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11 Dec 2019

Which of the following are risks of e-commerce? Firewalls,fraud, and computer viruses. Encryption, stolen credit cardnumbers, and fraud. Stolen credit card numbers, computer viruses,and impersonation. Computer viruses, encryption, and stolen creditcard numbers. Impersonation, encryption, and firewalls.

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13 Dec 2019
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In this activity, your instructor will assign you to a groupwith four or five of your peers. Each group member will select adifferent computer fraud event from the following list. Researchthe topic and discuss how the fraud occurred. Assess theeffectiveness of the company’s internal controls and recommendaccounting information system (AIS) controls that will mitigate therisk of future attacks. Ensure your recommendation is in compliancewith industry standards. Russian hackers broke into Citibank’ssystem and stole $10 million from customer accounts. Acxiom managescustomer information for credit card issuers, banks, automotivemanufacturers, and retailers. A systems administrator for a companydoing business with Acxiom exceeded his authorized access,downloaded an encrypted password file, and used a password-crackingprogram to access confidential IDs. The intrusion cost Acxiom over$5.8 million. During the Iraq war, Dutch hackers stole confidentialinformation, including troop movements and weapons information, at34 military sites. Their offer to sell the information to Iraq wasdeclined, probably because Iraq feared it was a setup. A17-year-old hacker broke into the Bell Laboratories network,destroyed files, copied 52 proprietary software programs, andpublished confidential information on underground bulletin boards.Many hackers are young, some as young as 12. In the worst securitybreach in gaming history, 101 million Sony PlayStation accountswere hacked, crashing the network for over a month. More than 12million credit card numbers, email addresses, passwords, homeaddresses, and other data were stolen.

Once each group member has submitted their assessment andrecommendation, discuss the similarities and differences betweenthe internal controls that allowed this fraud to occur and betweenthe AIS controls recommended to prevent future occurrences. Do youagree with your peers’ recommendations? Explain why or why not andsupport your claim with relevant research.

Match the following terms with their definitions

Internal control a.two or more people working together to overcome internalcontrol

Control procedures b. part of internal controlthat ensures resources are not wasted.

Firewalls c. requires companies to review internal control and takeresponsibility for the accuracy and completeness of their financialsupport

Encryption d. should be pre-numbered to prevent theft andinefficiency.

Environment e. limits access to a local network.

Information system f. example: theperson who opens the bank statement should not also be the personwho is reconciling cash.

Separation of duties g. identificationof uncertainties that may arise due to a company’s products,services, or operations.

Collusion h. examination of a company’s financialstatements and accounting system by a trained accountingprofessional

Documents i. without a sufficient one ofthese, information cannot properly be gathered and summarized.

Audits

j. the organizational plan and all the related measures thatsafeguard assets, encourage employees to follow company policies,promote operational efficiency, and ensure accurate and reliableaccounting data.

Operational efficiency k. component of internal control that helps ensure business goalsare achieved.

Risk assessment l. rearrange data by a mathematical process.

Sarbanes-Oxley Act m. to establish one, a company’s CEO and top managers must behavehonorably to set a good example foremployees.

Retail Store

Tony Zendejas is the owner of Housewares Galore, a housewaresstore that sells a wide variety of items for the kitchen, bathroom,and home. Housewares Galore offers a company credit card tocustomers.

The company has experienced an increase in sales since thecredit card was introduced. Tony is considering replacing hismanual system of recording sales with electronic point-of-sale cashregisters that are linked to a computer.

Cash sales are now rung up by the salesclerks on a cash registerthat generates a tape listing total cash sales at the end of theday. For credit sales, salesclerks prepare handwritten sales slipsthat are forwarded to the accountant for manual entry into thesales journal and accounts receivable ledger.

The electronic register system Tony is considering would use anoptical scanner to read coded labels attached to the merchandise.As the merchandise is passed over the scanner, the code is sent tothe computer. The computer is programmed to read the code andidentify the item being sold, record the amount of the sale,maintain a record of total sales, update the inventory record, andkeep a record of cash received.

If the sale is a credit transaction, the customer's companycredit card number is swiped through a card reader connected withthe register. The computer updates the customer's account in theaccounts receivable ledger stored in computer memory.

If this system is used, many of the accounting functions aredone automatically as sales are entered into the register. At theend of the day, the computer prints a complete sales journal, alongwith up-to-date balances for the general ledger and the accountsreceivable ledger accounts related to sales transactions.

Listed below are four situations that Tony is eager toeliminate. Would use of an electronic point-of-sale system asdescribed above reduce or prevent these problems? Why or whynot?

The accountant did not post a sale to the customer's subsidiaryledger account.

The salesclerk did not charge a customer for an item.

The customer purchased merchandise using a stolen creditcard.

The salesclerk was not aware that the item purchased was on saleand did not give the customer the sale price.

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