Fraud in the AIS Koss Corporation Fraud Free Essay Example, 2500 words

Failed supply of financial information to the decision makers The second major function of the AIS within any business organization is to supply the collected, recorded and stored financial data to the relevant authorities within the organization for subsequent decision-making (Hall, 2013). In the Koss Corporation fraud case, this function of the AIS failed completely, because the financial information collected were not submitted to the relevant top management of the organization such as the company CEO and the company auditors for investigations and analysis (Coenen, 2010). Despite the existence of a company auditor during the whole period that the fraud was being carried out, the auditor did not discover the discrepancies in the financial accounts that would have revealed the fraud, and neither did the CEO unearth the fraudulent dealings by the Chief financial officer of the company. Therefore, the information supply function of Koss’s AIS failed. Failed financial control mechanisms The last major function of AIS within any business organization is to ensure that the right control mechanisms are in place, which prevents the misappropriation of the organization’s funds, through applying the relevant checks and balance mechanisms that control the spending of the organizational funds to the relevant items of expenditure (Schaeffer, 2008). We will write a custom essay sample on Fraud in the AIS: Koss Corporation Fraud or any topic specifically for you Only $17.96 $11.86/pageorder now In the Koss corporation case, the financial control mechanism of the AIS absolutely failed, through allowing for enormous spending amounting to a massive $400,000 per month through a single account, all for personal expenses. The chief financial officer of the company fraudulently wired the huge amounts of money on a monthly basis to her personal credit card account for the period of 6 years, without being discovered by the company (Coenen, 2010). Therefore, the control mechanism of the company’s AIS was faulty, thus allowing for loopholes that would transfer such huge amounts of money without being detected. Koss Corporation‘s AIS Components Failure People failure People form a fundamental component of any organization’s AIS, because they are responsible for overseeing the operation of the system through initiating its major functions of collecting financial information, processing and then storing it for future use (Hall, 2013). Such people include the company accountants, auditors, financial analysts and top level managers. Thus, in the Koss corporation case, the people component of the AIS failed in its duty of seeing the system work effectively.