Hess, M. F., & Andiola, L. M. (2018). Fraud risk brainstorming at Tesla Motors (Links to an external site.). Issues in Accounting Education, 33(2), 1934.
Case Requirements:
In a paper, address the following questions.
Fraud risks related to Teslas culture, leadership, and governance structure.
How would you describe the tone at the top set by Teslas leader, Elon Musk? How do Mr. Musks leadership style and his tone at the top contribute to possible fraud risk at Tesla Motors?
How would you describe the companys culture? How might this culture create pressures and rationalizations for fraud?
Review Teslas Code of Business Conduct and Ethics (see Teslas Code of Business Conduct and Ethics (Links to an external site.)). How might any potential weaknesses in this code contribute to fraud risk at this company?
Describe some possible concerns regarding Teslas board of directors. How might these concerns create opportunities and rationalizations for fraud?
Fraud risks related to Teslas incentive structures and stock performance.
To what extent are executives and employees incentivized with shares and stock options? [See Teslas 2015 Annual Report (Links to an external site.), Item 7 Managements Discussion and Analysis (MD&A) and Item 8 Financial Statements and Supplementary Data section, Note 10.]
How do these pay structures create pressures/incentives for fraud?
Review Teslas stock performance over the last two years (refer to Exhibit 3 in the article). What fraud pressures are created by this stock performance?
Fraud risks indicated by the results of preliminary analytical procedures.
What fraud risks may be indicated by the year-to-year comparisons of Teslas financial statements? (Refer to Exhibits 1 and 2 in the article.) Be specific.
How does the company perform relative to its peers? (Refer to Exhibit 4 in the article.) Do these ratios and trends seem reasonable? Be specific.
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 above into your paper in bold type to ensure you have answered each of the requirements.
Use terms, evidence, and concepts from class readings, including professional business language.
Cite at least three credible academic or professional sources for this assignment.
