Fraud has continued to occur in many organizations in different forms. This ranges from improper recognition of revenue, falsification of financial statements, misappropriation of funds and outright embezzlement or stealing of company assets such as cash. In fact, no day passes without a story about asset misappropriation in corporate America. Also, most frauds occur when companies want to cover-up the true state of their financial affairs. No matter the form financial fraud takes, it hurts and adversely affects stakeholders such as shareholders, investors, creditors, customers, employees, and the regulatory authorities such as the Securities and Exchange Commission (SEC) and the Internal Revenue Service (IRS). Accounting Information Systems …show more content…
But for the whistleblower from American Express the Sachdeva fraud would never have been detected though the signs were obvious. Implementation of a risk review plan on a regular basis will lead to early detection and eventually deter future employee fraud occurrence. This is true because of the awareness that it creates among employees. However, such a plan might create unnecessary apprehension. Employee morale might be negatively affected as innocent employees showing similar signs as the one that is associated with perpetration of fraud, might be wrongly accused. The feel of being monitored consistently might create a possibility of loss of corporate citizenship among employees which might eventually lead to high labor turnover. Rezaee & Riley, 2010 views corporate governance as a mechanism of monitoring the actions, policies, and decisions of corporations in increasing shareholder value. They further maintain that no corporate governance will be needed if management acted in the best interest of shareholders and if corporate gatekeepers such as board of directors, lawyers, and accountants, effectively discharged their fiduciary duties and professional
Taking a look at Donald Cressey’s hypotheses which is now known as the fraud triangle depicts the certain criteria for the mind frame of the fraudster. The fraud triangle is a theory that consists of perceived pressures, perceived opportunity, and rationalization. It gives us the different pressures placed on individuals that would make them consider “cooking the books.” It also demonstrates where the possible opportunity lies so that we may take precautions to eliminate the opportunity. Last, it demonstrates how a fraudster rationalizes with themselves to make committing the fraud okay. Donald Cressey believes all three elements must be present for fraud to occur. Upper management is usually the focus of financial statement fraud because financial statements are done at the management level. So in this case financial statement fraud was committed by the CEO Gregory Podlucky
Regardless of when financial statement fraud first occurred and the development of technology, it will be infinite. People may believe that as technology becomes more advanced, there will be less opportunity to commit fraud and it is easier to catch, but as technology evolves, so do the fraudulent schemes while weaving in the old ones but with a twist. There are always going to be individuals that feel that they will never be the one to get caught and believe that they are invincible to all. There remains a population that lives by means of entitlement, and therefore, minimizing their actions and rationalize them once given an opportunity and the perceived need equaling greed. As fraud evolves, individuals learn by other's mistakes and develop more complex schemes to provide confusion. According to the Wisconsin Law Journal (2012), “financial statement fraud is an ugly fraud with methods that are complex and often not understood by the average consumer or investor, and its results often aren’t tangible to the average person.” Therefore, by making a complex financial statement fraud, the gain is enormous with the amount of investigation overwhelming to determine a portion of the
Throughout history there have been many white collar crimes. These crimes are defined as non-violent and financial-based crimes that are full ranges of fraud committed by business and government professionals. These crimes are not victimless nor unnoticed. A single scandal can destroy a company and can lose investors millions of dollars. Today, fraud schemes are more sophisticated than ever, and through studying: Enron, LIBOR, Albert Wiggan and Chase National Bank, Lehman Brothers and Madoff, we find how the culprits started there deception, the aftermath of the scandal and what our country has done to prevent future scandals.
Madura, Jeff. What Every Investor Needs to Know About Accounting Fraud. New York: McGraw-Hill, 2004. 1-156
Accounting/Finance application systems like Peachtree, Net Suite and QuickBooks let you manage your business with a little or no experience. All three application systems allow the users to manage the companies' capital including bookkeeping, inventory, non-inventory & service items, sales orders, purchase orders, and reports. It allows the companies to keep tracking of the financial assets and at the same time have the information the accountant needs. Using the accounting/finance application system, makes it easier to enter and process the data rather than manually enter and process the data.
In today’s day and age, there is a lot of news that is related to corporate accounting fraud as companies intentionally manipulate their financial statements to show a better picture of their financial health. The objective of financial reporting is to provide financial information about a company to its various stakeholders such as investors and creditors so that these stakeholders can make decisions accordingly. Companies can show a better image of their financial well being by providing misleading information. This can be done by omitting material information from the books or deceitful appropriation of assets such as inventory theft, payroll fraud, check forgery or embezzlement. Fraudulent financial reporting will have an effect on the This includes but is not limited to; check forgery, inventory theft, cash or check theft, payroll fraud or service theft.
Stair, R.M., Reynolds, G.W., Gelinas, J.U. Jr., Sutton, S.G., Hunton, J.E., Albright, S.C., Winston, W.L. & Zappe, C. (2007) Accounting Information Systems and Financial Modelling, Thomson, South Melbourne, Victoria, Australia.
Giroux, G. (Winter 2008). What went wrong? Accounting fraud and lessons from the recent scandals. Social Research, 75, 4. p.1205 (34). Retrieved June 16, 2011, from Academic OneFile via Gale:
Accounting fraud refers to fraud that is committed by a company by maintaining false information about the sales and income in the company books, when overstating the company's assets or profits, when a company is actually undergoing a loss. These fraudulent records are then used to seek investment in the company's bond or security issues. By showing these false entries, the company attempts to apply fraudulent loan applications as a final attempt to save the company by obtaining more money from bankruptcy. Accounting frauds is actually done to hide the company’s actual financial issues.
For those who do not know what fraud is, it’s basically deception by showing people what they want to see. In business it’s the same concept, but in a larger scale by means of manipulating figures that will be shown to shareholders and investors. Before Sarbanes Oxley Act there was “Enron Corporation”, a fortune 500 company that managed to falsify their statements claiming revenues over 101 billion in a span of 15 years. In order for us to understand how this corporation managed to deceive the public for so long, the documentary or movie “Smartest Guys in the Room” goes into depth by providing viewers with first-hand information from people that worked close with or for “Enron”.
The principle territory we are planning to address is accounting fraud and how it could impact an organization by answering, the who, what, when and how. Its goal is to increase the awareness of accounting fraud and fraud counteraction. The intriguing thing about accounting fraud is that little disclosure as a rule usually leads to an enormous increase in fraud. A number of categories and sub-categories can be divided up for fraud.
The following essay aims to analyse in depth a computerised accounting system and its aspects such as its history, what technologies is based on, and how it has developed since its beginning. Other aspects such as the current state of the system and the interactions with other systems and the future of the system will also be covered in this paper.
I am interested in conducting research and teaching in managerial accounting, auditing and assurance services and accounting information systems. In particular, I am interested in exploring the role of accounting information systems in decision making, internal control, and auditing. In order to gain an appreciation of these and related issues, it is essential for me to have a strong grounding accounting, accounting information systems, information technology, managerial accounting, as well as gain a general economic and management perspective.
Accounting dates back as far as first centuries, is the language of business. As everything has gone through many changes, accounting has also changed many times through out the centuries. It went from the use of abacus to the most advanced softwares, and computers. With these drastic improvements nowadays accounting, financial accounting and management are facing big challenges. From the presentation of the reports to communication to the users, investors, and owners, the accounting field has gained totally a new shape from two decades ago. Today with the dynamic change in every aspect of life, the accounting field has to act fast and be able to adapt these new changes and challenges in order to survive.
An Accounting Information System (AIS) can be defined as software that helps accountants to collect data and process it to create information ((Bagranoff, Simkin and Norman 2010)