...Assignment 3: Fraud in the AIS Ditanyan Patterson Jay E. Wright, CPA, CFE Strayer University ACC.564 August 17, 2014 Abstract After researching for a firm that was involved in a fraud and/or embezzlement case I came upon the embezzlement of Koss Corp. Koss Corp was a company in Milwaukee, Wisconsin that manufactured stero headphones, speaker phones, computer headsets, wireless headsets, and much more. The case of Koss came about because of inaccurate financial ststements, books and records, and the lack of adequate internal controls from the years of 2005-2009. Two of Koss former employees, Sujata Sachdeva and Julie Mulvaney were the ones to engage in a wide-range of accounting fraud to cover up Sachdeva's embezzlement scam. From the lack and inadequate internal controls and failures in overseeing the accounting and financial reports by the CEO and CFO they were able to embezzle a huge amount of money. Throughout my research I will write a paper in which I must assess the failures of the firms accounting information system to prevent the related fraud/ embezzlement; Also, evaluate the effectiveness of Koss stakeholders in the event that a third-party accounting system suffers a breach. Along with assessing the level of responsibility of the software provider to the business and their clients. This paper will determine what advances in accounting and/or information technology could have done to prevent such acts from occuring, the paper will give changes that should...
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...time when computer, internet connection, and technology are not necessities, frauds are easy to conceal. Given also the fact that accounting standards were still not that strict about some disclosures and can be circumvented easily, many people such as accountants, businessmen, and employees took advantage of it. These people may be blinded by their position that they are capable of doing their own dirty tricks. They also have their reasons why they wanted to try to benefit from their institution on themselves. Moreover, they also saw the opportunity in the weakness of the controls in the company so they knew how they will do it and conceal it. These ideas were in a way lessen as the accounting standards were amended due to the detection of numerous cases of accounting scandals at the start of the second millennium. More disclosures are now being asked from the companies in order for them to be transparent in their operations and be aware that the lawmakers are, now, more focus on them. However, even if more disclosures are being required by the accounting standards, some still have the guts to try to attempt in doing frauds. These people still see the opportunity and are still capable of doing it without even being obvious in the audit. In this era of quick developing technology, the idea of Information Technology (IT) audit is developed. Moreover, many see the need of it to address the time constraint for auditing the information systems of such large companies and to lessen...
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...INTRODUCTION 1.1 BACKGROUND TO THE STUDY The advancement of technology and its effects on information systems in organizations have been of major concern to the industrialists, investors and the general public in the recent times. Electronic technology has replaced the traditional methods of keeping records. The financial institutions (including banks) in most part of the world now embrace electronic technology through the use of Electronic Funds Transfer facilities (EFT), Automated Teller Machine (ATM) and Magnetic Ink Character Recognition (MICR). Automated equipment is now used to process billions of cheques in a short time. Telex Machines are used to ‘wire’ money in commercial transactions from banks in one country to another. The advancement has led to all banks in Nigeria being made IT compliance statutorily. In fact, CBN requires all banks to comply with the use of the new Electronic Financial Analysis and Surveillance System (EFASS) to submit their monthly returns. Infrastructural technology devices have therefore become significant determinant of how well basic functions are performed, as technology has prompted changes in organizational design that affect the quality and timeliness of intelligence and decision making, and the organizational goals as a whole. With quality of information, good decisions will be made and this will enhance the successful attainment of organizational goals and objectives. Information system has become a very powerful agent of change and it...
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...Accounting Proposal Introduction The field of accounting affects every active individual within a society to some extent. Taxpayers, families who budget for the future and businesses evaluating potential products use some form of accounting principles to accomplish the tasks required of them. A functional accounting system is critical to the success and health of any given economy. The purpose of this text is to suggest a solution to the lack of a medium through which accounting knowledge is disseminated. Knowledge of accounting is important in the innovation and improvement of accounting principles. These improvements are important in strengthening the economy of a country to compete in the emerging global market. In general, people would see benefit in their daily lives by understanding how and when to utilize various accounting principles. There are many instances in which these benefits can be seen. Individuals use accounting knowledge to more efficiently manage their financial resources. Also tied to this is the ability to keep accurate financial records in order for individuals to make more informed decisions regarding their money. These decisions include budgeting, fund allocation as well as general money management. These benefits stretch beyond the actual user of accounting principles. If people are better managing their money, they are less likely to fall into debt. If businesses do the same, they will be more averse to failure and bankruptcy. The use of accounting...
