Professional Documents
Culture Documents
Chapter 3: Ethics, Fraud and Internal Control Notes
Chapter 3: Ethics, Fraud and Internal Control Notes
DEFINITIONS OF FRAUD
• Fraud is the false representation of a material fact
COMPUTER ETHICS made by one party to another party, with the intent
• Computer ethics is the analysis of the nature and to deceive and induce the other party to justifiably
social impact of computer technology and the rely on the material fact to his or her detriment.
corresponding formulation and justification of • Employee fraud is the performance fraud by
policies for the ethical use of such technology. This nonmanagement employee generally designed to
includes details about software as well as hardware directly convert cash or other assets to the
and concerns about networks connecting employee’s personal benefit.
computers as well as computers themselves. • Management fraud is the performance fraud that
• A new problem or just a new twist on an old often uses deceptive practices to inflate earnings or
problem? to forestall the recognition of either insolvency or a
• Privacy decline in earnings.
• Privacy is full control of what and how much
information about an individual is available to THE FRAUD TRIANGLE
others and to whom it is available. • The fraud triangle is a triad of factors associated
• Ownership is the state or fact of exclusive with management and employee fraud: situational
rights and control over property, which may be pressure (includes personal or job-related stresses
ACCOUNTING INFORMATION SYSTEM CHAPTER 3
that could coerce an individual to act dishonestly); • Fraud Losses and the Collusion Effect
opportunity (involves direct access to assets and/ • One reason for segregating occupational
or access to information that controls assets); and duties is to deny potential perpetrators the
ethics (pertains to one’s character and degree of opportunity they need to commit fraud. When
moral opposition to acts of dishonesty). individuals in critical positions collude, they
create opportunities to control or gain access to
assets that otherwise would not exist.
• Fraud Losses by Gender
• Women are not fundamentally more honest
than men, but men occupy high corporate
positions in greater numbers than women. This
affords men greater access to assets.