Accounting Information Systems Threats

Separating governance from management.Distinguishes between governance (direct, evaluate, and monitor) and management (plan, build, run, and monitor). = COBIT Framework The objective of governance is to create value by optimizing the use of organizational resources to produce desired benefits in a manner that effectively addresses risk. = COBIT Framework Provides a framework of generally applicable information systems security and controls practices. = COBIT Framework Defines internal controls and provides guidance for evaluating and enhancing internal control systems. = COSO framework

Evaluate stakeholder needs to identify objectives. = Responsibility of the Board Planning, building, running, and monitoring the activities and processes used by the organization to pursue the objectives. = Responsibility of Management Prioritize objectives and provide direction to management. = Responsibility of the Board Monitor management's performance. = Responsibility of the Board

A framework that addresses the issue of control from five key principles including Meeting stakeholder needs. = COBIT Framework A private-sector group consisting of the American Accounting Association, the AICPA, the Institute of Internal Auditors, the Institute of Management Accountants, and the Financial Executives Institute. = COSO framework An organization that developed the COBIT framework. = The Information Systems Audit and Control Foundation (ISACF) The Internal Control—Integrated Framework was issued by this organization. = COSO framework

<p>Meeting stakeholder needs. = Helps users to customize business processes Strategic alignment. = Ensuring that IT supports the organization's business strategy and objectives. Value delivery. = Delivering value to stakeholders by optimizing the use of IT resources. Resource management. = Ensuring that IT resources are effectively managed. Risk management. = Managing and mitigating risks associated with IT.</p> Signup and view all the answers

<p>Authorization = Empowerment for performing specific tasks Collusion = Working together to override controls General Authorization = Handling routine transactions without special approval Segregation of Duties = Separation of responsibilities to prevent fraud</p> Signup and view all the answers

<p>Control Environment = Management's philosophy and operating style Risk Assessment = Identification and analysis of risks Control Activities = Policies and procedures to mitigate risks Information and Communication = Sharing relevant information Monitoring = Ongoing evaluations to ensure effectiveness</p> Signup and view all the answers

<p>Custody = Handling cash and assets Digital Signature = Unforgeable piece of data for signing documents Verification = Confirming presence of necessary authorizations Management Authorization = Granting specific rights for high-consequence activities</p> Signup and view all the answers

<p>EDM01 = Evaluate governance framework EDM02 = Direct IT strategy EDM03 = Ensure performance management EDM04 = Monitor compliance EDM05 = Ensure resource alignment</p> Signup and view all the answers

<p>Align, Plan, and Organize (APO) = Strategic alignment of IT with business goals Build, Acquire, and Implement (BAI) = Development and deployment of IT solutions Deliver, Service, and Support (DSS) = Operational delivery and support of IT services Monitor, Evaluate, and Assess (MEA) = Performance evaluation of IT processes</p> Signup and view all the answers

<p>Signing a document = Authorization Receiving checks = Custody Entering authorization codes = Authorization Writing checks = Custody</p> Signup and view all the answers

<p>Specific Authorization = High-consequence transactions General Authorization = Routine transactions Preventive Aspect = Control systems Operational Authorization = Daily task executions</p> Signup and view all the answers

<p>Undue Business Risks = Possibility of failure due to hasty decisions Assessment of Potential Risks = Informed decision-making process Communication of Operating Style = Influences employees' behavior Philosophy of Risk Appetite = Guides the types of risks accepted</p> Signup and view all the answers

<p>Ongoing Process = Continuous oversight and checking Communication = Sharing findings and results Feedback = Insights for improving processes Evaluation = Assessment of the framework's effectiveness</p> Signup and view all the answers

<p>Authorization Codes = Document essential permissions Collusion Risks = Fraud beyond single individual capabilities Digital Signature = Secures electronic agreements Segregation of Duties = Reduces risk of errors and fraud</p> Signup and view all the answers

<p>Evaluate = Assessing the effectiveness of governance Direct = Guiding IT resources and strategies Monitor = Regular checks on IT performance Communicate = Sharing insights across the organization</p> Signup and view all the answers

<p>Handling cash = Potential for theft Processing transactions = Need for verification Signing checks = Risk of unauthorized payments Entering transaction records = Data entry errors</p> Signup and view all the answers

<p>Preventive Control = Stops issues before they occur Detective Control = Finds issues after they occur Segregation of Duties = Limits single person’s control Authorization = Verification of task permissions</p> Signup and view all the answers

<p>Responsible Management Style = Encourages ethical behavior Clear Communication = Increases employee accountability Cultivating Trust = Enhances organizational integrity Risk Awareness = Promotes cautious decision-making</p> Signup and view all the answers

