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4.0 Task 2 – Integrity and Ethics in Financial Reporting
Integrity and ethical issues are playing a main role in every country. However, there is still a lot of company try to scam their investors in order to earn more profit. In our assignment, we would take Tesco Scandal (2014) as our example.
Tesco scandal occurred when it has been set up to have overstated its profit by $250 million of its expected profit for the half year. The reasons for Tesco’s fraud is to recognize the competitive environment who was exposed to the society. Recently, Tesco had faced a fierce contention within the marketplace. The German hard-discounters, Aldi and Lidl implemented a low pricing policy that had caused difficulties to Tesco. From there on, Tesco scandal begins which violated IFRS reporting requirements such as IAS 2, IAS 8, IAS 18, IAS 34 and IAS 37
In IAS 2 – Inventories, Tesco overstates the stock as the report demonstrates the decrease in cost of sales before the items were really sold. The reason for this is to inflate the gross overall revenue rate. Besides, Tesco also had been capitalizing store activities as inventory rather than expensing the activities. Next, Tesco abused IAS 8 because, in both its interim and year-end financial statements for the year ended 2014 and 2015, it failed to adjust for the year ended 2013 and 2014 for the commercial income errors. In addition, Tesco recorded profit but deferred the associated costs and also operated by deduct the cost in the right period but inappropriately defer the related decrease in income. By saying that Tesco “delayed accrual of costs” means that failed to record expenses. In addition, in IAS 18 – Revenue, Tesco overstated their profit as the manager was approached to evaluate the temporary value for the discount by an individual judgment in view of the expected future transactions. Lastly, Tesco neglected to disclose its increased commercial income balances, both on its statement of financial position and statement of comprehensive income and violated the “bright line” rule that contingent gains may never be recorded and which against IAS 34 and IAS 37.
The consequences of this scandal is Tesco had to pay a total amount of $235 million fine to settle investigations by the Serious Fraud Office (SFO) and Financial Conduct Authority (FCA) and a total of $85 million in compensation to the shareholder and investor. This error had caused Tesco loss a lot of investors and shareholders. Established on the analysis, Tesco shares lost nearly half of their value in the months after the scandal erupted. Succeeding, the relationship with their supplier is end and management who participate in this event has been given the sack.
To get rid of the problem occurred, corporations must demonstrate the proper “tone at the top”. The management will have to prepare a good leadership standard and also insure that there is a well-build a corporate governance culture. Based to the analysis, Tesco scandal occurred is due to the loose in the financial reporting process and inadequate internal control which may allow the bookkeepers to bypass in reporting the number.
Next, Tesco should outsource accounting services which will mitigate the conflict of interest. Tesco scandal can be avoided if hiring an unbiased third party to perform the bookkeeping for the pot. According to the analysis, Tesco’s internal bookkeepers are “playing around with the number” so it will “looks good” in the financial report. So, the third party is to express an opinion on the reports in order to enhance the reliability of the report.
Lastly, we can conclude that integrity and ethics are very important in a business. In order to ensure that all this issue can be avoided, many rules and regulation are implemented such as the IFRS standard. All this standard that implemented is to ensure less unethical problems occur.

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4. METHODOLOGY

This system is mainly concentrated on anonymization method with is used to provide
privacy to the dataset so that the attacker will not gain any sensitive information about the
individuals. Anonymization is the best method to provide privacy when compared to the other
methods like randomization, perturbation etc. Anonymization can be done in many ways, there
are several tools available to perform anonymization. Health care and financial data are very
sensitive. There are many methods to provide privacy to the dataset. The objective of this system
is to run the k-anonymity method.
A hospital dataset which contains the patient’s information with attributes of Patient id,
Patient Name, Age, Sex and disease as shown in table 1. In this table, Name attribute is the
personal identification, Disease is the sensitive attribute. If suppose we want to provide the
privacy of the data set, the patient consultancy field of a table is removed and it will be modified
to another table as follows.

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Table 1: Patient dataset.

