Accounting Information Systems: The Processes and Controls, 2nd Edition

THE RELATION OF ETHICS TO ACCOUNTING INFORMATION SYSTEMS (STUDY OBJECTIVE 9)

Unfortunately, there are many opportunities for unethical or fraudulent behavior related to accounting information systems. Accounting information systems can be misused to assist in committing unethical acts or helping to hide unethical acts. That is, the AIS is often the tool used to commit or cover up unethical behavior.

THE REAL WORLD

In an anonymous company that sold computer software, the following unethical behavior occurred:

Top management set very ambitious monthly targets in order to meet annual revenue goals. Sales could not be booked as revenue until the product was shipped to customers. As it got closer to the end of a month and it appeared that monthly goals would not be met, salespersons were asked to call customers and ask them to take receipt of their orders earlier than anticipated. If these efforts did not produce enough revenue, there were instances where products were shipped to customers who had not ordered, knowing that customers would immediately ship them back to the company. The revenue, however, would already be recognized for the current month, which resulted in meeting the monthly sales goal.⁵

Notice that those who engaged in this unethical behavior presumed that there was an accounting information system that would record sales when orders were shipped to customers. These individuals were taking advantage of the AIS by forcing products to be shipped early and thereby artificially ...