The information system is the set of formal procedures by which data are collected, processed into information, and distributed to users.  A transaction is an event that affects or is of interest to the organization and is processed by its information system as a unit of work.  A financial transaction is an economic event that affect the assets and equities of the organization, is reflected in its accounts and is measured in monetary terms.  A non-financial transaction is an event that doesn’t meet the definition of a financial transaction. 

 

            The accounting function are accountant manages the financial resource of the firm, value of information is determined by its reliability and information reliability requires accounting independence. Accounting activities must be separate and independent of the functional areas maintaining custody of resources. Accounting supports these functions with information but does not participate in the physical activities.  

 

            Accounts play a prominent role on system development teams as domain experts, responsible for many aspects of the conceptual system including specifying rules, reporting requirements and internal control objectives. Accountants perform audits which typically involve the AIS. External audit is an independent attestation and opinion regarding financial statement presentation. Internal auditing is an independent appraisal function within an organization to examine and evaluate activities. 

 

             Ethics pertains to principles of conduct used in making choices and guiding behavior in situations involving the concept of right and wrong. Computer ethics analyzes the social impact of computer technology and formulation and justification of policies for the ethical use of technology. Fraud denotes a false representation of material fact made with the intent to deceive and induce another to rely it to their detriment.  

 

            Sarbanes-Oxley Act (SOX) Section 406 requires public companies to disclose to the SEC if they have a code of ethics that applies to the CEO, CFO and controller. Passage of SOX has had tremendous impact on the external auditor’s responsibilities for fraud detection in a financial audit.  SOX establishes a framework for oversight and regulation of public companies. Corruption involves a member of the organization in collusion with an outsider.