ETHICS

-principles of conduct that is used in making

choices and guiding behavior in situations that
distinguishes right from wrong

Employee Fraud
1. Stealing of asset
2. Conversion to usable form
3. Concealment of crime

Ethical Responsibility
-Every major decision has consequences that
potentially harm or benefit employees,
shareholders, customers &the public
-Managers must achieve balance between these
consequences.

Management Fraud
1. Management level
2. Involves the financial statements
3. Involvement of related 3rd parties

Computer Ethics
-Analysis of nature and social impact of computer
technology & the corresponding formulation and
justification of policies for the ethical use of such
technology
Are there no more good people in this world ?!?
Not ALL people will act ethically.
-Social, Economic, Political and other pressures
can drive good people to do bad things.
ETHICAL SYSTEM
-Describes the duties and behaviors commonly
considered correct for a given circumstance
Codes of Ethical Conduct
-Formal documentation of the values of an
enterprise or organization
Can be:
-Normative
-Descriptive
Reasons for developing Codes of Conduct:
1. Define acceptable behaviors for relevant
parties
2. Promote high standards of practice throughout
the organization
3. Provide a benchmark for organizational
members to use for self-evaluation
4. Establish a framework for professional
behavior, obligations and responsibilities
5. Offer a vehicle for occupational identity
6. Reflect a mark of occupational maturity
Irregular and Illegal Acts
Irregular Acts
-reflect either an intentional violation of
corporate policies or regulatory requirements; or
an unintentional breach of law
Illegal Acts
-willful violation of the law
FRAUD
According to law, must meet the ff:
1. False representation
2. Material Fact
3. Intent
4. Justifiable reliance
5. Injury or loss
aka white-collar crime, defalcation,
embezzlement, irregularities
FRAUD Levels

Fraud Triangle
1. Situational Pressure
2. Opportunity
3. Ethics
ISACA Guideline
auditors are not qualified to determine
whether an irregular, illegal or simply erroneous
act has occurred. Instead, it should be made by a
qualified expert (i.e. lawyer, judge).
the extent to which the observed unusual act if
material to the financial statements taken as a
whole is outside the scope of an IT Audit.
Regulatory and Legal Issues
Legal Contracts
A contract is an agreement between or among 2
or more persons or entities to do, or abstain from
doing, something in return for an exchange of
consideration.
Elements in a Contract
-OFFER
-CONSIDERATION
-ACCEPTANCE
What to check
IT Auditors typically will examine written
contracts dealing with the purchase and sale of
goods and services.
Employment Contracts
Confidentiality Agreements
-Describe the nature of information protected by
the agreement
-List permissible uses of such information
-Affirm a duty of confidentiality
-Identify remedies for noncompliance
-Qualify the term of the agreement
Trade Secret Agreements
-Trade secrets are the lifeblood of many
successful organization. Hence, protecting such
secrets from disclosure is essential to the
continued economic viability of the company.
Discovery Agreements
-Unless employees are specifically hired to
develop certain ideas or inventions, they might
own the intellectual rights to such discoveries,
depending on the state and circumstance.

Noncompete Agreements

Has the following elements:

-Offer
-Consideration
-Agreement
-Period of time
-Geographic radius
Computer Crime or Cybercrime
-Direct or indirect use of computer and
communication technologies to perpetrate a
criminal act
Examples of Computer Crime
Examples:
-hacking into an entitys network
-stealing intellectual property
-sabotaging a companys database
-denial of service attack
-harassing or blackmailing someone
-pirating computer software
-violating privacy rights
Intellectual Property
-Refers to valuable creations of human mind,
such as inventions, literary and artistic works,
symbols, images and designs.
-The use of computer and communication
technologies in violating intellectual property
rights constitutes cybercrime.
A. Industrial Property
-patents
-trademarks
Patents
-grant an inventor the right to exclude others
from producing or using the inventors discovery
or invention for a limited period of time.
To be patented it must be:
-Novel
-Useful
-Not of an obvious nature

General types of intellectual discoveries:

-Machines
-Human-made products
-Compositions of matter
-Processing methods
nonrenewable period of 20 years from the date
of application
Trademarks
reflect distinctive images or words that sellers
affix to distinguish the origin of their products.
B. Individual Property
Copyright
protects creative works from being reproduced,
performed or disseminated by others without
permission.
life of copyright begins the moment the work is
created and lasts for the life of the creator plus
and additional fifty years.

Cyber Information Crimes

When electric information is compromised, the
ramifications fall into 3 categories:
-Confidentiality
-Integrity
-Availability
Privacy Issues
The rights and obligations of individuals and
organizations with respect to the collection, use,
disclosure and retention of personally identifiable
information
Can be:
-Factual
-Subjective
How it is all related
Individual Privacy Rights - Organizations Accounting Profession