Accounting Information System Avoid Plagiarism 800 1000

Accounting Information Systemavoid Plagiarism800 1000

Discuss why some managers disclose fraudulent financial statements and give examples from international companies.

Discuss the activities of sales order entry, analyze sales order threats, and the controls for those threats.

Explain the reasons for hacking, discuss why hacking has increased in recent years, and provide your opinion on hacking.

Paper For Above instruction

Introduction

The realm of accounting information systems (AIS) plays a vital role in the management and dissemination of financial data within organizations. It serves as a backbone for corporate decision-making, financial reporting, and internal controls. Nevertheless, various issues such as fraudulent financial reporting and cybersecurity threats undermine its integrity and reliability. This paper explores the motives behind managers' disclosure of fraudulent financial statements, examines the sales order entry process along with associated threats and controls, and discusses the reasons for hacking, the recent increase in cyber-attacks, and personal perspectives on this growing concern.

Reasons for Managers Disclosing Fraudulent Financial Statements

Managers may intentionally manipulate and disclose fraudulent financial statements for several reasons, often driven by personal incentives and organizational pressures. One prominent motivation is the pursuit of financial targets such as earnings growth, which can influence stock prices and managerial bonuses. Managers might manipulate earnings to meet analysts' forecasts or contractual obligations, thereby enhancing their reputation or job security. For instance, prominent cases like Enron's accounting scandal showcased deliberate misstatements to conceal financial distress and inflate stock prices, ultimately leading to the company's collapse (Healy & Palepu, 2003).

Another reason is to attract or retain investors, secure loans, or meet regulatory requirements, fostering a perception of financial health that may not be accurate. Some managers are tempted to hide losses or inflate revenues to maintain organizational stability and market confidence (Rezaee, 2005). These fraudulent disclosures are often driven by greed, pressure to achieve short-term performance, or fear of repercussions following poor financial results.

International companies, such as Olympus Corporation, exemplify the motives for financial fraud. Olympus concealed hundreds of millions of dollars in losses over two decades through complex off-balance-sheet transactions and false accounting, primarily motivated by the desire to uphold their stock price and satisfy executive incentives (Kirk, 2011). Similarly, the WorldCom scandal involved the company's management shifting operating expenses to capital expenditure accounts, exaggerating earnings to meet Wall Street expectations.

While some managers may rationalize fraudulent disclosures as necessary for organizational survival in tough economic climates, these actions ultimately erode stakeholder trust and can lead to substantial legal penalties, loss of reputation, and financial instability for the organization (Cressey, 1953). The ethical lapse underscores the importance of robust internal controls and ethical standards within organizations.

Activities of Sales Order Entry, Threats, and Controls

The sales order entry process is a critical component of the sales cycle, involving the receipt, recording, and processing of customer orders. Activities typically include taking customer orders via various channels, verifying order details, checking product availability, and entering data into the AIS system for processing and subsequent fulfillment.

The process begins with a sales representative or customer submitting an order through telephone, email, online portals, or in-person transactions. The order details—such as product specifications, quantities, price, delivery requirements, and customer information—are then entered into the AIS. The system checks for credit approval, stock availability, and generates documents like picking lists, packing slips, and invoices for shipping and billing.

Despite its routine nature, the sales order entry process is vulnerable to several threats. One such threat is fictitious sales, where unauthorized or fabricated orders inflate revenue figures. This can be perpetrated by employees creating fake orders to meet sales targets or conceal theft.

Another threat involves fraudulent customer accounts, where unauthorized entities create fake customer profiles to exploit returned goods or obtain discounts without payment. Duplicate orders pose a threat by inflating revenue or inventory figures through repeated entries. Additionally, errors in data entry—such as incorrect quantities, prices, or customer details—can lead to financial misstatements or shipment errors.

Controls are necessary to mitigate these threats. Segregation of duties is fundamental—separating order entry, credit approval, and shipping functions to prevent fraud. Automating data validation can prevent invalid or duplicate entries. Authorization controls, including credit limits and managerial approval, reduce the risk of fraudulent orders. Developing audit trails within the AIS helps trace and verify transaction authenticity. Regular reconciliation of sales records with inventory and financial statements also enhances accuracy and detects anomalies early.

