Please enable JavaScript.
Coggle requires JavaScript to display documents.
identifying and preventing fraud (potential for computer fraud (lack of…
identifying and preventing fraud
potential for fraud
prerequisites/precondition/predisposition for fraud
dishonesty: personality factors/cultural factors
motivation: financial needs or wants. or envy of others/a desire to avoid punishment
opportunity
assessing the risk of fraud
external factors: the general environment in which the business operate
internal factors:changing operating environment; rapid growth; new personnel; new technology; new MIS;new products and processes; restructurinng
business risks: profit levels deviating significantly from the industry norm, market opinion; complex structures
personnel risks: secretive behavior; expensive lifestyles; long hours or untaken holidays; autocratic management styles; lack of segregation of duties; low staff morale
potential for computer fraud
lack of training within the management team:senior management can often be the least computer literate. they may also be the most reluctant to receive training, preferring to delegate tasks to assistants
identifying the risks: most firms do not have the resources to keep up to data with the pace of development of computer technology
computer hackers
need for ease of access and flexible systems: in most cases, a firm uses computers in order to simplify and speed up operations. however, implementing strict controls can sometimes suppress these features
systems for detecting and preventing fraud
general prevention policies
personnel controls. through interviewing and recruitment procedures including obtaining references can be effective screening for dishonest employees. appraisal and grievance systems can prevent staff de-movtivation
training and raising awareness can be important. fraud awareness education should therefor be an integral part of the training programme
emphasizing ethics can decrease the chances of fraud
specific prevention policies
sequential numbering/dates:cut-off testing/standard procedures/holidays/recruitment policies
computer security/manager and staff responsibilities/availability of information/whistle blowing:employment protection rights/investigation of fraud: fraud response plan/evolving control systems
physical controls/segregation of duties/authorization policies/customer signatures/documentation
responsibility for detecting and preventing fraud
the responsibilities of directors:(1)ensure the activities of the business are conducted honestly(2)establish arrangements to prevent and detect fraud(3)ensure reliable financial information
the role of the auditor: the responsibility of external auditor is to express an opinion on whether the financial statements give a true and fair view of the company's financial situation and results