Computer Fraud in Accounting Environment Assignment

Added on - 21 Apr 2020

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1Computer Fraud in Accounting EnvironmentName of the StudentName of the UniversityAuthor Note
2ContentsIntroduction......................................................................................................................................3Research Objectives.........................................................................................................................4Literature Review............................................................................................................................5Research Methodology....................................................................................................................9Data analysis & Discussion...........................................................................................................11Section A: Level of Awareness..................................................................................................11Section B: Hypothesis Testing...................................................................................................16Section C: Measures taken for detection and preventing the fraud...........................................20Conclusion.....................................................................................................................................27References......................................................................................................................................28
3AbstractThe present research study is conducted with the aim of examining the issue of computerfraud in the accounting environment. The research has analyzed the factors responsible for theincreasing fraudulent activities in the business organizations with the use of computingtechnologies. This study has mainly focused on the increasing occurrence of fraudulent activitiesin the accounting practice with the use of compute technologies. In this context, the research hasincorporated the use of exploratory research method for achieving the aims and objectives of theresearch. The primary data is collected through questionnaire survey method while secondarydata is gathered through the use of extracting information from the various academic sources.The research methodology has helped in examining the techniques that can be used forprevention of fraudulent activities in the accounting environment resulting from the use ofcomputer technologies. The research has used the statistical and graphical analysis technique fordata analysis.
4IntroductionThe business environment is undergoing continual change with the advent of newtechnologies to carry out the business operations. The development of innovative technologicaltools and devices are rapidly transforming the business environment. The business organizationsare implementing the use of computerized systems and process in each and every aspect toachieve fast and accurate results. The accounting field is also largely influenced by theintroduction of new technological devices in the business environment. The accounting processinvolves computation and interpretation of complex financial data and therefore is largely relyingon the use of automated systems for achieving better results in short span of time. Thus, theaccounting process and procedures have been eased largely with the impact of technologicaldevices (Coderre, 2009).However, the increasing use of computerized systems and processes is also associatedwith the risk of occurrence of computer fraud. This is because the accounting environment isvulnerable to many frauds with the use of computer technologies such as manipulation offinancial data by the accounting mangers or theft of critical data by the competitors through theuse of hacking devices. Thus, the breach of safety by the use of computing environment is one ofthe most prominent issues that business organizations have to face with the use of technologicaldevices. The loss of confidential information to the outside parties will negatively impact thebusiness performance. Also, the mis-representation of financial data by the accounting mangersbecomes easy with the use of computerized devices. Therefore, it is very important for thebusiness organization to adopt adequate safety measures for prevention of computer fraud(Gelinas, Dull, Wheeler and Hill, 2017).
5The present research, in this context, addresses the issue of computer fraud in accountingenvironment. The research takes into account the problem of occurrence and variance of newtypes of frauds in the usage of computers in the accounting environment. The researchspecifically targets the application of the same in the commercial organizations of the UK andtries to analyze the problems the organizations in the concerned place experience. The researchalso proposes the types of techniques that can be used by the business organizations to tackle theissue of computer fraud and suggest the possible and more effective ways for resolving the issue.Research ObjectivesThe study tries to address several key questions of substantial concern regarding theaspect of frauds in the computer usage in the perspective of the organizations in the UK. The keyresearch questions are as follows:What type of computer frauds usually occur in the accounting environment of thecompanies in the UK?What are the techniques that are usually used by the companies in the concerned place totackle detect and prevent the computer frauds in the accounting environment?Has the usage of computer for accounting operations led to an increase in the number andthe magnitude of frauds occurring in the commercial organizations of the country?What role does the Information Technology aspect actually play in the detection andprevention of computer frauds?Is there any scope of improvement in the aspect of the internal controlling systems in thecommercial organizations, with respect to the current technologies existing in this aspect,
