Academic Interview – AC202: Corporate Fraud and Accountability: Principles and Practices

We sat down with Dr Alexandra Scherf, teacher of AC202: Corporate Fraud and Accountability: Principles and Practices, to explore what students can expect from the LSE Summer School course. Whether you’re interested in audit, forensic accounting, or management consulting, this course offers a hands-on foundation to tackle corporate fraud and build resilient organisations.

What problem does your course aim to address?

AC202: Corporate Fraud and Accountability: Principles and Practices addresses a critical challenge facing modern businesses: how to protect against corporate fraud and misconduct while building resilient organisations.

Corporate fraud and misconduct by senior leadership remain persistent threats in today’s capital markets, eroding investor confidence and causing devastating consequences for stakeholders. Yet strong corporate governance and internal controls can safeguard firms against these risks and create sustainable businesses that deliver long-term value.

This course examines these challenges on two levels: first, how firms can manage and mitigate misconduct risks at the leadership level; and second, how organisations can develop comprehensive enterprise-wide risk management systems to identify and control operational risks – from establishing key performance indicators (KPIs) to implementing disaster recovery planning.

How does this course fit within the wider context of accounting?

Accounting education often includes three key areas: financial accounting, managerial accounting, and internal controls. This course focuses on the third area, examining corporate leadership structures and how governance tools and enterprise risk management systems strengthen internal controls to safeguard business operations.

We'll also explore the critical role of auditors as capital market gatekeepers, examining both common pitfalls and strategies for effective auditing practice.

This course is ideally suited for students with foundational knowledge in financial accounting and cost accounting. While a background in audit is helpful, it is not essential.

How can students who take this course apply it in their future career?

Understanding drivers of fraud and design of internal controls is essential for students pursuing careers in accounting and finance – particularly in audit and forensic accounting. This course provides an excellent foundation for those interested in corporate control systems and fraud detection.

More broadly, the course benefits students interested in corporate governance and leadership, especially those considering management consulting. Understanding key issues in corporate governance, tools for strengthening leadership, and strategies for managing and recovering from corporate failures are all critical competencies in these fields.

Could you please describe the practical components of the course and how students will engage in hands-on learning in the classroom?

The course centres on practical, case-based learning through several key components:

• Case Studies in Corporate Failure and Recovery: Students will analyse real-world cases of financial scandals and audit failures, examining the circumstances that led to collapse, as well as the critical factors enabling recovery. We apply findings from academic theory and research and to contemporary cases of corporate fraud, exploring the conditions under which misconduct is most likely to occur.
• Principal-Agent Problems and Governance Design: Students will tackle the challenge of aligning management incentives with shareholder interests through compensation contract design. We’ll evaluate the pros and cons of different performance measures and incentive structures, exploring how governance mechanisms can address conflicts of interest.
• Enterprise Risk Management Applications: Through hands-on exercises, students will practice risk mapping and developing key performance indicators (KPIs). We’ll examine systems designed to help firms identify and manage operational risks, including disaster preparedness and recovery planning.

What resources would you recommend to anyone interested in taking this course?

The most important resources are an open mind and active engagement in class. The course uses a case-driven pedagogy, so students should come prepared having completed the readings and ready to participate in class discussions and hands-on exercises.

What is the most exciting things students will learn in the classroom?

How to defend and articulate their own viewpoints. In an age of increasing AI and automation, the ability to think critically and develop independent perspectives is more valuable than ever. This is especially important when identifying and managing fraud risks that require human judgment.

This course sharpens these skills through real-world cases of corporate failure and risk management, teaching students not just what happened in major scandals, but how to analyse complex situations, question assumptions, and make sound judgments under uncertainty.