How can accounting information systems aid in the prevention

How can accounting information systems aid in the prevention of fraud? Do legislative activities such as the Foreign Corrupt Practices Act and the Sarbanes-Oxley Act of 2002 really aid in the prevention of accounting fraud? Justify your answer.

Are the types of system controls that may be implemented effective in regards to system security? Justify your answer.

Data integrity is essential for a company\'s operations. Describe various steps companies can use to ensure the integrity of its information.

Computers and technology have changed the way we do business. How has the auditing of a company become more difficult, and how has auditing become less difficult for businesses that operate solely through the computer?

Solution

1.

The accounting information system (AIS) is a program that collects the data, process the data and prepare the report for different uses. The accounting information system works on a set guidelines and standard templates. Hence, any malpractice or fraudulent activities are either detected and noted or not accepted by the system. As a result, the fraud is prevented. Further, the AIS prepares the report that shows the irregularities in the report and it is acknowledged by the management and auditors. It helps these people to take initiative to stop the fraud taking place or prevent the fraud from being spread in the organization.
Legislative activities help in preventing the accounting fraud as it makes the organization to come up with sound accounting framework, important disclosures and implement the guidelines that reduces   the occurrence of the case of accounting fraud. We can take the legislation of the Foreign Corrupt Practices Act that demands increased level of transparency in accounting activities under the aegis of the securities exchange act as well as the cases of the bribery by the company officials to acquire any kind of benefits. A case against the Walmart officials offering bribe for favors in foreign country came into light. It made an example for the other companies who wanted to involve in such practices. So, accounting fraud is prevented.
Sarbanes-Oxley Act also make public enterprises to bring the necessary accounting reforms and some of the provisions of the act also apply to the privately held organizations. It causes the company to bring a sound accounting framework that does not leave any scope of fraudulent practices. So, the act also helps in reducing the accosting fraud and contributes towards the protection of investor’s best interests.

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