<p>Management = Grants specific authorization Employees = Execute routine tasks Computer Systems = Record digital signatures Internal Controls = Prevent unauthorized transactions</p> Signup and view all the answers

<p>Behaving Responsibly = Guided by management's philosophy Assessing Risks Before Acting = Influenced by operating style Evaluating Rewards = Based on risk assessment Following Policies = Encouraged by control activities</p> Signup and view all the answers

<p>Management's philosophy = The approach and principles that guide decision-making Board of directors = A group responsible for overseeing the company’s activities Commitment to integrity = Dedication to ethical standards and competence Organizational structure = The arrangement of roles and responsibilities within a company</p> Signup and view all the answers

<p>Risk appetite = The amount of risk a company is willing to accept Audit committee = A group that oversees internal controls and compliance Internal control structure = The process ensuring accurate financial reporting Compliance = Adherence to laws, regulations, and standards</p> Signup and view all the answers

<p>Manipulating performance measures = Presentation of favorable outcomes despite actual performance Pressuring employees for results = Prioritizing outcomes regardless of ethical implications Demanding ethical behavior = Ensuring actions are aligned with moral standards Believing ends justify the means = Rationalizing unethical practices for desired results</p> Signup and view all the answers

<p>Functional structure = Organizing employees based on specialized roles Divisional structure = Grouping employees based on product lines or markets Matrix structure = Combining functional and divisional approaches Direct reporting relationship = Clear lines of authority and accountability</p> Signup and view all the answers

<p>Human resource standards = Guidelines for employee management and performance Ethical standards = Norms governing moral conduct Financial reporting standards = Principles ensuring clarity and accuracy in financial statements Corporate governance standards = Framework for accountability and control</p> Signup and view all the answers

<p>Sarbanes-Oxley Act = Requires audit committee composed of independent directors Internal controls = Measures to ensure compliance and accuracy in reporting Oversight responsibilities = Duties assigned to ensure proper governance Public companies = Corporations that must adhere to specific regulations</p> Signup and view all the answers

<p>Aggressive management = Risky maneuvers to achieve rapid success Ethical management = Focus on long-term goals with integrity Reactive management = Responding to challenges without foresight Proactive management = Planning ahead to mitigate risks and seize opportunities</p> Signup and view all the answers

<p>Fraud Hotline = A mechanism for employees to report fraud anonymously Forensic Accounting = Specialized accounting focused on fraud detection and investigation Neural Networks = Programs that mimic brain functions to identify patterns in data Sarbanes-Oxley Act = Legislation that requires companies to establish compliance processes</p> Signup and view all the answers

<p>Value Creation = The primary goal of companies as per ERM Uncertainty Acceptance = Management's decision regarding acceptable risks Risk = The potential for adverse effects on value creation Opportunity = The potential for positive effects on value preservation</p> Signup and view all the answers

<p>Assignment of responsibility = Delegating specific tasks to individuals or teams Authority delegation = Passing decision-making powers to subordinates Accountability = Being answerable for outcomes and actions taken Responsibility clarity = Clear understanding of roles and expectations</p> Signup and view all the answers

<p>Chief Compliance Officer = Oversees compliance issues within a company Forensic Specialists = Engage in fraud detection and investigation Boards of Directors = Demand compliance and accountability in corporate governance Employees = Participate in reporting fraud through hotlines</p> Signup and view all the answers

<p>COSO - ERM = Broader focus on enterprise risk management SAS No. 99 = Sets guidelines for fraud detection processes Compliance Mechanisms = Systems put in place to ensure adherence to laws and regulations Forensics Training = Specialized training for accountants in detecting fraud</p> Signup and view all the answers

<p>Compliance = Ensures adherence to financial regulations Reporting Mechanisms = Establishes methods for reporting fraudulent activities Ongoing Monitoring = Continuous assessment of compliance processes Fraud Prevention = Proactive measures to identify and prevent fraudulent behaviors</p> Signup and view all the answers

<p>Risk Management = To effectively manage uncertainty Value Preservation = To maintain existing corporate value Opportunity Identification = To explore positive impacts on business Strategic Alignment = To ensure risk strategies align with company goals</p> Signup and view all the answers

<p>FBI Training = Specialized programs for forensic accountants IRS Training = Focuses on tax-related fraud detection Corporate Governance Training = Involves educating boards on compliance issues Fraud Detection Workshops = Programs aimed at enhancing skills in identifying fraud</p> Signup and view all the answers

<p>Overwhelming number of tasks = Could signal regulatory pressure or issues Accurate identification by neural networks = Indicates advanced technology in fraud detection Empowering CCOs = Shows a trend in delegating compliance responsibilities Employee reporting = Highlights the importance of creating safe communication channels</p> Signup and view all the answers

