anti-fraud concepts. Our idea was to gather teams of students from the greater Philadelphia area to compete against each other in analyzing a real-life inspired fraud case and then present their comprehensive detection, prevention and deterrence plans to a panel of judges for a cash prize. In February 2015, we held the first Fraud and Internal Control Case Competition (FIC³) at Drexel.

Five years later, FIC³ is still engaging students, faculty and business leaders in real-life scenarios and building network connections, friendships and mentoring relationships.

We share this story so that it might inspire others in higher-ed and the business world to consider creative ways to capture the passion and imagination of budding anti-fraud professionals.

We’re on the case

Think back to those days when you were in college — your nose buried deep in textbooks that contained concepts you were going to have to apply to work someday. Often only a gifted professor could lift the principles out of your books and make them come alive. That professor had real-life experiences and examples that would practically elevate concepts so you could imagine how you’d apply them in your first job. That’s the core goal of the FIC³: bring theory to life beyond the classroom.

Also, to have students:

• Develop knowledge in real time.
• Work and network with local business leaders and experts.
• Develop critical thinking, teamwork and presentation skills.
• Have fun!

Another key goal of the competition is to demonstrate to students the challenging and exciting things they can do with accounting degrees — the field is way sexier than just preparing tax returns.

Timely cases with latest anti-fraud principles

The FIC³ team tries to bring theory to life by building cases that introduce diverse industries and concepts. The case during the first year of the competition, which was set in the home-components manufacturing industry, featured financial reporting fraud to prop up the stock price of a fictitious company and achieve financial targets for bonuses. Since then, cases have covered a university, a convenience store chain and a municipality, among others. The most recent FIC³ case, on Feb. 14, was set in the casino industry and incorporated e-sports. Talk about being timely!

To keep everyone on their toes, the varied featured frauds have included outright theft of organization funds, fake vendors, overbilling insurance, pumping up the performance of key reporting unit(s), skimming, kickbacks, and misuse of construction funds and resources for private benefit. In the 2020 FIC³, students used data analytics in assessing vendor and employee files to identify fraudulent payments and network logs that revealed a data breach. We anticipate including data visualization in 2021’s case competition and beyond.

Teams rule!

Initial FIC³ organizers put in a lot of thought on the competition’s structure. Do we go with individual competitors or teams? Should participants only be from Drexel University, or do we go big and try to recruit students from other schools? Do we let folks pick their own teams, or do we mix it up for them to promote networking? Understanding that diversity of thought and experience would drive the best outcomes, we landed on promoting teams made up of a range of individuals.

We’ve had a mix of students from different schools, majors and educational levels. They’ve been from Drexel, Temple University, University of Delaware, Eastern University, West Chester University and LaSalle University.

Each team is required to have one accounting major, one senior or grad student, and one freshman or sophomore so it has a great mix of perspectives and experiences. Some of the most successful teams have been comprised of students who didn’t know each other in advance.

Samantha (Sam) Morningstar, a finance major at Drexel, competed for the second time this year and came out on top as a member of the winning team. “When I first signed up for FIC³ my freshmen year, I didn’t know what to expect,” Morningstar says. “I hadn’t even finished an accounting class yet, much less any class on audit and internal controls.

Understanding that diversity of thought and experience would drive the best outcomes, we landed on creating teams made up of a range of individuals.

“I did it to step out of my comfort zone and get some experience on my then empty résumé,” she says. “Once I competed, I realized what a fantastic networking and growth opportunity the case competition was.

“After competing, I was asked about the case in almost all of my first round of co-op interviews,” Morningstar says. “I ended up landing a job at Comcast in internal controls.”

Game day

The winning team at the inaugural one-day FIC³ received $500. The 2020 competition was a full week concluding with a closing ceremony at which the winning team received $1,500 thanks to the generous sponsorship of the local Philadelphia IIA chapter. The additional recurring support from area businesses and the Philadelphia ACFE chapter allowed us to expand the competition’s reach and keep the fun factor.

At the kickoff event on Monday evening, students teamed up for the first time. David Small, vice president and chief audit officer at Children’s Hospital of Philadelphia and long-time head of the case-writing committee, distributed the case and provided instructions and tips.

During the week, the student teams studied the case and searched the data for red flags. They read through background materials on the COSO framework and the Fraud Triangle. They compared notes, brainstormed potential issues, suggested solutions and strategized how to maximize their time.

On Friday, competition day, the excitement was palpable. Real money and coveted bragging rights were at stake. The teams assembled with computers and strategies to win over the hearts and minds of the tough judges — all business professionals from the greater Philadelphia area. Each team was assigned a coach from a pool of other businesspersons who helped and challenged them.

“Coaching and interacting with the students at FIC³, who were truly excited about the fraud case, made it a fun and rewarding experience,” says 2020 coach Michael Mitrione, of EisnerAmper LLP. “I believe … events like FIC³ … can expose them to new career paths and interests sooner than they would be otherwise, and that can give them a leg up.”

Many students give professional presentations for the first time during the FIC³. The competition pressure can be intimidating, but the coaches help students identify and highlight potential red flags of fraud and find big internal control issues.

Coaches help teams sift through findings by asking questions and nudging them to rank their importance and priority. The coaching connection is often highlighted as a favorite part of the event for the students. “My coach my first year, Laurie Riggs, helped me and my team through the case when we collectively had no experience with the material,” Morningstar says. (Riggs is director of internal audit for Thomas Jefferson University.)

Sheng Liu, a Drexel doctoral student, says he found the experience of “making a public speech for the presentation and responding to challenging questions” some of the best learning opportunities of the competition.

“The biggest thing I learned from this event was that fraudulent activity within a company may not always be something obvious you can immediately see,” says Christina Emsley, a Drexel accounting major. “You have to evaluate where potential frauds could occur based on where there are potential pressures and opportunities that could cause someone to rationalize their actions,” Emsley says.

“A lot of this pressure can be [even unintentionally] caused by upper management’s tone. I also learned that even one rationalization of illegal or unethical actions can lead to opening the door to more rationalizations,” she says.

Passing the torch

This year was our most successful competition with 47 students on 12 teams representing four schools with seven coaches and 11 judges representing 16 organizations. As the competition has evolved, we’ve created opportunities for Drexel students to become more involved in case development and event operation. We’re truly excited about the evolution and future of the FIC³ competition.

Of course, the real business problem of fraud isn’t going away. We believe our profession needs a constant pipeline of passionate professional anti-fraud fighters who are ready, willing and able to carry the torch forward. Our collective responsibility is to build excitement and awareness about what we do to help bridge the gap from the classroom to the conference room.

We hope you’ll see the potential impact that expanding the accessibility and reach of fraud-case competitions can have on our profession. Please accept our challenge of bringing your own versions into your classrooms, ACFE chapters or businesses.

If you feel inspired to get in the game and you need some help to get started, please feel free to connect with us.

Barbara Murray Grein, Ph.D., is an associate professor and head of the accounting department in the LeBow College of Business at Drexel University. Contact her at bmg33@drexel.edu.

Frank Pina, CFE, CPA, CFF, is managing director of The Mercadien Group and president of the Philadelphia Area ACFE Chapter. Contact him at fpina@mercadien.com.

The authors thank Regent Bethmara Kessler, CFE, one of the FIC³ judges, for inspiring us to share our story and for her help with bringing this column to life.