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CHAPTER 11 Accounting for Decision Making 379

Is It Possible to Stop Cyber Crime?

ompanies lose billions of dollars each year as a result of cyber crimes,
also referred to as electronic crimes or e-crimes. Cyber is short for
Ccyberspace, the electronic medium of computer networks in which
online communication takes place. There are numerous news stories regarding
electronic crimes and the related costs to companies. Although control tech-
niques and other security policies and procedures are critical to the deterrence
of electronic crimes, detection and resolution of successful or attempted elec-
tronic crimes are also of critical importance. Not only the cost, but also the
embarrassment of such crimes is something that all companies wish to avoid.
A well-designed accounting system can enhance a firm’s abilities to
detect and resolve electronic crimes. Is it possible to stop all criminal activ-
ity with controls and security techniques? No, even the best internal control
system cannot be expected to stop every type of criminal activity. Even if a
system was perfectly designed, it must still be operated by fallible human
beings. For example, passwords may be set up to prevent unauthorized
access to the system. Unfortunately, some employees have been known to
sticky-note their passwords to their monitors, so that they don’t forget their
passwords. While this helps overcome forgetfulness, it also provides an easy
way for an unauthorized person to gain access to the system.

Introduction

Accounting is the language of business. Accounting is the recording, summarizing, accounting The recording,
and reporting of the economic activities and events of an organization. Accounting summarizing, and reporting of the
economic activities and events of an
generates information used by people inside and outside the firm to make important
organization
decisions. For example, a financial institution like a bank may use accounting
information to decide whether to lend money to a loan applicant. The lending
institution—an external user—must predict whether the applicant can pay back
the loan; this decision depends on reliable accounting information contained in
financial reports. Within the firm, business managers use accounting information
to make decisions that contribute to the success of the firm. For business managers,
timely and accurate accounting information is essential for managing and controlling
company operations. The accounting information system contributes to developing
a sound organizational structure, to ensuring that employees are held responsible
for their actions, and to maintaining cost effective business operations.

Accounting Information System

LEARNING OBJECTIVE 1
Explain the function of the accounting information system.

The accounting information system (AIS), like all systems, has specific objectives, accounting information system (AIS)
inputs, processes, outputs, and controls. A typical AIS has two principal objectives: A business system that provides all the
financial information needed to internal
to provide all the financial information needed internally by management for busi-
management for their business decision
ness decision making and to provide financial information to various external users making and to external users who are
concerned with the financial activities of the organization. concerned with the financial activities
of the organization

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