ACCT 307 Ch 5 Computer Fraud

Fraud

*Any means a person uses to gain an unfair advantage over another person; includes:* -A false statement, representation, or disclosure -A material fact, which induces a victim to act -An intent to deceive Victim relied on the misrepresentation -Injury or loss was suffered by the victim

Computer Fraud

*If a computer is used to commit fraud it is called computer fraud.* Input Processor Computer instruction Data Output

Conditions for Fraud Fraud Triangles

1. *Pressure* -*Employee* ----Financial ----Lifestyle ----Emotional -*Financial Statement* ----Financial ----Management ----Industry conditions 2. *Opportunity to:* -Commit -Conceal -Convert to personal gain 3. *Rationalize* -Justify behavior -Attitude that rules don't apply -Lack personal integrity

*The three conditions that are present when fraud occurs include:* A. attitude B. opportunity C. lack of control D. Financial

A

*Which of the following statements is FALSE?* A. For an act to be fraudulent there must be a false statement, representation, or disclosure. B. Fraud perpetrators are often referred to as management fraud. C. Misappropriation of assets is often referred to as employee fraud. D. SAS No. 82 was adopted in 1997.

B

The Association of Certified Fraud Examiners estimates total global fraud losses to be more than A. $9.2 trillion a year. B. $2.9 trillion a year. C. $290 billion a year. D. $920 billion a year.

B

*Computer fraud is increasing rapidly due to the fact that:* A. not everyone agrees on what constitutes computer fraud B. many computer frauds go undetected C. the total dollar value of losses is difficult to calculate D. all of the above E. A and B

C

*Internal control factors that provide an opportunity for employee and financial statement fraud includes:* A. incompetent personnel B. operating on a crisis basis C. inadequate supervision D. low employee morale and loyalty

C

*Operating system crashes are an example of:* A. natural and political disasters B. intentional acts C. unintentional acts D. software errors and equipment malfunctions

D. software errors and equipment malfunctions

*The pressures that can lead to employee fraud include:* A. fear of losing job B. lack of control C. poor performance ratings D. family or peer pressure E. A and D

E

*Ways to prevent and detect computer fraud include:* A. develop a strong system of internal controls B. install fraud detection software C. integrate the accounting functions of authorization, recording, and custody. D. all of the above E. A and B

E

Two Categories of Fraud

Misappropriation of Assets Fraudulent financial reporting

Threats to AIS

Natural and Political Disasters Software errors and equipment malfunctions Unintentional acts Intentional Acts