Fraud Risk Brainstorming at Tesla

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).

Sample Solution