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Zipcode Age Sex Disease
47677 29 M Ovarian Cancer
47678 22 M Ovarian Cancer
47602 27 M Prostate Cancer
47909 43 M Flu
47905 32 F Heart Disease
47906 47 M Heart Disease

Table 2: Patient dataset after removing Name attribute

So removing the personal identification information will not provide complete privacy to
the data. To provide privacy to the dataset first we have to remove the personal Identification
information and then we have to anonymize the quasi identifiers. The sensitive attributes should
always be released directly because researcher’s want this information. Different privacy
preserving methods have been proposed. To anonymize the quasi-identifiers, K-anonymity.

4.1 K-ANONYMITY

This approach is as follows: The information for each person contained in the released
dataset cannot be distinguished from at least k-1 individuals whose information also appears in
the data. For example: if an attacker with the only information of birthdates and gender is trying
to identify a person in the released dataset. There are k persons in the table with the same birth
date and gender. In k anonymity any quasi-identifier present in the released table must appear in
at least k records. The goal of K-anonymity is to make each record indistinguishable from at
least k-1 other records. These K records form an equivalence class.

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Zipcode Age Sex Disease
476** 2* M OvarianCancer
476** 2* M OvarianCancer
476** 2* M ProstateCancer
479** 3* F HeartDisease
479** 4* M Flu
479** 4* M HeartDisease

K-anonymity uses generalization and suppression. Using generalization, k anonymity
replaces specific quasi-identifiers with less specific values until it gets K identical values. And it
uses suppression when generalization causes too much information loss, which is referred as
outliers. Form the table 1 we have 3 quasi-identifiers which can be generalized as shown in the
figure 1

Figure 1: Generalization on Quasi-identifiers like patient id, age and sex

By applying k=2 anonymity and quasi-identifier { patient id , Age, sex} on table 2 we
will get the new table 3. Now if we compare table 2 and table 3 it is difficult for an outsider to
find the sensitive information because there are three people with generalized patient id and age.
In table 3 first three records form one equivalence class and last two records are another
equivalence class.

Table 3: k-anonymity on table 2

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Zipcode Age Sex Disease
476** 2* M OvarianCancer
476** 2* M OvarianCancer
476** 2* M ProstateCancer
* * * *
479** 4* M Flu
479** 4* M Heart Disease

Any records which has not come into any equivalence class should be suppressed. In this
table record 4 will not fall into any of the equivalence class so it should be suppressed. By
applying the generalization and suppression to all fields on table 3 it results to another Table 5.

Equivalence
Class

Suppressed
Record

Equivalence
Class

table 4 : Generalization and suppression

The problem with the k-anonymity is, it will not provide privacy if sensitive values in an
equivalence class lack diversity and also if the attacker has background knowledge. Consider
Table 4 the first 3 records which form an equivalence class have the same sensitive attribute
values where there is no privacy and attacker can direct to gain the information. And last three
records if attacker has some background knowledge about the person (ex. The person father is a
heart patient) then this information may be useful for the attacker to gain the sensitive
information.

4.2 Triple DES Algorithm

Triple DES is another mode of DES operation. It takes three 64-bit keys, for an overall
key length of 192 bits. In Stealth, you simply type in the entire 192-bit (24 character) key rather
than entering each of the three keys individually. The Triple DES DLL then breaks the user-
provided key into three sub keys, padding the keys if necessary so they are each 64 bits long.

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The procedure for encryption is exactly the same as regular DES, but it is repeated three
times, hence the name Triple DES. The data is encrypted with the first key, decrypted with the
second key, and finally encrypted again with the third key.
Triple DES runs three times slower than DES, but is much more secure if used properly. The
procedure for decrypting something is the same as the procedure for encryption, except it is
executed in reverse. Like DES, data is encrypted and decrypted in 64-bit chunks.
Although the input key for DES is 64 bits long, the actual key used by DES is only 56
bits in length. The least significant (right-most) bit in each byte is a parity bit, and should be set
so that there are always an odd number of 1s in every byte. These parity bits are ignored, so only
the seven most significant bits of each byte are used, resulting in a key length of 56 bits. This
means that the effective key strength for Triple DES is actually 168 bits because each of the
three keys contains 8 parity bits that are not used during the encryption process.

