Information Technology IT Fraud Research Paper

Excerpt from Research Paper :

IT Fraud

Evaluate the factors that add to corporate fraud

The business fraud can be credited to conditions emerging from deceptive monetary reporting and misappropriation of possessions. These conditions are 3 and all 3 features of the fraud triangle have to exist for fraud to take place. Management or staff members have to have the reward or pressure to dedicate fraud, see the opportunity emerge and have the ability to justify the occasion.


Management or perhaps others in the workforce will have benefits or conditions of pressure to carry out fraud. If the choice is made by management to publish illegal monetary statements, the most typical reason for this will be threat by financial, market or entity operating conditions to the monetary security and productivity of the business. Extreme pressure is put on management to satisfy the projection made by industry experts, internal company projections or to pay back loans (Fox School of Business, 2009). The misappropriation of business assets might be done due to individual monetary pressure such as home mortgage, or a non-sharable trouble such as substance abuse or gambling loans (Wells 2007).


The misstatements of monetary statements take place when the opportunity to do so exists. In sectors where considerable judgments and projections are included, the monetary statements of these businesses can be manipulated. The opportunity of theft exists in all business, however the honesty and integrity of the workforce determines if fraud will actually take place. As soon as there is accessibility to money, stock or other useful possessions, workers will capitalize on the opportunity. If a company does not have appropriate internal controls and tasks are not appropriately set apart, the opportunity to abuse possessions considerably rises (Fox School of Business, 2009).


The attitude of upper management towards financial reporting sets the tone of the company. If there are lack of ethical values within a company, management and staff members could be in an environment that triggers them to justify carrying out a dishonest act. If upper management shows neglect for the financial reporting procedures, regularly publishes excessively positive projections, or become obsessed with living up to market expectations, deceitful reporting is most likely (Fox School of Business, 2009).

The impact to the auditing profession and the firm conducting the audit

Auditors are anticipated to adhere to specific obligations, efficiency and reporting requirements. Auditors are needed to be qualified and capable in order to perform the audit. Professional skepticism and expert judgment are fundamental obligations of an auditor throughout the whole course of the audit. The influence on the exterior auditor would be that he would have to be under the fiduciary liability to see to it that the general public and investors can be comfortable with the reports released by the subject business and their third-party viewpoint is crucial for analysis of monetary efficiency of business. External auditors would be under pressure to encourage corporate governance by making certain the subject business's reports are precise, real and are an unbiased representation of the business's condition.

How companies can use IT systems to create fraud and how IT auditors need to use healthy scepticism when executing the audit procedures in these areas.

Automated info systems have actually become an important part in the daily operations of modern-day companies. This has actually permitted even more work to be finished with less individuals and a greater level of information to be incorporated into the work with the sophisticated capabilities of computer systems. It is essential for business to take the essential preventative measures required in shielding their systems and picking the correct internal controls for information technology as well as audit reporting. This consists of examining the efficiency of their internal controls. This is usually done by asking the following questions:.

* Is the design and operation of the internal control system current with technological innovations?

* Is the internal control system and reporting in compliance with Sarbanes-Oxley Act of 2002?

* Does the existing system determine existing controls which are mishandled, redundant, and expensive?

* Is the internal control system and showing enhanced performance and overall company efficiency?

The responses to these points must be evaluated by management to guarantee that the criterion of the information technology is not only regulated but also controlled.

An audit report has 3 general features which are made use of to report a business's financial statements. These reports show whether the financial statements…

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