Liberty Bell Hospital: A Case Study In Employee Information Systems Fraud

Abstract

Information systems provide an attractive opportunity for dishonest employees in sensitive job positions to develop and implement a fraudulent scheme. Many different types of technical information systems controls help prevent these situations from occurring and can also detect occurrences after they have happened. However, in some cases, employees are able to circumvent critical segregation of duties. In addition, management of a company may override traditional internal controls in order to achieve business objectives. Overriding internal controls can produce an environment that is conducive to fraud.

Internal auditors with an information systems specialty can often identify red flags prior to fraudulent acts taking place in the organization. This allows an organization to utilize preventive measures to reduce the likelihood of a fraud occurring. In a specific situation where an information system fraud is suspected, internal auditors are often charged with leading the investigation. This case analyzes an employee fraud involving a breakdown of internal information technology and management controls, falsification of business records, and a lack of segregation of duties. This case is designed for use in either an undergraduate auditing, information systems security, accounting ethics, internal auditing, computer ethics or other related class. Its primary purpose is to introduce students to a very common type of employee fraud and to illustrate how professional guidance can be applied in such a situation. While the case is based on a true situation, all identities have been modified to protect each individuals right to privacy.