Accounting Information Systems

Running head: ACCOUNTING INFORMATION SYSTEMS 1

Name

Institution

ACCOUNTING INFORMATION SYSTEMS 2

Accounting Information Systems

Introduction

A structure used by the decision-makers in collecting, storing and dispensation of

financial and accounting data is accounting information system. This system uses information

technology resources in conjunction with computer-based methods for tracking accounting

activities. Apart from collecting, storing, and processing accounting data, an accounting

information system is responsible for producing informational reports used by managers and

other interested parties in making business decisions. This article will discuss the facts of a case

of fraud. It will also apply the fraud triangle to show how the situation complies with the fraud

triangle. Furthermore, the article will get into the minds of the perpetrator and look at what drove

them to commit the offense and if there were signals that could have alerted individuals that the

offenders were on the verge of committing that crime. This paper also discusses the need for

additional controls to avoid crimes like this. Finally, this editorial will talk about the outcome of

this fraudulent case.

Facts of Case

Intentionally violating the requirements set by law through the Food Business Operators

challenges the food control systems (Horvat & Lipičnik, 2016). The FLDS leader Lyle Jeff got

blamed for extensive food stamp fraud and money laundering. The American Department of

Agriculture, Food, and Nutrition Services operates SNAP that offers monetary assistance to the

low-income persons and families to buy food products. Persons who want to obtain SNAP

profits apply to the proper state agency. USDA-FNS delegates the authority to individual states

to regulate suitability and to confirm individual SNAP recipients. Approved applicants get

Electronic Benefit Transaction card.

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There is a consideration that food fraud is more dangerous in some cases than traditional

food safety threats (Horvat & Lipičnik, 2016). Only the approved persons must use the card, and

SNAP aids apply to buying of authorized food items only. The recipients of the SNAP benefits

cannot exchange their assistance for non-food items, domestic goods, or money and only the

associates of the beneficiary family can use package benefit. FLDS leaders led by Lyle Jeff

introduced the united order that required the congregants to donate their lives and all of their

material substance to the church. Lyle Jeff directed FLDS members to divert their SNAP profits

to the FLDS warehouse. Lyle Jeff together with other leaders held gatherings in which they

circulated depot protocols and provided instructions on how to evade government suspicion.

Tempering or falsification of food, food requirements, or providing false or deceptive

declarations about merchandise for economically inspired explanations is food fraud (Horvat &

Lipičnik, 2016). Lyle Jeff and other leaders directed associates to divert their SNAP rewards to

the church by purchasing food items at Meadowayne and Vermillion. Members physically

transport the items to the storehouse for donation or by converting SNAP benefits directly to

fungible assets by swiping their electronic cards in Meadowayne or Vermillion without exchange

of any food products. Additionally, third-party payment processors then deposited the SNAP

proceeds into accounts of Meadowayne and Vermillion. The managers of these two transferred

the funds to companies acting as a front for the FLDS storehouse.

Consumers, authorities, and industry are increasingly becoming aware of frauds,

adulterations, and criminal negligence (Horvat & Lipičnik, 2016). The front companies paid no

payroll expenses for employees, utilized no advertising, established no internet presence, and

incurred only nominal overhead costs. Furthermore, they only reported minimal sales revenue to

state sales tax authorities despite receiving millions of dollars in payments from Vermillion and

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Meadowayne. Transferring SNAP proceeds concealed and camouflaged the nature, locality,

foundation ownership, and the regulator of the profits corresponding to fraudulent transactions.

Consequently, FLDS leaders controlled SNAP benefits from the fraud’s initial directive to

members. Meadowayne and Vermillion facilitated the scam, and the front companies concealed

it. Lyle directed the use of funds for other purposes other than purchasing eligible food products

for the authorized recipients.

Application of the Fraud Triangle

Many individuals are capable of fraud given the right set of circumstances (Morales,

2014). Lyle Jeff’s case complies with the fraud triangle in the aspect of rationalization. SNAP

policies state that their funds should be for purchasing foodstuff for the qualified persons only.

However, Lyle Jeff feels that the funds can benefit all members of the congregation and it can be

for buying foods and other commodities as well. Additionally, the opportunity is another way

this fraudulent case complies with the fraudulent triangle because Lyle sees the possibility of

acting without being caught using Vermillion and Meadowayne and the front companies.

The Mind of the Perpetrators

The key to understand fraud risk factors include the organizational control mechanisms

and an individual’s morality (Morales, 2014). The religion, unity and the act of equality triggered

Lyle Jeff to commit this fraudulent crime. Through the FLDS church, the leaders instituted the

united order that made the believers donate all their material substance to the church’s

storehouse. This storehouse was a communal storeroom that collected and disbursed

commodities to the community. The formation of the unified order could have been suspicious as

well as a storehouse that received and distributed products were signals that could have alerted

people that Lyle Jeff was on the verge of committing fraud.

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Need for Additional Controls

On top of information technology, accounting reporting is essential for the prevention of

fraud (Suryanto, 2016). To be able to point out such fraudulent cases it is crucial for the citizens

to work closely with the federal agencies and ensure implementation of an anonymous theft

reporting system. Individuals should be aware of the laws to avoid manipulation by their spiritual

leaders into committing offenses unknowingly. Additionally, verify and restrict the use of SNAP

credit cards. Ensure all the charges made using credit cards or accounts are relating to the

proposed transactions. Furthermore, SNAP can periodically review the credit card usage of its

members to determine whether usage is appropriate and connect to the businesses and purpose of

SNAP.

The Outcome

Between 1999 and 2011, Europe had 7000 allegations of agricultural and fishery frauds

prosecuting 3000 cases and 300 individuals received prison sentences (Horvat & Lipičnik, 2016).

Sentencing Lyle Jeff for 57 months in prison is acceptable because he deserves this kind of

punishment. The reasons are that his behaviors proved that he did not respect America’s laws.

Although the control of his decisions was by his religious beliefs, Lyle Jeff cheated taxpayers out

of government funds. However, he acknowledged his mistakes and decision-making, and his

brother, Warren Jeff banned him from the sect meaning, he lost his job, family and his faith.

Conclusion

Businesses whether small or large are often targets of fraud. However, both the minor and

midsize establishments undergo a more significant segment of swindle losses than the superior

companies do. A comprehensive fraud prevention program that consists of the investigation,

proactive prevention and investigations are crucial because companies annually lose up to six

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percent of their revenues to fraudulent cases. Lack of a comprehensive fraud prevention program

creates room for swindlers to perform the act.

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References

Horvat, T., & Lipičnik, M. (2016). Internal audits of frauds in accounting statements of a

construction company. Strategic management, 2(4), 29-36.

Morales, J., Gendron, Y., & Guénin-Paracini, H. (2014). The construction of the risky individual

and vigilant organization: A genealogy of the fraud triangle. Accounting, Organizations

and Society, 39(3), 170-194.

Suryanto, T. (2016). Dividend policy, information technology, accounting reporting to investor

reaction and fraud prevention. International Journal of Economic Perspectives, 10(1),

138.

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