Payroll Fraud And Accounting Information Systems

Romney, M., & Steinbart, P. (2012). Accounting information systems. (12th ed., p. 143). Upper Saddle River, NJ: Prentice Hall.

Throughout most sources, though, it is clear to see that employer fraud is the most prevalent and costly type of fraud. Employer fraud includes a number of schemes used by employers to reduce the number of workers' compensation insurance premiums by underreporting payroll, misclassifying employees' occupations and misrepresenting their claims experience. According to the National Council on Compensation, the most common frauds include:

The same starting information will be accessed by PC from the memory gadget, the recovery of the information will be automatic and the speed of recovery will be a few times faster than that of the manual systems. The movement of the information in the accounting system is the first step, however, movement of information is not the catalyst for business opportunities; supplanting the system obliges customization as per the new system, nevertheless, the current information additionally should be moved into new system (Castle, 2008). The movement of the information does not bring new opportunities as it is expected after the computerization of the accounting systems. The new system will have distinctive risks, and the prerequisites will be diverse for the information operations and recovery. The inside controls will be distinctive, and the regulations will be diverse. The recovery of the information turns out to be simple and snappy due to the modernized systems. However, it has the dangers identified with the utilization of information for the reason other than that for which it was gathered. An employee is not supposed to use confidential information of other employees, and therefore confidentiality must be up held. Personal information should be kept classified and utilized just for the planned reason. The information assurance acts have confined the entrance of information by an unauthorized

Cash is such an important current asset to a business, especially for the every day running of it, so ready access to cash is crucial. Therefore, every company must utilize safeguards to protect and manage their cash. An alarming statistic in one of The National Restaurant Association’s (NRA) reports shows that employee theft cost $8.5B to its members in 2007 – the equivalent of 4% of food sales. Furthermore, only 10% of employees do not commit fraud in any situation, while 5% do commit fraud, and the other 85% will actually consider

Accurate payroll reporting is not only crucial regarding the employer but for the employee as well. In the eyes of the employer, they do not wish to pay their employees more than they have to and definitely not for work or hours they did not do. Further, if a company has a reputation for inaccurate payroll or late payroll, it can cause employees to leave for companies who do not have these issues as well as deter other individuals from working for the company to begin with if they are aware of these issues. Further, repeated inaccuracies with payroll could result in frustrations for the payroll department as they have to put time and effort into fixing past mistakes which likely will cause further mistakes to occur. Additionally, inaccuracies

Many organizations have been in the news over the past few years due to accounting ethical breaches that have affected their customers, employees, and the general public. I searched the Internet to locate a story in the news that depicts an accounting ethical breach. I selected Krispy Kreme. I enjoy their hot donuts and was curious to learn more about how they played with the numbers. For some reason I always want to dig into the trickery behind the manipulation of financial statements.

1. There’s a potential risk of delegating one-person manipulating the recording and authorizing of the payroll accounts.

The video “Cooking the Books” discussed the ZZZZ Best case of fraud, it tells how and why fraud was perpetrated by Barry Minkow and why it was undetected for so long. According to the video, ZZZZ Best was founded by Barry Minkow in 1982; when he was sixteen years old, it started as a carpet cleaning company. But, due to high competition in the industry, low entry barriers, and bad internal control, this young entrepreneur started to have cash flow problems, thus creating a shortage of working capital. As a result of the financial pressure, he started to commit fraud by creating false accounts receivable and sales, false documents (using photocopies of real

Combating fraud in the private sector is a difficult task. Trying to combat fraud in the public sector is daunting. In 1999 15.7% of the American workforce were employed by a government entity (federal, state, and local).[1] Mirroring society, government will have its share of perpetrators. The difference from the private sector is in the scope of the fraud committed, the loss of the public trust, the blaring headlines from news media, and difficulty in making necessary changes to combat the problems.

Fraud is defined as a deliberate misrepresentation that causes a person or business to suffer damages, often in the form of monetary losses through deception or concealment. And Occupational Fraud as defined by the ACFE is the use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets. Traditional fraud triangle theory by Donald Cressey explains that propensity of fraud occurring in an organization lies on three critical elements which are Pressure, Opportunity, and Rationalization.

As requested I have completed an analysis of the accounting fraud case at Computer Associates (CA) in preparation of your speech at the American Accounting Associations annual meeting. I have structured my analysis to correspond to six key questions that arose from the case and Stephen Richards actions while Head of Global Sales at Computer Associates.

Each year more than 16 million dollars worth of unemployment fraud is identified by Labor Department investigation--and that is likely just

The personnel and payroll cycle includes the hiring of employees, recording hours worked, withholding and, recording of taxes, distributing payment for work performed, and properly documenting the termination of employees. Payroll can be a significant expense for a company and without proper internal controls can be vulnerable to fraud. Some common types of the fraud within the payroll cycle consist of ghost employees, claiming unworked hours, and pay rate alteration. The objective of a payroll audit is to determine if the current balances in the audit period are fairly stated and in accordance with accounting principles. According Arens, Elder, and Beasley, “Tests of controls and substantive tests of transactions procedures are the most important means of verifying account balances in the payroll and personnel cycle” (2012, p. 664). An

Information systems changed forever the way accounting tasks are processed. The days of green paper pads are gone, and instead businesses have a centralized place where all accounting transactions are entered and saved. No more looking for paper

Corporations are often the victims of the most common white-collar crimes that occur in corporate America. According to the Association of Certified Fraud Examiners (cfenet.com), “abuse and fraud by employees cost U.S. organizations more than $400 billion annually…[which equals] $9 per employee per day.”