The process of encryption is as follows –
1. Encrypt the data using DES Algorithm with the help of first key.
2. Now, decrypt the output generated from the first step using DES Algorithm with the help
of second key.
3. Finally, encrypt the output of second step using DES Algorithm with the help of third
key.

The decryption process of any cipher text that was encrypted using Triple DES Algorithm is the
reverse of the encryption process i.e.,
1. Decrypt the cipher text using DES Algorithm with the help of third key.
2. Now, encrypt the output generated from the first step using the DES Algorithm with the
help of second key.
3. Finally, decrypt the output of the second step using DES Algorithm with the help of first
key.

The process of encrypt – decrypt – encrypt help complexing things and securing the data.
The three keys can also be same or two of them can be same. But it is recommended to use all
the three keys different.

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4.3 SYSTEM SPECIFICATION

Hardware Specification

Processor : Intel Pentium i3.
RAM : 4GB
Hard drive : 500 GB
Monitor : 17″ Flat L.G color SVGA

Keyboard : Multimedia keyboard

Mouse : Optical scroll mouse

Software Specification

Operating System : Windows XP and Above

Front-End : ASP.Net 2010

Database Server : Microsoft SQL Server

Application Server : IIS

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4.1.1 The stride from Despair to Hope (Pessimistic to Optimistic)
A paradigm shift is a defining change in an individual’s perception of reality, commonly occurring when a person’s way of thinking or way of doing something is disrupted and altered. In regard, the paradigm shift concept was evident throughout Ng?g? wa Thiong’o’s piece Matigari. Centralizing around the theme of revolution, specifically that of positive outcomes, the author demands ultimate change for his society by implication of Matigari’s justice-seeking mindset. The novel tells the story of a freedom fighter, Matigari, that returns from the forest in the dawn of neo-colonialism within his society. As a story of liberation that provides a review of the history of Africa, Matigari accounts of the life of the African people confronted with cultural, economic, and social enslavement. In the pursuit of a peaceful life in his future, Matigari’s focus shifts towards seeking for truth and justice, as he finds discomfort in seeing the maltreatment of his people. Individuals were placed into jail without sufficient reason, such prisoners were once teachers who had been arrested and accused of teaching Marxism and communism in school. Having found his country in such a crisis, Matigari began to devise moral inspiration to unite against the neo-colonialism that he perceived to taint his country. Within the translated piece, Matigari, Ng?g? wa Thiong’o inspires the reader to recognise the reality of a grim post-colonial society with an underlying desire for liberation, by portraying Matigari as a guide that directs people away from the materialism of capitalism and towards truth and justice, as can be seen through the prophet motif and liberational subplot.
The suffering of Matigari’s people holds to be a recurring theme throughout the novel. By achieving a tone of displeasure, by the African people, through the portrayment of neo-colonialism after independence; Thiong’o inspires the reader to share the viewpoint of the general African public. By doing such, Thiong’o can then provide a more authentic reality of the injustice that was experienced by Matigari’s people. “How can the tiller go on working for the benefit of those-who- reap-where-they-never-sowed? Yesterday it was the whites. Today they have been joined by some blacks.’ Matigari walked into the restaurant and sat down. He ordered a cup of tea. ‘My friends! Tell me where in this country one can find truth and justice” (Thiong’o 75). This statement provides evidential circumstance of the people being under the controlling regime of neo-colonialism. The visionary, Matigari, continues to consistently challenge the capitalistic behavior of the colonialists by encouraging people to to recognize his perception. The metaphorical expression spoken by Matigari in the story as “there is no night so long that it does not end with dawn” (11) dwels on his and his people’s hope for a better tomorrow.

In the story, the author reveals the solid identity and the quest of the people to get the right justice and truth after independence. There is a national struggle for land, true independence, freedom from new settlers and the so-called leaders after colonialism. The highest peak of resistance will always stand as a memorial of the protagonist characters commitment and courage. Matigari’s patriotism for his country and his people haunted his soul; he is depicted as a returned hero after a long absence unlike, the society he met, he is never afraid to preach what the right truth and justice should be. His grace, his compassion, his love, his patience, his peacefulness, gentleness are all the qualities of Christ. At the beginning of the novel, the society seems to be under fear and disillusionment due to the presence of greedy, selfish and dictator leadership. People were pessimistic and feel despair at the beginning and tried to resist Matigari’s progress. However, due to his strong commitment and determination, he miraculously agitates people, teaches the harmfulness of neo-colonialism and inspires the society with full courage and bright vision.