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...Today’s Risk of Fraud: Forensic Accountants Help Protect Identity Theft Megan Laughman Financial Accounting Theory Michael Miller 4/7/15 Abstract The purpose of this study is to explore the recent cyber breaches that have occurred within companies throughout the United States and to look at the different ways these cyber breaches could have been prevented. The research also examines the need for forensic accountants within the business field, as they are able to help protect a company’s credibility and reputation. The study looks at the different internal controls a forensic accountant can incorporate into a company to help prevent cyber breaches and fraud from taking place. The results of the research provide confirmation that forensic accountants are essential in every company in order to help prevent and detour cyber breaches and fraud. Table of Contents Introduction……………………………………………………………………………………4 Literature Review………………………………………………………………………………7 Data Analysis........................................................................................................................…...14 Results and Conclusion…………………………………………………………………………17 References………………………………………………………………………………………19 Today’s Risk of Fraud: Forensic Accountants Help Protect Identity Theft Introduction Technology today is more advanced than it ever has been and almost everyone this day and age owns a computer, tablet, or smart phone. Most Americans utilize their computers, tablets...
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...summarizes accounting fraud in the United States. I explain why each aspect of communication skills and report writing is vital to an accountant’s professional career. | Table of Contents I. Executive Summary 1 II. Introduction 1 III. Review of Literature 1 IV. Analysis 1 V. Recommendations 1 VI. Summary and Conclusions 1 VII. Appendix x 1 VIII. References 1 I. Executive Summary Accounting fraud is the deliberate manipulation of accounting records in order to make an organization's financial performance or condition seem better than it actually is. There are many examples of accounting fraud. * Merging short and long term debt into one amount for improving the perceived liquidity of the organization or a company. * Failing to disclose the risky investments or creative accounting practices. * Over-recording the sales revenue. * Under-recording expenses i.e. depreciation of expenses. From Enron, WorldCom and HealthSouth, it appears that accounting fraud is a major problem that is increasing in frequency and severity. research evidence has shown that a growing number of frauds have undermined the integrity of financial reports, contributed to substantial economic loses, and destroyed investors' confidence regarding the reliability of financial statements. The increasing rate of white-collar crimes demands stiff penalties and strong punishments. II. Introduction New laws and guidelines have helped reduce, but not eliminate fraud. Enron, WorldCom...
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...about an accounting information system attacks and failures: who to blame. I am also going to discuss the following related topics in the following order: Firstly, I will take a position on whether a firm and its management team should or should not be held liable for losses sustained in a successful attack made on their AIS by outside source. Secondly, I will suggest who should pay for the losses, to whom, and state why. Thirdly, I will give my opinion regarding the role, if any; the federal government should have deciding and enforcing remedies and punishment. Finally, I will evaluate how AIS can contribute or not to contribute to the losses. A Firm and its Management Team Should Be Held Liable for the Losses According to the Control Objectives for Information and Related Technology (COBIT) framework and the Trust Services framework, achieving organization’s business and governance objective require adequate control over IT resources. IT processes must be properly managed and controlled in order to produce information that satisfies the seven criteria: effectiveness, efficiency, confidentiality, integrity, availability, compliance and reliability. These IT processes are grouped into the following four management activities or domains (Romney & Steinbart, 2012). 1. Plan and Organize (PO), 2. Acquire and Implement (AI), 3. Deliver and Support (DS), and 4. Monitor and Evaluate (ME). First of all management develops plan to organize information resources...
