University Accounting Information System and Processes Report

This report analyzes two scenarios involving accounting information systems and internal control weaknesses. Scenario A details a case of fraudulent overpayment due to inflated invoices. The report identifies five procedures, such as cross-verifying invoices and segregating duties, to mitigate this risk. Scenario B examines fraudulent activity in freight and travel expenses. The report identifies internal controls that could have prevented the fraud, including monthly bank reconciliations and segregation of payment responsibilities. Additionally, the report outlines procedures that would alert auditors to fraud, such as investigating unusual behaviors and building detective processes to identify symptoms. The report concludes with a reference list of relevant academic sources.

Running head: ACCOUNTING INFORNMATION SYSTEM AND PROCESSES
Accounting information system and processes
Name of the student
Name of the university
Student ID
Author note

ACCOUNTING INFORNMATION SYSTEM AND PROCESSES
Table of Contents
Scenario A:.................................................................................................................................2
Answer to requirement:..............................................................................................................2
Scenario B:.................................................................................................................................3
Answer to requirement 1:...........................................................................................................3
Answer to requirement 2:...........................................................................................................3
References list:...........................................................................................................................5

ACCOUNTING INFORNMATION SYSTEM AND PROCESSES
Scenario A:
Answer to requirement:
In the scenario one, the falsely stating the number of invoices received from the
purchaser of product resulted the company to make overpayment. Such act is an act of fraud
as the company has willingly performed the act to make money. Some of the procedures that
would have reduced the risk to Victim Company are as follows:
 All the references related to the invoices and the number of responses should be cross
verified.
 The purchaser of the product of company should be enquired and the investigation
should be done seeking the total number of responses that he collected by presenting
the documents.
 There should be segregation of duty concerning all the areas of business and the
person in charge of handing the manual work and fetching the data into the computer
system should be different.
 There should be careful screening of the person having access to cash receipts and the
handling of the invoices should be done by the separate staffs.
 In case of small business like that of Promotion Company, it is considered vital to
have strong supervision where the concealment of any fraudulent acts would not be
possible (DeZoort and Harrison 2018). There should be a basic control measures for
handling the accounts and the associated treatment.

ACCOUNTING INFORNMATION SYSTEM AND PROCESSES
Scenario B:
Answer to requirement 1:
Identification of internal control that would have prevented the fraud:
 The bank accounts should be reconciled every month by an independent person and
examination of the signatures of the cheques should be done.
 There should be use the system of cheques and balances that would help in ensuring
the fact that no person enjoys a control over all the parts of financial transactions. In
the given scenario, trade payable clerk should not be solely responsible for making the
payment and issuing cheques (Munteanu et al. 2016).
 The payment of the company’s account should not be solely done in cheque, rather
there should be payment in cash as well.
 Looking for the cheques that are paid to the same vendor using the same bank account
and such inspection should be done by an independent person (Henry 2016).
 When the cheques are issues for payment, it should be marked paid by writing down
the cheque number along with the name of person for which the cheques have been
issued.
Answer to requirement 2:
Identification of the procedures that would have alerted the auditors of fraud:
The auditors can be alerted of the fraud by adopting the following procedures and
they are as follows:
 Knowing the exposures- The exposure of the several accounts to the fraud should be
ascertained.

ACCOUNTING INFORNMATION SYSTEM AND PROCESSES
 Knowing the symptoms of occurrence- The occurrence of fraud should be
investigated by knowing whether such transactions or issuing of cheques has been
done before (Kulikova and Satdarova 2016).
 Being alert for behavior indicators and symptom- Any change in behaviors of the
employees such as trade receivable clerk in the given scenario should be enquired by
the auditors.
 Building detective process to look for symptoms- The auditors should have adequate
and appropriate process in place that helps in detecting the occurrence of frauds
(Frazer 2016).
 Following through all the observed symptoms- All the observed symptoms related to
the accounts and the system of payments should be evaluated on regular basis.

ACCOUNTING INFORNMATION SYSTEM AND PROCESSES
References list:
DeZoort, F.T. and Harrison, P.D., 2018. Understanding auditors’ sense of responsibility for
detecting fraud within organizations. Journal of Business Ethics, 149(4), pp.857-874.
Frazer, L., 2016. Internal control: Is it a benefit or fad to small companies? A literature
dependency perspective. Journal of Accounting and Finance, 16(4).
Henry, L., 2016. Fraud prevention: An effective control environment can deter or minimize
the occurrence of fraudulent activities. Internal Auditor, 73(2), pp.17-19.
Kulikova, L.I. and Satdarova, D.R., 2016. Internal control and compliance-control as
effective methods of management, detection and prevention of financial statement
fraud. Academy of Strategic Management Journal, 15, p.92.
Munteanu, V., Copcinschi, L., Luschi, C. and Laceanu, A., 2016. INTERNAL AUDIT-
DETERMINANAT FACTOR IN PREVENTING AND DETECTING FRAUD RELATED
ACTIVITY TO PUBLIC ENTITIES FINANCIAL ACCOUNTING. Knowledge Horizons.
Economics, 8(2), p.14.

ACCOUNTING INFORNMATION SYSTEM AND PROCESSES

ACCOUNTING INFORNMATION SYSTEM AND PROCESSES