The vulnerability of computerised accounting information systems to computer crime.

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Abstract.

The objective of this essay is to determine the vulnerability of computerised accounting information system to computer crime and the solutions to prevent such crime from occurring in organisations. Ever-Changing information technology has made computerised accounting processes easier. However, it has also created significant threats in relation to ensuring the security and reliability of computerised accounting information systems. Using an accounting software package such as MYOB can be vulnerable to frauds if internal controls are not implemented correctly. Fraudulent activities such as unauthorised use of data, theft of inventory, theft of funds and incorrect financial reporting can be conducted by internal employees of an organisation. Furthermore, outsiders are also able to access unauthorized information through electronic exchange of data if proper controls are not installed. Controls such as password, authorities, firewall, encryption, segregation of duties, and auditing, physical controls over assets contribute to reducing crimes conducted by both internal employees and outsiders.

The rapid change in information technology and the implementation of user friendly computer systems have enabled processing accounting tasks much faster and accurate than ever before. However, this state-of-the art technology has also created significant threats in relation to ensuring the security and reliability of computerised accounting information systems. In addition, other factors can contribute to the vulnerability of computerised accounting information systems to computer crime including inadequate control practices and violation of internal controls (Albrecht, 2003, p471). Many companies and organisations should be aware of potential security threats to their computerised accounting information systems and must consider adequate security controls to prevent computer crimes (Ahmad, 2001 and 2003). Furthermore, the use of accounting software packages such as MYOB can be exposed to security threats and sufficient measures must be taken to prevent it from happening further.

Doney (2001, p30) defines computer crime as crimes in which perpetrators use a computer as a tool. However, unintentional errors cannot be considered as a crime. For example, if incorrect data is mistakenly entered in a computerised financial statement, it cannot be considered as a computer crime due to the fact that it was not done with the intent of gaining advantage over another through false pretence. (Albrecht, et al, 2003). However, if in the same situation, someone purposely enters incorrect data to trick investors or to steal funds, it could be judged as a crime (Albrecht, et al, 2003).

Albrecht (et al, 2003) states that the most common crime committed in computerised accounting information systems is fraudulent financial reporting which is usually conducted by internal management. These frauds are committed to make reported earnings look better or increase company's stock prices. Furthermore, financial statement fraud often occurs in companies that are experiencing losses or unexpected loss of growth (Albrecht, et al, 2003). Therefore, it could be established that perhaps internal employees pose the greatest risk in terms of access and potential damage to critical computerised accounting information systems (Shaw, Ruby & Post, 1998).

Studies show that loss from fraud and embezzlement is about ten times higher when a computer is used that when it isn't (Doney, 2001, p31). Hence, computerised accounting information system such as MYOB can be vulnerable to crimes or misuse in several areas. If suspected, a risk assessment must be conducted to identify the risk of using such a software package. For assets such as inventory, theft, fraudulent recording and wastage can put a significant effect in sales revenue. The process of risk assessment requires a good understating of the business operations and the processes and the environment...
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