How an AIS Works In Real Life

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Offline hassan

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How an AIS Works In Real Life
« on: February 20, 2020, 11:12:56 PM »
We've seen how a well-designed AIS allows a business to run smoothly on a day-to-day basis or hinders its operation if the system is poorly designed. The third use for an AIS is that, when a business is in trouble, the data in its AIS can be used to uncover the story of what went wrong.

The cases of WorldCom and Lehman Brothers provide two examples.

In 2002, WorldCom's internal auditors Eugene Morse and Cynthia Cooper used the company's AIS to uncover $4 billion in fraudulent expense allocations and other accounting entries. Their investigation led to the termination of CFO Scott Sullivan, as well as new legislation — section 404 of the Sarbanes-Oxley Act, which regulates companies' internal financial controls and procedures.

When investigating the causes of Lehman's collapse, a review of its AIS and other data systems was a key component, along with document collection and review, plus witness interviews. The search for the causes of the company's failure "required an extensive investigation and review of Lehman's operating, trading, valuation, financial, accounting and other data systems," according to the 2,200-page, nine-volume examiner's report.

Lehman's systems provide an example of how an AIS should not be structured. Examiner Anton R. Valukas' report states, "At the time of its bankruptcy filing, Lehman maintained a patchwork of over 2,600 software systems and applications... Many of Lehman's systems were arcane, outdated or non-standard."

The examiner decided to focus his efforts on the 96 systems that appeared most relevant. This examination required training, study, and trial and error just to learn how to use the systems.

Valukas' report also noted, "Lehman's systems were highly interdependent, but their relationships were difficult to decipher and not well-documented. It took extraordinary effort to untangle these systems to obtain the necessary information."
Md. Arif Hassan
Assistant Professor
Department of Business Administration
Faculty of Business and Economics
Daffodil International University

Offline shahanasumi35

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Re: How an AIS Works In Real Life
« Reply #1 on: February 23, 2020, 06:40:56 PM »
Informative post.Thanks for sharing.

Shahana Kabir
Assistant Professor
Department of Business Administration