Data as per the literature is a raw and unprocessed facts, which organization collect for various Events, Resources and agents.
Information is a processed fact or data i.e. when many data’s together processed it is termed as information. Information is used to take decision, so better information helps in better decision and do get the good information , accurate and required , relevant and quality is expected.
Information System is a group of two or more interrelated components that interact to achieve a goal. E.g. here it is data along with some processing system interacts with each to get the information. Most systems are composed of smaller subsystems and vice versa. Every organization has goals, and the subsystems should be designed to maximize achievement of the organizations goals-even to the detriment of the subsystem itself. Topic.
So there is a very clear relationship between all three i.e data, information and information system. we can summarise it as follow:-
DATA-------PROCESSING -------> INFORMATION
SO, data is input which is processed with the help of a system to get the information which is output. And output will be dependent on input, so if input is correct, system is efficient and technology based then output will be also good, and vice versa.
A council health inspector threatens to close down a restaurant by issuing a fake health violation notice if the owner does not make a financial payment to him. If the restaurant owner does not cooperate, the restaurant cannot be opened for business and the negative publicity will drive customers away. Faced with the potential economic loss, the owner makes the payment.
Answer: The fraud which happened with the restaurant owner is a type of corruption and a documental fraud or forgery, and it was possible because Violation Notice Serving System was Manual in this case so it allowed a chance for the health inspector to prepare a false and fake document of violence Notice and cheat the restaurant owner. The restaurant owner was also ignorant and may be indulged some kind of wrong practices which restricted him protest and take this matter to health inspector’s senior , instead of paying it directly . This could have been avoided with
a proper internal control systems in the place
Online system of servicing notices
We can categorize this fraud under
To Detect fraud that too in time is necessary, and to do a robust internal control system is required which may be
Use more and more technology based systems to avoid manual interventions, it reduces not only chances of manipulation and fraud but also helps in increasing accuracy of the process, speedy work.
Use a system of checks and balances to ensure no one person has control over all parts of a financial transaction along with Periodically reconciling the incoming check log against deposits
Reconcile agency bank accounts every month. Require the reconciliation to be completed by an independent person who doesn’t have bookkeeping responsibilities or check signing responsibilities or require supervisory review of the reconciliation
Restrict use of agency credit cards and verify all charges made to credit cards or accounts to ensure they were business-related, set limit for credit card balances and expenditures to at least cap losses in case any.
Protect checks against fraudulent use.
Prohibit writing checks payable to cash.
Deface and retain voided checks.
Avoid or discourage related party transactions.
Require that a written conflict of interest and code of ethics policy is in place and that it is updated annually.
Require that related party transactions be disclosed and be approved by the Board.
A recent “KPMG Fraud Survey” found that organizations are reporting more experiences of fraud than in prior years and that three out of four organizations have uncovered fraud. The NYS Office of Mental Health's Bureau of Audit has provided few control measures few of which are as stated above.
In Accounting Information System (AIS), credit check are the processes of evaluation of financial behaviour and creditability of a customer by digging their historical credit information for a particular period of time.
Credit check in advance technology as the term itself explains is related to use of advance technology in the process of credit check, the system decides whether to give or deny credit to a customer based on his financial records contained in the credit history file. If the system founds that the credit history of a customer fails to meet the criteria, then it may denied to grant the credit and the sales clerk should not be able to compel the business transaction to proceed with the customer.
Under the basic technology system, credit checking of potential customers is an element of the credit department, which has duty for ensuring the best possible application of the company's credit policies. The complexities of credit policies will changes depending on the relationship of company with its customers and materialist of the business transaction. First time credit approval for any customer may take a while because it may require some consultation with outside credit rating agencies. In contrast, credit decisions for existing customers for a transaction within current allowed credit limit may be done very quickly.
The following is the description of cash disbursements system of Two Symbols Limited:
Upon receipt of the documents from accounts payable department, the cash disbursements clerk files the documents until their payment due date. On the due date, the clerk prepares a cheque for the invoiced amount, which is sent to the treasurer who signs it and mails back to the supplier.
The cash disbursement clerk then updates the cheque register, accounts payable ledger, and accounts payable control account from the clerk’s terminal. Finally, the clerk files the invoice and copy of purchase order, receiving report, cheque in the department.
