AIS+ch05 - CHAPTER5 ComputerFraud andSecurity 1...

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CHAPTER 5 Computer Fraud and Security 1
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LECTURE OUTLINE The fraud process Why fraud occurs Approaches to computer fraud Specific techniques used to commit  computer fraud Ways companies can deter and detect  computer fraud
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THREATS TO AIS  (p.165, table 5-1) Natural and political disasters Unintentional acts Intentional acts (computer crimes)
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THE FRAUD PROCESS Fraud   is any and all means a person uses to  gain an unfair advantage over another person. In most cases, to be considered fraudulent, an  act must involve: A false statement (oral or in writing) About a material fact Knowledge that the statement was false when it  was uttered (which implies an intent to deceive) A victim relies on the statement And suffers injury or loss as a result
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THE FRAUD PROCESS Fraud against companies may be committed by an  employee or an external party. Former and current employees (called  knowledgeable  insiders ) are much more likely than non-employees to  perpetrate frauds (and big ones) against companies. Largely owing to their understanding of the company’s  systems and its weaknesses, which enables them to  commit the fraud and cover their tracks. Organizations must utilize controls to make it difficult for  both insiders and outsiders to steal from the company.
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THE FRAUD PROCESS Fraud perpetrators are often referred to as  white-collar criminals . Distinguishes them from violent criminals, although  some white-collar crime can ultimately have violent  outcomes, such as: Perpetrators or their victims committing suicide. Healthcare patients killed because of alteration of  information, etc., that can result in their deaths. Three types of occupational fraud: Misappropriation of assets Corruption  Fraudulent statements
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THE FRAUD PROCESS A typical employee fraud has a number of important  elements or characteristics:  (p. 168) gain the trust or confidence use weapons of deceit and misinformation can’t stop once they get started, and frauds grow in size spend what they steal, rarely save or invest the money become greedy often grow careless or overconfident over time In time, the sheer magnitude of the frauds may lead to  detection absence of internal controls and/or the failure to enforce  existing controls
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THE FRAUD PROCESS Fraudulent financial reporting intentional or reckless conduct, whether by  act or omission, that results in materially  misleading financial statements. Financial statements can be falsified to:
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This note was uploaded on 12/21/2010 for the course ACCT 330 taught by Professor Heidi during the Fall '09 term at Hong Kong Shue Yan.

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AIS+ch05 - CHAPTER5 ComputerFraud andSecurity 1...

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