Lecture+_8+-+Internal+Control+Issues+I

Lecture+_8+-+Internal+Control+Issues+I - ACCOUNTING...

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ACCOUNTING INFORMATION SYSTEM INTERNAL  CONTROL ISSUES I
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AGENDA  Threats to Companies Information Systems  Types of Occupational Fraud  Occupational Fraud Opportunities  Computer Fraud Classifications  Computer Fraud and Abuse Techniques  SOX and the Foreign Corrupt Practices Act  Overview of Control Concepts  Internal Control Framework
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THREATS TO COMPANIES  INFORMATION SYSTEMS Companies face four types of threats to their  information systems: Natural and political disasters Include: – Fire or excessive heat – Floods – Earthquakes – High winds – War and terrorist attack
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Companies face four types of threats to their  information systems: Natural and political disasters Software errors and equipment malfunction Include: – Hardware or software  failures – Software errors or bugs – Operating system  crashes – Power outages and  fluctuations – Undetected data  transmission errors 60% of companies studied  had significant software  errors THREATS TO COMPANIES  INFORMATION SYSTEMS
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Companies face four types of threats to their  information systems: Natural and political disasters Software errors and equipment malfunction Unintentional acts Include – Accidents caused by: • Human carelessness • Failure to follow established  procedures • Poorly trained or supervised  personnel – Innocent errors or omissions – Lost, destroyed, or misplaced data – Logic errors – Systems that do not meet needs or  are incapable of performing  intended tasks Information Systems Security Assn.  estimates 65% of security problems are  caused by human error. THREATS TO COMPANIES  INFORMATION SYSTEMS
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Companies face four types of threats to their  information systems: Natural and political disasters Software errors and equipment malfunction Unintentional acts Intentional acts (computer crime) Include: – Sabotage – Computer fraud Information systems are increasingly  vulnerable to these malicious attacks. THREATS TO COMPANIES  INFORMATION SYSTEMS
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Three types of occupational fraud: Misappropriation of assets Involves theft, embezzlement, or misuse of company  assets for personal gain. Examples include billing schemes and theft of  inventory. In the 2004  Report to the Nation on Occupational  Fraud and Abuse , 92.7% of occupational frauds  involved asset misappropriation at a median cost of  $93,000. TYPES OF OCCUPATIONAL FRAUD
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Lecture+_8+-+Internal+Control+Issues+I - ACCOUNTING...

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