An Accounting Information System ( Ais )

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James Guisti, the manager of the North Providence branch of the Greater Providence Deposit & Trust Bank took out 67 fraudulent loans all with 90-day notes over a 3-year period. He did this to fund his gambling addiction and pay off its debts. When a loan matured, he paid off the loan by creating another 90-day note loan and kept rewriting the loans to make more money off of them. He committing identify theft by using the name of his wife, his father, two friends of his, and a fictitious person. No documentation was provided for any of the loans. The loans were in low amounts that they would not be flagged by internal auditors or his employees. An AIS would have been useful in catching this fraud. An Accounting Information System (AIS) has…show more content…
The customer service representative, that cosigned the checks, had custody but saw nothing unusual about the checks although she did not know the people that the checks were made out to. The segregation of duties was not implemented at this bank as there should have been a separate person to record the transactions so that they would see the different loans. They would have also noticed that there was no official documentation to back the loans. Preventative controls were not implemented as just previous to the first fraudulent loan; the computer services arrangement was dropped making it almost impossible to detect any fraud. The detective controls were not implemented because there were internal auditors that did not pick up on the fact that several loans were given to 5 people, one of whom was not existent, and because the amounts of the checks were low, they were not flagged. The corrective controls were implemented as the bank itself was charged with a felony because they did not report cash transactions that were more than $10,000, as is the standard procedure. There were no long-term clerks during that time to be able to catch the multiple checks for the same people as they were rotated on a regular basis which made follow up impossible. Guisti felt the pressure to pay off his gambling debts on time as there was a lot of emotional and financial stress involved. One wonders if the computer services were dropped at Guisti’s request so that he could
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