Fraud in Ais

In: Business and Management

Submitted By bigbdchad
Words 1071
Pages 5
Fraud in the AIS

Chad Burrell

Professor Daniel Acheampong

Accounting Information Systems ACC564

August 14, 2013

Abstract

Firm Embezzled There were many failures in the firms accounting system that assisted this embezzlement to last for a decade. Sue Sachdeva was the main accountant at Koss Corporation and it is estimated that she embezzled over 34 million dollars during that time. Sachdeva was able to embezzle this amount through wire transfers, checks, and credit cards (Whitehouse, 2011). The first failure was the age of the AIS. It is estimated that the system was almost 30 years old. There were two offers to purchase a new system and each time Michael Koss, the CEO, denied the request (Whitehouse, 2011). Koss was operating on an outdated accounting system and probably thought that it was okay because he had auditors come in and authenticate the work it did. It is important to have a current system in order to keep accurate reports in keeping the company operating efficiently. Another failure was the reports that were produced by the AIS. Michael Koss never took the time to look at the financial records of the company. Even though he was the CEO of the company, he never took adequate time to read and compare the financial statements on a monthly or yearly basis. SOX
The article recounts some specific problems within Koss: * Koss Corporation prepared materially inaccurate financial statements, book and records, and lacked adequate internal controls from fiscal years 2005 through 2009. * Michael Koss was supposed to approve the payment of invoices greater than $5,000, but no approval was needed for wire transfers or cashier’s checks (the primary method of theft by Sachdeva). * The computer system was more than 30 years old, and did not lock the accounting system at the end of a month to prevent later changes to the…...

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