Risks in Conducting E-Business

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SUMMARY

In recent years, the development of technology and the Internet has had an important impact on every aspect of life. The application of automatic and electronic system has becomes essential in every activity, particularly in business. E-business now has an important role in the success of enterprises. It reduces expenditure, time and labor for management information systems, yet provides higher quality of financial information to managers. On the other hand, conducting e-business can create a non-secure environment that may influence the quality of financial information. Both accidents and intentional breaches are potential security risks arising from e-business. Accidents cannot be completely eliminated but could be reduced by an efficient internal control, whilst intentional frauds represent another threat. In order to limit or eliminate these security risks in conducting e-business, each enterprise should have a plan to organize an efficient internal control system and implement/purchase a security service to protect confidential information. Depending on their financial status, and the cost for recommended activities, the enterprise should determine whether conducting e-business is worthwhile.

INTRODUCTION

Background
Conducting e-business is popular and benefits all enterprises, particularly for financial management. However it also creates several risks, particularly security risks to the quality of a business’s financial information. These security risks should be identified, assessed and studied to reduced adverse impacts on business activities. Aims

- To analyze the benefits of conducting e-business;
- To analyze the security risk of conducting e-business;
- To give some solutions to limit or eliminate analyzed risks. Scope
The report will focus on the impact of conducting e-business on financial management and financial information security. REPORT BODY

1. Electronic business (e-business)
E-business refers to the application of electronic networks, especially via the Internet, to exchange information among an organization and its customers and suppliers. It also uses networks between organizational departments (such as manufacturing, distribution and accounting) to link business processes. (Genilas et al. 2012). Conducting e-business benefits not only enterprises but also their customers. For example, the Commonwealth Bank, a leader bank in net banking in Australia provides their thousands of customers access to their accounts anytime, anywhere with electronic devices. And the bank therefore increases their attractiveness to customers to enhance its value. Particularly to financial management, the applying of e-business provides validity, accuracy and completed information at any requested time for managers to make financial decisions. - Speed: Automatic accounting information systems (AIS) enables organizations to record and process every transaction immediately when it happens and the information is then processed to related journals and even financial reports. All departments and head office can have information about this transaction. For instance, in a supermarket, when an item is sold, it barcode is scanned and AIS records the increase in sales, account receivable and reduce the inventory. Managers can have daily information about sales and inventory to make decision about stocking inventory to reduce storing cost. - Accurate and complete information: All data about business transactions is recorded and processed automatically via computers and Internet networks so information is high quality and mistakes by manual complex calculation are avoided. The decisions based on such information are more relevant. - Saving resources: By conducting e-business, almost all transactions are processed automatically via computer systems, thus expenditure for labors, papers is lower. Recently, some companies have applied “paperless office systems” with all activities operated via electronic devices...
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