6which can be undertaken to detect as well as to prevent the accounting frauds done withthe help of computers?What are the measures that can be undertaken in this respect to make the computer frauddetection as well as prevention sounder for the concerned places?Literature ReviewHutchings (2013) stated that the business organizations around the world are increasinglyadopting the use of computer technology and devices for performing their various operationaltasks and activities. The use of latest computing technologies and devices helps the businessorganizations to improve the efficiency of their business processes and thus achieving higheroutput and improved profitability. The business organizations are increasingly adopting the useof computer technologies in the accounting department for improving the efficiency of theiraccounting processes. The increasing adoption and implementation of the informationtechnology systems in the accounting and financial processes of the organizations have alsocaused the occurrence of various ethical issues. The most important ethical issue involved withthe use of computer technology systems in the accounting processes is fraudulent behavior. Thegreater use of information technology devices has caused an increasing concern towards theoccurrence of computer fraudulent activities (Hutchings, 2013).Kassem & Higson (2012) stated that the computer technologies are used almost in everyaspect by the business organizations to perform various types of tasks. The businessorganizations operate in a highly dynamic environment and therefore the use of informationtechnologies help them to perform their operational activities in a flexible manner. The mostemerging business field where computer technologies are increasingly being used is the
7accounting department. The information technologies and tools have become an intrinsic part ofthe financial processes for developing the financial statements and reports. The accountants areusing the latest technology tools and devices for developing the general purpose financialstatements. The main reason for the increasing use of information technology in the field ofaccounting is improved speed and accuracy for achieving the financial results. Thus, the businesscorporations through the use of computer technology and devices are able to easily solve thecomplex financial problem and issues (Kassem & Higson, 2012).Cooper, Dacin, & Palmer (2013) stated that the increasing use of computer technologiesin accounting environment is largely contributing towards the occurrence of accounting frauds.The accounting fraud with respect to the use of computer technologies can be regarded as themisuse of technology in mis-interpreting the financial information for achieving specific resultsor outcomes. The increasing use of innovative information technology devices is also leading tothe problems of computer frauds in business environment. In this context, the theory of fraudtriangle stated that frauds in a general context occur in steps. The steps, as mentioned by theauthors are namely the pressure which the individuals feel, like that of debt problems andlifestyle problems. Another step is the opportunity for committing fraudulent activities, theability of rationalizing the crime by the fraudulent individuals, cumulatively which leads to thefrauds that occur in any business organization in a general framework (Cooper, Dacin, & Palmer,2013).As per the views of Gbegi & Adebisi (2014) there is a large monetary impact of theaccounting frauds on the business organizations and therefore lead to the occurrence of largeamount of loss. The computer technologies are increasingly finding use in each aspect of thefinancial processes of the businesses such as in accounting transactions, accounts payable,
8inventory management and financial reporting. Therefore, there is huge monetary impact of thecomputer frauds in the accounting environment on the business organizations. The effectiveinternal control and good employment practices can help the business organizations inpreventing the occurrence of fraud and mitigating the losses. The internal audit committeedeveloped within the business organization would help in assessing the risks associated with theuse of computing technologies. The establishment of audit committee would help in examiningthe business processes and technologies and thus identifying the risks of computer frauds inadvance (Gbegi & Adebisi, 2014).In accordance with the Nigrini (2012) the development of latest information technologytools is also leading to the development of various types of new devices that can helps inpreventing the occurrence of computer frauds. The forensic accounting is one such technologytools that can be used by businesses for identification of computer frauds. The forensicaccounting can help in prevention of digital frauds such as identity theft, malwares and spywaresidentification, website cloning, cyber stalking and corrupting viruses. Thus, businesses shouldadopt the use of fraud detection digital tools for reducing the chances of occurrence of computerfrauds. The business organization should emphasis on strengthening the internal control withinthe workplace for effective fraud prevention. The development of a strong ethical culture withinthe workplace is most important for establishing an effective internal control. It is therefore mostimportant for the management of business organizations to develop a strong ethical culturethrough developing strong business values. The implementation of strong business values wouldhelp in promoting an ethical and transparent business environment and thus preventing the fraudoccurrence (Nigrini, 2012).
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