Accounting Information System Essay

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Accounting Information Systems

Accounting Information System
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Environmental, institutional, or individual pressures and opportune situations, which are present to some degree in all companies, motivate individuals and companies to engage in fraudulent financial reporting. Fraud prevention and detection require that pressures and opportunities be identified and evaluated in terms of the risks they pose to a company.
Adapted from the CMA Examination.

Identify two company pressures that would increase the likelihood of fraudulent financial reporting.


Sudden deceases in revenue or market share
Financial pressure from bonus plans that depend on
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c. For each of the following, identify the external environmental factors that should

be considered in assessing the risk of fraudulent financial reporting.

The company’s industry o Specific industry trends such as overall demand for the industry's products, economic events affecting the industry, and whether the industry is expanding or declining. o Whether the industry is currently in a state of transition affecting management's ability to control company operations.

The company’s business environment o The continued viability of the company's products in the marketplace. o Sensitivity of the company's operations and profits to economic and political factors. 

The company’s legal and regulatory environment o The status of the company's business licenses or agreements, especially in light of the

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