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...There are fraudulent accounting procedures taking place in many businesses all across the world, and many companies have been going a number of years covering up the real financial value of their company. Forensic accountants are becoming much needed as accounting frauds, financial scams, and various economic scandals are beginning to increase globally. This type of accountant does more than the typical accountant of a business or corporation, because their objective is to investigate fraudulent activities being used in the accounting departments of these companies. The amount of fraud being used by companies globally is most likely going to increase in the future as technology is evolving and scammers are getting more creative. This will also lead to a gradual decrease in the investment rates in companies, because the risks of investing in a corrupt business world will outweigh the benefits. Potential investors in companies using creative accounting techniques will increasingly become more at risk if there is no exponential growth in the field of investigative accounting. Accounting scams are becoming a part of the normal occurrence of day to day activities as this type of fraudulent activity is frequently gaining exposure in the daily news worldwide. As owners and managers conceal the financial state of their companies by manipulating their financial statements, the reliability and trust of these statements by investors are decreasing. Illegal accounting procedures are not being...
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...Importance of forensic accounting and fraud awareness in Malaysia As a result of recent, highly publicized financial scandals; reported increases in occupational fraud; and heightened concerns over money laundering to support terrorism and racketeering, legislative mandates and public expectations have heightened the necessity to hrther define the auditor's and accountant's responsibility for detecting fraud within organizations. Successful fraud or forensic accounting analyses and findings reported by practicing professionals may be the difference between whether perpetrators avoid detection of their illegal activities or they are brought to justice. In most cases, success is directly and primarily dependent upon the knowledge, skills, and abilities of the professionals performing the work. Consequently, the demand for entry-level professionals with formal education in fraud and forensic accounting has grown. Academic institutions and stakeholder organizations that provide education in these fields are faced with a number of questions regarding the nature, extent, and format of a worthwhile curriculum. A review of existing higher education institution offerings indicates that the number of courses available varies from a single class to programs of 4-10 different courses. Programs are offered at the undergraduate and graduate level as majors, minors, tracks, or as nondegree "certificate" programs. Further, job opportunities and the student applicant pool are likely to vary...
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...ACCOUNTING INFOMRATION SYSTEM TABLE OF CONTENT INTRODUCTION ............................................................................................................................................. 2 FRAUD ........................................................................................................................................................... 3 Internal Fraud ........................................................................................................................................... 3 Procurement fraud.................................................................................................................................... 4 Online safety ............................................................................................................................................. 5 Cheque Fraud ............................................................................................................................................ 5 INTRODUCTION OF COMPUTER VIRUS TO THE SYSTEM .............................................................................. 7 UNINTENTIONAL ACTS/MISTAKES. ............................................................................................................... 7 CONCLUSION................................................................................................................................................. 8 REFERENCES ......................................................................
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...Forensic Accounting in Practice Gabrielle Bryant Dr. Carolyn Green Contemporary Business 11/17/2013 Determine the most important five (5) skills that a forensic accountant needs to possess and evaluate the need for each skill. Be sure to include discussion regarding the relationship between the skill and its application to business operations Although forensic accounting is not a new field, it has become more talked about since cases like Enron came to light. For someone interested in the Forensic Accountant profession they should know that this field can be time consuming, but very rewarding. People who work in this career investigate white collar crimes such as company fraud, fraudulent financial record reporting, and illegal investment schemes. In a recent study by the Federal Bureau of Investigation shows that white collar crimes have cost the United States and estimated 300 billion dollars (DiGabriele 2008). I think five of the skills that a forensic account would need are communication skills, detail oriented, professional and ethical behavior, sound judgment and discretion. Communication skills are vital in any profession. It allows you to convey information for others to receive. The problem with communication is that it can be interpreted differently by other intended parties. As a forensic accountant, communication skills, verbal and non-verbal, are important when it comes to conducting interviews and gathering information. After gathering the records, forensic...
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...Audit Week 2: Financial Statement Audits, Financial Statement Assertions and Audit Evidence Financial Statement Audit * A systematic process of objectively obtaining and evaluating evidence regarding assertions about the economic actions and events to ascertain the degree of correspondence between assertions and established criteria * Purpose: To enhance the degree of confidence of intended users in the financial statements by the expression of an opinion by the auditor Overall Objectives of the Auditor: * To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, thereby enabling the auditor to express an opinion on whether the financial statements are prepared, in all material aspects, in accordance with an applicable financial reporting framework * To report on the financial statements and communicate in accordance with the auditor’s findings Audit Process Overview: * Step 1: Client Acceptance and Retention * Step 2: Risk Assessment (Through understanding client business environment and operations Assess risks of material misstatement Assess Audit Risk) * Step 3: Audit Procedures Planning * Step 4: Test of controls (IF reliance on controls) * Step 5: Perform substantive tests * Step 6: Audit Completion and Reporting Financial Statement Assertions: * Assertions are representations made by management, explicit or otherwise, that are embodied in...