In this case there is no segregation of duties. Clerk preparing cheque has access to cheque register, accounts payable ledger, and accounts payable control ledger, files copy of purchase order, invoice and receiving report. All the jobs should be segregated and assigned to separate employees. Otherwise, there may be chance of manipulation of these documents.
Internal Control Weakness alludes to disappointment in the usage or viability of the interior controls framework. This shortcoming can be characterized by issues related to erroneous acknowledgment of income, absence of isolation of obligations, the rebelliousness of bookkeeping arrangements, and so on.
According to the realities given, representative of Two Symbols Limited get the archives, set up the check of the receipt sum, refreshes the check register, creditor liabilities record, and records payable control account from his terminal lastly documents the receipt and duplicate of procurement request, getting the report, check in the office.
There is no creator and checker in the whole framework and, in this manner, inclined to numerous dangers like paying a seller twice on a similar receipt if the agent committed some manual error in the bookkeeping, completing duties which are conflicting with the administration desires and wants unapproved or bogus instalments. Here, the kinds of shortcoming and hazard included may include:
a) Isolation of obligations of Authorizing and handling of Cash Disbursement: Clerk approved the liabilities and processed instalment
Shortcoming: Clerk approves the risk and composes the check to pay it.
Hazard: The representative could make a bogus seller, set up obligation and dispense reserves
Control: Segregation of obligations between the undertakings of approving a risk and handling the instalments.
b) Isolation of Duties at the hour of Account Keeping: Clerk makes instalment additionally update the record payable record
Shortcoming: Clerk approaches both the seller record and the overall record.
Risk: Balancing general record control accounts with relating merchant records can help recognize specific kinds of blunders and abnormalities like if erroneously receipt booked twice or paid twice. This capacity is lost when a similar individual is answerable for refreshing the two records.
Control: Segregation of obligations with the goal that no fiscal summary is taken care of by the individual from start to finish.
c) Independent verification:
Shortcoming: Clerk sets up an obligation dependent on the sellers' receipt.
Hazard: The organization might be paying for things it didn't structure, didn't get or utilize or is following through on an excessively significant expense to an individual who is some way or another identified with the Clerk.
Control: The assistant ought to play out a three-way-match of the buy request, getting the report and receipt to check that the risk is authentic and forcefully expressed and accurately evaluated.
Leon Jones worked in the warehouse of a large building supply company. One day he unexpected left for Fiji, never to return. His supervisor seized the opportunity to continue submit time cards for Leon to the payroll department. Each week, as part of his normal duties, the supervisor received the employee pay cheques from payroll and distribute them to the workers on his shift. As Leon was not present to collect his pay cheque, the supervisor forged Leon’s name and cashed it.
In case again due to lack of proper Accounting Information System in place, the process of disbursed was influenced by supervisor and he was able to cheat the company so to avoid this Leon John should apply the following internal control techniques and install the advance technology which can work in his absence and he can monitor overall operations from abroad, Which a now a days a common practice followed by various MNC and Global companies:-
Online Payroll System along with approving authority directly with a different person other than preparing the payroll, involvement of more than one person and regular internal audit and Reconciliation of checks and balances go ensure that payments are reached to the right person
Payroll fraud is theft of funds using a company’s payroll system. Its most often carried out by managers and senior employees of the payroll department who have access to the systems through which employees are paid and can use that access to issue false payments. It can also be carried out by employees who make false claims for payment
Bio Metric Attendance system , which avoids any type of ghost employee in the payroll record , it helps in getting the high level of accuracy in the attendance system and payroll process also becomes easy
Payroll fraud is a form of asset misappropriation, one of the most common types of fraud to affect businesses. And it’s often long-term, trusted employees who carry out these frauds, and companies with lax or non-existent controls are most often targets.
Some common payroll fraud schemes and methods include:
Commission fraud and bonus fraud
Expense reimbursement fraud
To detect and prevent ghost employee schemes, companies should implement controls, including:
Require documentation and authorization from management before an employee can be added to the payroll.
Use direct deposit for payroll checks to create a paper trail.
Separate the duties of maintaining payroll records and personnel records.
Conduct background checks and reference checks on new hires.
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