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

Fraud is a wrong doing, a deception. It is illegal as well as unethical.

Information systems helps in developing fraud risk assessment. This assesment helps in determining potential threats relevant to an organization with the use of algorithms and softwares.

Information systems can be used for surveillance, utilization review and detection of fraud.

A manufacturing company\'s reporting of fraudulent sales can be easily detected by the presence of a good information system. Extra units of goods are being produced to match the over-reported sales. This will cause an increase in inventory and will be detected by the accounting software, while doing the valuation of closing inventory.

Another method where fraud in sales can be detected - IT system can put in place RFID tags on all goods produced and then sold. This way it can track the movement of goods produced and sold on a real time basis. Any over reporting of sales will easily be recorded in the server, as the goods are not being sold actually, but are just a fictional record in the accounting books.