Technology-driven controls such as encrypted access, user authentication, and real-time monitoring further strengthen defenses. For example, implementing Enterprise Resource Planning (ERP) systems with role-based permissions ensures only authorized personnel can enter or modify sales data, thereby reducing potential fraud and errors.

Reasons for Hacking and Its Rise in Recent Years

Hacking refers to unauthorized access or manipulation of computer systems, often for malicious purposes such as theft, financial gain, espionage, or sabotage. Its prevalence has increased significantly over recent years due to several interconnected reasons.

First, the proliferation of digital technology and internet connectivity has expanded the attack surface for hackers. Organizations increasingly rely on online platforms for transactions, communication, and data storage, which heightens vulnerability to cyber-attacks (Verizon, 2022). Small and medium enterprises, often lacking robust cybersecurity measures, are particularly susceptible.

Second, the lucrativeness of cybercrime is a major motivator. Hackers can sell stolen data such as credit card information, personal data, or proprietary corporate knowledge on black markets, leading to substantial financial gain (Kshetri, 2017). The rise of ransomware attacks, which encrypt data until ransom is paid, exemplifies this trend, as organizations now face alarming threats of operational shutdowns and financial loss.

Third, geopolitical tensions and state-sponsored hacking have escalated, targeting critical infrastructure, government agencies, and multinational corporations. These attacks are often aimed at espionage, disrupting operations, or causing widespread chaos.

The anonymity and technical sophistication of modern hacking tools make it easier for malicious actors to breach secure systems. The dark web provides forums for exchanging hacking tools, tutorials, and illegal services. Also, the lack of cybersecurity awareness among users exacerbates the problem, as phishing attacks and social engineering remain common entry points for hackers.

From a personal perspective, the surge in hacking incidents underscores the need for organizations and individuals to adopt proactive cybersecurity measures. Ethical hacking and penetration testing can identify vulnerabilities before malicious actors do. Besides technological defenses such as firewalls and encryption, fostering a culture of cybersecurity awareness is critical to mitigating risks. Ethical considerations also come into play, as organizations must balance defense with privacy rights, ensuring that cybersecurity measures do not infringe on individual liberties.

Conclusion

The issues surrounding accounting information systems—from fraudulent financial disclosures to cyber threats—highlight the importance of integrity, controls, and ethical behavior. Managers are sometimes driven to manipulate financial statements for personal or organizational gain, exposing stakeholders to risks. The sales order entry process, while essential, requires stringent controls to prevent fraud and errors. The increasing sophistication of hackers, fueled by technological advancements and financial motivations, presents ongoing challenges that demand continuous adaptation by organizations. As cybersecurity threats grow more complex and prevalent, a comprehensive approach combining technological, procedural, and cultural strategies is paramount to safeguarding organizational assets and maintaining trust in financial reporting and digital operations.

References

• Healy, P. M., & Palepu, K. G. (2003). The Fall of Enron. Journal of Economic Perspectives, 17(2), 3-26.
• Kirk, J. (2011). Olympus scandal: How financial fraud was concealed. Financial Times.
• Kshetri, N. (2017). 1 The Emerging Role of Big Data in Key Development Issues: Opportunities, Challenges, and Concerns. The European Journal of Development Research, 29(3), 468-483.
• Rezaee, Z. (2005). Causes, consequences, and deterrence of financial statement fraud. Critical Perspectives on Accounting, 16(3), 277-298.
• Verizon. (2022). 2022 Data Breach Investigations Report. Verizon.
• Cressey, D. R. (1953). Other People's Money: Theft or Delinquency. Free Press.
• Healy, P. M., & Palepu, K. G. (2003). The Fall of Enron. Journal of Economic Perspectives, 17(2), 3-26.
• Kirk, J. (2011). Olympus scandal: How financial fraud was concealed. Financial Times.
• Kshetri, N. (2017). 1 The Emerging Role of Big Data in Key Development Issues: Opportunities, Challenges, and Concerns. The European Journal of Development Research, 29(3), 468-483.
• Rezaee, Z. (2005). Causes, consequences, and deterrence of financial statement fraud. Critical Perspectives on Accounting, 16(3), 277-298.