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Volume 8 Issue 4

IMA Educational Case Journal
ISSN 1940-204X


Michael C. Knapp, University of Oklahoma
Carol A. Knapp, University of Oklahoma

LE-NATURE’S INC. WAS A PENNSYLVANIA-BASED BEVERAGE COMPANY founded in 1989 by CEO Gregory Podlucky, who oversaw a large-scale financial fraud based on bogus sales revenues from the late 1990s through 2006. This case uses the Le-Nature’s fraud as a vehicle to introduce students to the fraud triangle, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) internal control framework, and how management accountants can contribute to strong internal controls, fraud prevention, and an ethical climate that encourages good overall corporate governance. Case questions require students to relate the Le-Nature’s case to these topics and make recommendations on how Le-Nature’s could have improved its corporate governance practices and avoid this massive fraud. Students are also required to explore the ethical responsibilities of corporate accountants and other parties involved in the accounting and financial reporting process by referring to the IMA Statement of Ethical Professional Practice.
Keywords: fraud, internal control, enterprise risk management, corporate governance, professionalism, independent audits, beverage industry.
ChurchCecily Raiborn, Texas State University
Janet B. Butler, Texas State University
Nathan H. Cannon, Texas State University
Randall F. Young, Texas State University

SAINTLY CHURCH IS EXPERIENCING DECLINING REVENUES AND increasing expenses, and several fraud risk factors are present. Do these fraud risk factors indicate fraudulent activity by one or more of the key persons in the case, or could there be reasonable and legitimate explanations? The purpose of this case is to allow students to explore the IMA Statement of Ethical Professional Practice within the context of a nonprofit institution by examining the role of Sandy Withers, CMA, as she attempts to help the church address these issues. By completing the case, students will identify potential underlying causes (both fraudulent and legitimate) of the declining revenues and increasing expenses, highlight weaknesses in internal controls, and discuss Withers’s responsibilities and approaches to communication under the IMA Statement of Ethical Professional Practice.
Keywords: ethical standards, church fraud, not-for-profit fraud, fraud triangle, internal controls.