<p>Fraud awareness training = Education to help employees identify and prevent fraud. Prosecution of fraud perpetrators = Legal action taken against individuals committing fraud. Risk assessment = The process of identifying and evaluating potential risks. Public relations disaster = A situation where fraud becomes highly visible and damages reputation.</p> Signup and view all the answers

<p>Rotation of duties = Changing employee responsibilities to reduce fraud risk. Ethical considerations = Factors influencing the morality of business practices. Employee training = Continuous education provided to staff about fraud and ethics. Reporting intrusions = The act of disclosing security breaches to authorities.</p> Signup and view all the answers

<p>Increased fraud risk = Higher likelihood of experiencing fraudulent activities. Loss of public trust = Damage to the company's reputation due to visible fraud. Legal complications = Challenges arising from failure to prosecute fraud cases. Employee morale decline = Negative impact on staff productivity and enthusiasm.</p> Signup and view all the answers

<p>Lapping = Requires ongoing attention from the perpetrator. Kiting = Manipulates banking systems to create the illusion of funds. Fraud by key employees = Results in significant financial losses for the company. Unreported crimes = Leaves companies vulnerable to future fraud incidents.</p> Signup and view all the answers

<p>Risk response = Measures taken to mitigate identified risks. Impact assessment = Evaluating the consequences of potential fraud incidents. Fraud response plan = A strategy outlining actions to take when fraud is detected. Incident reporting = Documenting occurrences of fraud or attempted fraud.</p> Signup and view all the answers

<p>Employees = Responsible for adhering to policies and reporting suspicious activities. Management = Oversees implementation of fraud prevention measures. Law enforcement = Investigates and prosecutes fraud cases. Internal auditors = Conducts audits and assessments of financial practices.</p> Signup and view all the answers

A framework for governance and management of IT functions, emphasizing control and value optimization.

Governance involves directing and monitoring, while management involves planning and executing IT activities.

Understanding and addressing the requirements of all stakeholders involved in IT operations.

COBIT is centered around principles that guide effective governance of organizational IT resources.

A framework created by a committee to enhance internal control systems and manage risks within organizations.

COSO’s framework defining internal controls and guidance for improving control systems.

Management must plan, build, run, and monitor organizational activities for achieving objectives.

The goal of governance to maximize the use of resources for achieving desired outcomes.

The combination of factors within an organization influencing its operations.

The fundamental beliefs and values guiding a manager's approach to business decisions.

The level of risk a company is willing to accept in pursuit of its goals.

A group composed of independent directors overseeing a company’s financial reporting and compliance.

Conduct that conforms to accepted moral standards and values in business.

The system that defines a company’s hierarchy and reporting relationships.

A dedication to uphold ethical standards and honesty in business practices.

The process of designating responsibility and power to individuals within an organization.

COSO was updated in 2013 to align with technological advancements.

An ongoing process requiring monitoring, communication, and feedback.

Uses five governance processes: Evaluate, Direct, Monitor (EDM01–EDM05) and 32 management processes.

Include Align, Plan, Organize (APO), Build, Acquire, Implement (BAI), Deliver, Service, Support (DSS), and Monitor, Evaluate, Assess (MEA).

The most important component of ERM and internal control frameworks.

Evaluating potential risks and rewards before acting.

Control environment, risk assessment, control activities, information and communication, and monitoring.

Sarbanes-Oxley Act regulations ensuring accurate financial reporting.

An executive responsible for compliance with regulations and policies.

Specialized accounting for detection and investigation of fraud.

A mechanism for employees to report suspected fraud anonymously.

A comprehensive approach to identifying and managing risks and opportunities.

The primary goal of companies to generate wealth for owners.

Risk is potential loss, opportunity is potential gain from uncertainty.

A framework integrating risk management with strategy and performance.

Deliberate wrongdoing by employees to gain illicit benefits.

A fraud scheme where payments are misappropriated by a series of delays.

A scheme of writing checks on insufficient funds to create an illusion of money.

Policies designed to reduce the risk of ongoing fraud by forcing absence.

Legal contracts preventing disclosure of sensitive information.

Insurance that protects companies against losses from employee dishonesty.

Fraud cases that companies do not disclose, often to avoid reputational damage.

The process of granting employees permission to perform tasks.

Management grants routine transaction permissions without special approval.

Separating responsibilities to minimize risk of fraud or errors.

When two or more individuals work together to bypass controls.

Measures set to prevent errors or fraud before they occur.

An electronic signature verifying authenticity, hard to forge.

Responsibility for safeguarding cash or assets.

The process to ensure proper authorization exists for transactions.