Please note! This essay has been submitted by a student.
Internet of Things refer to collecting any object or process that needs monitoring, connecting and interacting in real time through various information sensors, radio frequency identification technology, global positioning system, infrared sensor, laser scanner and other devices and technologies, collecting all kinds of information needed by sound, light, heat, electricity, mechanics, chemistry, biology, location and so on, and realizing things through all kinds of possible network access. The ubiquitous connection with objects, objects, and people can realize intelligent perception, recognition and management of objects and processes. The Internet of Things (IOT) is a carrier of information based on the Internet, traditional telecommunication network and so on. It enables all ordinary physical objects that can be independently addressed to form interconnected networks.
The basic characteristics of the Internet of Things from the perspective of communication objects and processes, the information interaction between objects and objects and people is the core of the Internet of Things. The basic characteristics of the Internet of Things can be summarized as overall perception, reliable transmission and intelligent processing.
Intelligent Processing: Uses various intelligent technologies to analyze and process the perceived and transmitted data and information to realize intelligent monitoring and control. According to the above characteristics of the Internet of Things, combined with the information science perspective, around the flow of information, the function of processing information in the Internet of Things can be summarized.
From one side businesses can leverage the Iot to upgrade their products by having a better understanding of their customers, improve their business planning and resource allocation. As real-time data can ameliorate budgeting accuracy and enhance cost planning and forecasting. To be able to take advantage of this new era of data companies will have to change their accounting and reporting system. They will have to master a new language to attain a full understanding of the advantages that will be open to them through the use of Iot, nonetheless businesses will face some challenges while adopting Iot: there will always the possibility of a data breach where hackers can break into the system and steal valuable data. And companies might look for some privacy and discretion avoiding the misuse of such crucial information. So How can iot be seamlessly integrated in the financial/accounting sector while mitigating fraud risks? What is the purpose of Iot for businesses ? What if one or many of the devices our accounting systems is connected to start sending fraudulent or corrupted data? How will companies harmonize between data protection and privacy policies?
In order to faithfully represent financial information to shareholders, it is necessary to have proper controls in place to mitigate fraud risks. As a shareholder, revenue is an important indicator of growth therefore it is important to understand where the revenue is coming from. Corporations are susceptible to revenue misstatements if income is coming from fraudulent accounts. IoT can vaguely identify digital users thus making it vital for businesses to differentiate if customer transactions are authentic. Internal controls must be set in place to analyze large amounts of data and patterns in order to successfully monitor transactions (Faulkner, 2018). As more and more corporations transition to the IoT, it is essential to consider all possible sides of the argument and raise awareness of the potential risks that can occur. Are corporations aware of the possible risks associated with revenue recognition and hands-free transactions? Are there procedures or contingency plans put in place for the misstatement of revenue? How big of a role does IoT play in the organisations strategy? Evaluating the possible risks associated with IoT will raise awareness while also helping monitor their risk exposure in multiple areas of the business (Protiviti, 2016).
IoT is a great concept and will play a key part in the future of any business that has massive amounts of transactions on a daily basis. As in makes all devices connected to one another in real time allowing users to access live data, it also comes with its downsides. For instance, fraud is probably one of the biggest issues to date with IoT as this technology is still fairly new (a hacker’s dream), thus making data integrity and security big concerns for its users. Data integrity represents a challenging aspect as it is crucial for data to stay unmanipulated in order to avoid any financial misstatements. If the system is unable to identify good vs. bad data, IoT could become a problem. If we take the example of Inventory management, how can a system, let say for a grocery store, account for perished food or to identify what is still good and what is not following a power outage? However, if we look at it on a different perspective, a system which enter PO into an ERP by scanning it would prevent potential human errors and could also save many work hours for a company. Another aspect would be data security, which would include all possible breaches for any confidential information or even strategic data a hacker would want to put his hands on.
When a company chooses to install and use the Internet of Things (IOT) system, they are basically deciding to conduct their business on the internet. It is well known that systems attached to the internet are vulnerable to hackers. Therefore, it is logical to assume that if a company uses the IOT system they will be at risk of being a victim of a data breach.
Data breaches happen to many companies, across many different industries. The Identity Theft Resource Center (ITRC) collects yearly data on every single data breach that occurs (ITRC, 2018). They compile and analyze all the data and then produce a yearly report. The 2018 report provides the total number of data breaches and exposed records for different industries which can be found in table 1 in the appendix section (ITRC, 2018). The business industry has the highest number of breaches in the year 2018, 46% of all the breaches for every industry as shown in graph 1 (ITRC, 2018). The business industry is also the industry with the highest number of exposed records for the year 2018, as chart 1 shows it had 93% of the yearly total (ITRC, 2018).
Most industries saw a decrease in the amount of data breaches, the overall yearly total of data breaches decreased from 2017 to 2018 by 23% (ITRC, 2018). Unlike the decrease in data breaches, the total number of exposed records more than doubled, increasing by 126% (ITRC, 2018).
If a company suffers a data breach it can increase its expenses. According to Gatzlaff and McCullough state that the company could possibly have to pay fines and penalties, as well as having to spend additional money on safeguarding is data from future breaches (2010). When installing IOT a company needs to assess all of its vulnerabilities in order to help prevent any possible data breaches and the fallouts that come along with them.