Core concepts of accounting information systems 13 by simkin norman chapter 03

Prepared by Paula Funkhouser
University of Nevada, Reno

Core Concepts of Accounting Information Systems, 13th Edition
Mark G. Simkin ● Jacob M. Rose ● Carolyn S. Norman

Computer Crime,
Fraud,
and Ethics
Chapter 3

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Chapter 3: Computer Crime, Fraud,
and Ethics
• Introduction
• Computer Crime and Fraud
• Examples of Computer Crimes
• Preventing and Detecting Computer Crime and Fraud
• Ethical Issues, Privacy, and Identity Theft

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Computer Crime and Fraud
• High level of public interest
• Data on incidents is limited
• Sources of information
– Computer Security Institute (CSI) annual survey

– KPMG surveys
– Association of Certified Fraud Examiners (ACFE) survey

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Computer Crime and Fraud
• Computer Crime
– Criminal activity that involves computers
– Dishonestly obtain money, acquire property, or something of
value, or cause a loss
– Steal identities
– Harass an individual

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Computer Crime Examples

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Computer Crime and Fraud
• Fraudulent Financial Reporting
– Intentional falsification of accounting records
– Intend to mislead analysts, creditors, investors
• Misappropriation of Assets

– Misuse of company assets
– Committed by employees within an organization

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Asset Misappropriation Examples

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Federal Legislation of Computer
Crimes
• Computer Fraud and Abuse Act of 1986 (CFAA)
– Amended in 1994 and 1996
• Computer Fraud Definition
– An illegal act
– Computer technology essential for perpetration, investigation,
or prosecution

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CFAA Fraudulent Acts
• Unauthorized theft, use, access, modification,
copying, or destruction of software or data
• Theft of money by altering computer records or

the theft of computer time
• Intent to illegally obtain information or tangible
property through the use of computers

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CFAA Fraudulent Acts
• Use, or the conspiracy to use, computer
resources to commit a felony
• Theft, vandalism, destruction of computer
hardware
• Trafficking in passwords or other login
information for accessing a computer
• Extortion that uses a computer system as a
target
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Federal Legislation Affecting the
Use of Computers

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Federal Legislation Affecting the
Use of Computers

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State Legislation
• Every state has a computer crime law
• State law provisions
– Define computer terms
– Define some acts as misdemeanors
– Declare other acts as felonies

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Computer Crime Statistics
• Limited availability of data
– Private companies handle abuse internally
– Most computer abuse is probably not discovered

• Growth of computer crime
– Exponential growth in use of computer resources
– Continuing lax security
– Availability of information about how to perpetrate
computer crimes
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Study Break #1
Which of the following pieces of computer legislation is probably
the most important?
A.
B.
C.
D.

Cyber Security Enhancement Act of 2002
Computer Security Act of 1987
The Computer Fraud and Abuse Act of 1986
Federal Privacy Act of 1974

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Study Break #2
Which legislation might help discourage computer hacking?
A.
B.
C.
D.

Federal Privacy Act of 1974
Computer Fraud and Abuse Act of 1986
USA Patriot act of 2001
CAN-SPAM Act of 2003

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Examples of Cybercrime
• The TRW Credit Data Case
– Credit rating company
– Altered company credit ratings for a fee
– Clients relied on inaccurate information
• Analysis
– Data diddling – proprietary data
– Fair Credit Reporting Act – protection of consumer

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Computer Hacking
• Analysis
– Growth of hacking
• Cloud computing
• Wide area networks
– Encryption protection
– Utilize ethical hackers for intrusion and penetration
testing

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Computer Hacking

Slammer worm
– Identified weakness in Microsoft SQL Server 2000
software

• Denial of Service (DOS)
– Malware
– Computer worms
– Boot-sector viruses
– Trojan horse programs
– Logic bombs
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Protecting Systems
• Preventing Viruses
– Firewalls
– Antivirus software
– Antivirus control procedures

• Organizational Control Procedures
– Discourage free exchange of computer disks or external programs
– Require strong passwords to limit unauthorized access
– Use antivirus filters

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Preventing and Detecting

Cybercrime and Fraud
• Enlist Top-Management Support
• Increase Employee Awareness and Education
• Assess Security Policies and Protect Passwords
– Strong passwords
– Social engineering

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10 Simple Steps to Safer PCs

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10 Simple Steps to Safer PCs

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Preventing and Detecting
Cybercrime and Fraud
• Implement Controls
• Identify Computer Criminals
– Nontechnical Backgrounds
– Noncriminal Backgrounds
– Education

• Maintain Physical Security

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Recognizing Symptoms of
Employee Fraud
• Accounting Irregularities
• Internal Control Weaknesses
• Unreasonable Anomalies
• Lifestyle Changes
• Behavioral Changes
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