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Information Technology and Accounting Fraud

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Information Technology and Accounting Fraud

History has shown the accounting network has come a long way from the days which included manual general ledgers to the present where electronic general ledgers are a necessity. In the electronic world we now live in, the accounting information system requires us to utilize computer systems and intranets, which transfer vital information at a much more rapid speed. Information systems used for accounting purposes is a function used by businesses internally. These highly sophisticated systems report financial data for users from entry-level staff, key decision makers, stakeholders, and investors. These systems provide owners of all businesses and management the supporting data required for making critical decisions, although these systems may encounter threats which can obstruct their overall effectiveness.
Account information systems can become so complex for businesses they prove to be ineffective and inefficient for the everyday use in business operations. These high complexities may take place when business owners or management make efforts to construct an information system which gathers far more information that is needed, or use the system for reasons outside the scope of their original purpose. Businesses who lack the adequate technology or employees familiar with accounting systems may find this technology difficult to use. Management must ensure the accounting systems implemented within their organizations are functional throughout the company by all users.
Because of the complexities just discussed, the accounting information systems can be the focus of fraud or exploitation by company employees. Employees can obtain data for personal use or even worse manipulate information in an effort to force financial documents to appear healthier than the authentic results. Business owners and managers who are not at the forefront of the organization’s operations must depend on other employees to supply accurate and timely data through the accounting information system. Negligent employee oversight may lead to the allowance for deceptive activities in the organization. Individuals who should not have admission to accounting information can also generate problems in the accounting information system.

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