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...COLLEGE OF BUSINESS UNIVERSITI UTARA MALAYSIA __________________________________________________________________________ COURSE CODE: BKAS2013 COURSE NAME: ACCOUNTING INFORMATION SYSTEMS PREREQUISITE: BKAS1013 IT IN ACCOUNTING AND BKAF1023 INTRODUCTION TO FINANCIAL ACCOUNTING __________________________________________________________________________ 1. SYNOPSIS This course introduces students to the important concepts of Accounting Information Systems (AIS). The course contents are divided into three main sections. The first section introduces the basic concepts of AIS including its objectives, components, and subsystems. The concept of E-business as an emerging trend of conducting business in the new era of information technology (IT) is also covered in this section. The second section discusses in depth the common features of transaction processing systems such as revenue and accounts receivable, purchase and accounts payable, manufacturing and inventory, human resource as well as general ledger and reporting system. Integration of selected accounting software will also take place at this stage to enable students apply the AIS concepts into practice. This section also introduces students to the techniques of documenting accounting systems and database modeling tools. The final section discusses the emerging issues in computer crimes, computer ethics and concept of internal controls in organization...
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...Anatomy of computer accounting frauds A. Seetharaman, M. Senthilvelmurugan and Rajan Periyanayagam Faculty of Management, Multimedia University, Malaysia Keywords Fraud, Corruption, Financial reporting, Whistleblowing, Internal control, Corporate governance Abstract This paper introduces fraud as asset misappropriations (85 per cent of cases), corruption and fraudulent statements. Symptoms include accounting anomalies, lack of internal control environment, lifestyle and behaviour. The most effective tools for fraud detection are internal audit review, specific investigation by management, and whistle-blowing. The paper details the fraud investigation process and the role of auditors as fraud examiners. The correlation of fraud perpetrators’ personality with the size of losses is examined. Personality is analysed into age, gender, position, educational background and collusion. A strong system of internal control is most effective in fraud prevention. Fraud prevention procedures, targeted goals and improvements to system weaknesses feature in the paper. Fraud impacts on accounting transactions in accounts receivable, receipts and disbursements, accounts payable, inventories and fixed assets, and financial reporting. The monetary impact resulting from fraud is analysed by the type of victim and the amount of loss. Internal control and good employment practices prevent fraud and mitigate loss. Computer accounting frauds 1055 Introduction Accounting fraud involves an intentional...
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...Submission of Research paper as a part of curricular activity. Forensic Accounting: A new dynamic approach to investigate fraud. SUBMITTED BY: Aniket Desai (12BBL016) Alakananda Duggirala (12BBL016) Rut Shah (12BBL051) SUBMITTED TO: Dr. Pranav Saraswat For the academic session July to December 2014 1 PREFACE This research project is carried out as a part of curricular activity for the course of Financial Audit, in semester V for the programme B.com LLB (Hons.). We have tried our best to do justice with the project and put it in black and white the research we've done in the last three months. Regards, Aniket Desai Alakananda Duggirala Rut Shah Date: 2th November, 2014 _______________________________ Signature of the researchers. 2 ACKNOWLEDGEMENT We owe a debt of gratitude to Dr (Mr.) Pranav Saraswat, the faculty for the course of Financial Audit, for his constant guidance and support which helped us to conceive this research project. It is also my duty to record my thankfulness to Dr. Atul Bhatt, the librarian of the Institute of law, Nirma University for keeping handy useful resources which helped me collect information and datas which was very important for my doctrinal research work. Finally, I would like to take this opportunity to thank my friends and colleagues for the support whenever required. Regards, Aniket Desai Alakananda Duggirala Rut Shah 3 DECLARATION We hereby declare that this piece of written work...
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