ACCT 402 SEU Fraudulent Financial Statements Questions

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Abunnysndrru

Subject

Business Finance

Course

ACCT 402

School

Saudi electronic university

Department

ACCT

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College of Administrative and Financial Sciences Assignment 2 Deadline: Course Name: Introduction to Student’s Name: Accounting Information Systems Course Code: ACCT 402 Student’s ID Number: Semester: II CRN: Academic Year: 1440/1441 H For Instructor’s Use only Instructor’s Name: Students’ Grade: Marks Obtained/5 Level of Marks: High/Middle/Low Instructions – PLEASE READ THEM CAREFULLY • The Assignment must be submitted on Blackboard (WORD format only) via allocated folder. • Assignments submitted through email will not be accepted. • Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page. • Students must mention question number clearly in their answer. • Late submission will NOT be accepted. • Avoid plagiarism, the work should be in your own words, copying from students or other resources will result in ZERO marks. No exceptions. • All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism). • Submissions without this cover page will NOT be accepted. 1 Question 1: (02 Marks) Discuss why some managers disclose fraudulent Financial Statements and give examples from international companies? Question 2: (01.5 Marks) Discuss the activities of sales order entry? Analyze sales order threats and the controls for those threats? Question 3: (01.5 Marks) Explain the reasons of hacking? Discuss why has hacking increased in recent years? Give your opinion on hacking. 2
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Running head: ACCOUNTING INFORMATION SYSTEM QUESTIONS

Accounting Information System Questions
Student’s Name
Institutional affiliation
Date

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ACOUNTING INFORMATION SYSTEM QUESTIONS

2

Accounting Information System Questions
Question One:
Managers commit fraud by manipulating financial statements as a means to inflate profits
and maximize the wealth of shareholders. Notably, the disclosure of fraudulent statements
presents investors or financiers with a different perspective of the company. Managers use
financial reporting as a tool to mask the financial challenges of the company (Lessambo, 2014).
As such, the assets and liabilities are manipulated to present false data that attract investors. In so
doing, the inflated profits increase investor confidence and the shareholders benefit from
increased returns. Also, increasing the profits in fraudulent financial statements enables
managers to have easy access to credit and access financial markets.
Corporate executives are compensated depending on the company’s financial
performance. As such, managers are compelled to manipulate financial statements in favor of
high compensation packages that meet performance expectations. Investor confidence has been
greatly eroded in financial reporting. Moreover, fraudulent financial statements are less likely to
be detected by investors because of the relationship that prevails between the corporate client and
the independent auditor (Lessambo, 2014). There are accounting companies that have dominated
the auditing environment in the corporate sector. While these companies are considered as
independent auditors, a conflict of interest...