What is the role of Information Systems in preventing fraud

What is the role of Information Systems in preventing fraud or unethical behavior in a company? Discuss If a company’s manufacturing system increased production based on the fraudulent sales in the previous quarter! Can the computer system provide transparency to track back unethical sales?

Solution

Ethical issues are an area of the corporate world that most businesses deal with on a regular basis. The importance is growing with the continuous development of technology. Companies need to be aware of ethical obligations of their products and decisions. Privacy is a problem that occurs due to the fact that companies can access individuals’ information on the history of the websites a person has visited to develop customer Ethical principles is essential to keep corporations on top and away from any negative consequences that unethical practices may lead to 1.0.The importance of ethics in business is growing as firms become more dependent on information systems. The consequences of unethical behavior can cause harm to the company and society. 1.1 The ease of Information Systems has caused concern that employees may be tempted to use unethical behavior 1.2 Corporations also have to be aware that their systems might fail, raising the question who is responsible for failed systems? The company? The consumer? 1.3 It is important for corporations to address ethical issues in order to avoid legal scandals and avoid hurting the reputation of the company. 1.4 One way to address ethical situations is to use strongsoftware systems If corporations recognize ethical behavior in their organization they can prevent scandals and legal difficulty Employee fraud is a significant problem faced by organizations of all types, sizes, locations and industries. The Role of Information Technology Planning • Participating in the Fraud Risk assessment and brainstorming processes • Identifying IT specific risks and relevant IT control activities • Understanding the business process control reliance on application systems and reports • Understanding the thresholds that business process controls operate and where they are fallible • Understanding areas of potential override inside or outside of the application systems Execution • Including key IT organizational personnel in fraud inquiries • Assessing IT control activities • Suggesting improvements in IT control activities and information retention requirements Can the computer system provide transparency to track back unethical sales Employee may use cash collected from customers for personal advantages,and two or more employees may collude to defraud the organization or her customers by hide vital information and records.Credit Facilities may also be given and disbursed to non existing customers accounts, and sometimes, customers may be misinformed in order to divert fund in their accounts due to personal interest of the employees .Any organization where to management frequently over ride the policies/controls is also exposed to fraudulent activities What of Management Fruad? From the top, that the resident control officer cannot do anything about it?. Well, we know that fraud cannot be completely eliminated, but it can be reduced to bearest minimum. Unfortunately, one of the difficulties is that so often top management is involved in the fraud. This is particularly true in small, closely held companies. I recall two instances as an employee and one as a consultant where I discovered fraud and each time an owner was involved Well , these are normally risks attached to any business activity. However, with closer monitoring by management, these are preventable/detected early If good accounting manuals are implemented in every company based on need, occurrence or scope for any such possibilities can be minimized. Professional bodies regulating accounting profession must play greater role in guiding managements It’s all about establishing controls. Having the same person issue payments that approved the PO is maybe not a great idea. This is where an experienced accounting professional can be really useful to a small business owner – setting up the appropriate controls from the start so that the potential for fraud or abuse is minimized. Employees pose as assets and also as threat if they are not monitored properly. If you think that there is no need to monitor senior staff and only culprits are the lower band employees, than this mindset can result lead to employee thefts and crimes. Very nice article as it brings a crucial view across with statistics. There is a need for networking monitoring of all PCs in a company or organization so that employee’s activities, tasks, websites visited, file/folder changes and much more are remotely handled by an administrator.