ACC00718 - Accounting Information System: Procedures and Checks

This assignment focuses on identifying procedures and checks within an accounting information system (AIS) that can reduce the risk of fraud. Scenario A examines a case where a promotions company inflated response numbers, leading to overpayment. The solution identifies five procedures the victim company could have implemented, including due diligence, fraud risk communication, internal controls, monitoring, and expert consultation. Scenario B discusses the COSO internal control framework and its application in preventing fraud, using risk assessment, effective internal environment, control activities, information and communication, and monitoring as examples. It further identifies five procedures an auditor could have used to detect fraud, emphasizing awareness of fraud exposures, recognizing symptoms, building detective processes, and investigating observed symptoms. The assignment references relevant academic sources to support its analysis.

ACCOUNTING INFORMATION SYSTEM 1
ACCOUNTING INFORMATION SYSTEM
By (Students Name)
Professor’s Name
College
Course
Date

ACCOUNTING INFORMATION SYSTEM 4
ACCOUNTING INFORMATION SYSTEM
Scenario A
1) Identify five (5) procedures and checks that would have reduced the risk to the
victim company?
The Australian Public company ought to have followed the blow five procedures. It
should have known the promotions company well by visiting the customer reviews and
comments section among others. Secondly, it should have communicated fraud risk policy to
possibly alert the promotions company that they are watching against fraud. The third procedure
was to implement internal controls that deter fraud such as documenting the number of
customers reached through promotion and their verifiable contacts. The next procedure was to
carry out monitoring and lastly the Australian company could hire experts qualified to examine
fraud (Munsif, Raghunandan and Rama 2012).
Scenario B
1) Identify and discuss which internal control could have prevented this fraud and
give five (5) examples
The American company should have used the COSO internal control framework. It
ensures that the risk of intentionally or unintentionally misrepresenting financial figures are
avoided (Hoitash and Johnstone 2012). For example, risk assessment, effective internal
environment, control activities, effective information and communication and monitoring.

ACCOUNTING INFORMATION SYSTEM 3
2) Identify and discuss five (5) procedures could have alerted the auditor to the
fraud?
The auditor should have, as the first procedure, known the exposures that exist in regard
to fraud. Secondly, the symptoms of occurrence of fraud should have been known. The third
procedure was to watch out for symptoms and behavior indicators. The next procedure was to
build detective processes that help look for the symptom such as programs and software. The last
procedure was to follow through every symptom observed for leads to identifying fraud.

ACCOUNTING INFORMATION SYSTEM 4
References
Hoitash, R., Hoitash, U. and Johnstone, K.M., 2012. Internal control material weaknesses and
CFO compensation. Contemporary Accounting Research, 29(3), pp.768-803.
Munsif, V., Raghunandan, K. and Rama, D.V., 2012. Internal control reporting and audit report
lags: Further evidence. Auditing: A Journal of Practice & Theory, 31(3), pp.203-218.