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You want to know what I plan to do? I tell you, for I have nothing to hide. I have come back to the people girded with a belt of peace; a farmer whose seeds have not germinated does not give up planting. A person who seeks justice never tires of the search until he finds it. Truth never dies; therefore, truth will reign in the end, even if it does not reign today. My house is my house. I am only after what I have built with my own hands. Tomorrow belongs to me. I invite you to my house the day after tomorrow. Come to feast and celebrate our homecoming! My thirst and hunger are not for material things. My only thirst and hunger are to do with my troubled spirit. I have traveled far and wide looking for truth and justice’ (Ibid., P.94).

Matigari has traveled the length of breadth of his country looking for truth and justice to convince, people to protest against neo-colonialism his hope, his determination, his mission and goal to rebuild a country as new Jerusalem, makes him different from other characters who are portrayed in Ngugi’s earlier novels.

Between producers and parasites, there will never’ be peace or unity or love. Never! Supposing our forefathers and foremothers had behaved as if they had no eyes to see no ears to hear and no tongues to speak? Where the would be today? Yesterday, yes only yesterday. I would be able to find the truth of peace; I would be able to find truth and justice in this country. For it has been said that truth and justice are mightier than an armed power (Ibid. P.138).

The word ‘parasite’ in the above extract refers to landlords who are exploiting workers’ labor’ or wage. The above extract also intensifies that no more tolerance and frustration like previous foremothers and fathers the hero is committed enough to bring real justice and truth in the country. The character is non-materialist since he is seeking truth and justice which are necessary for all people in common.

And you, imperialist, and you servant Boy-with all your other lackeys, ministers and leaders of the police force, the army and the courts, the prisons and the administration-your days are numbered! I shall come back tomorrow. We are the patriots who survived Matigari Ma Njiruungi, and many more of us are being born each day. Jon Boy, you shall not keep in my house again. It’s either you or I and the future belongs to me!’ (Ibid., 124).

Here, Matigari is hopeful in rebuilding his country. There is no a sense of disillusionment in his progression, even if the government and the so-called ministry of truth tried to preach the society as Britain and the European community have given the country a loan of several million pounds for the development of the administration, the society stands by the side of Matigari. Ngugi in the story of Matigari prefers the character to wear a belt of peace since he 30 believes that the enemy, who is driven out peacefully, by negotiations, never comes back; but the one driven out by force alone always comes back. Ngugi supports the saying that goes “truth and justice are mightier than any armed power.”

Matigari gradually persuades the society by creating awareness of the presence of neocolonialism which hinders the country’s development.

‘The builder builds a house, the one who watched while it was built and moves into it. The builder sleeps in the open air. The tailor makes clothes, the one who does not even know how to thread a needle wears clothes…. The workers produce goods. Foreigners and parasites dispose of them. The worker is left empty-handed. So where are truth and justice on this earth? (Ibid., P.113).

This and many other expressions in the story manifest the presence of huge corruption in the country. So, Ngugi’s reflection in the novel seems serious in bringing social, economic, and political freedom. The author suggests this kind of economic, political and social crisis could be found in all most all African countries since there are dictators, greedy and selfish leaders as it is mentioned in the story. Yesterday it was whites and today some blacks who exploit the country. In addition, the story of Matigari is taking place in an unnamed country, this by implication refers all African countries. Therefore, in capitalist societies, the most vulnerable people are proletariats. So, to struggle this phenomenon, the protagonist characters show strong commitment and hope in his search for truth and justice to be seen in the country unlike Ngugi’s earlier characters in his earlier novels.

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4.1 DESIGN GOALS
To enable secure outsourcing of file under the aforementioned model, our mechanism design should achieve the following security and performance guarantees:
4.1.1 INPUT/OUTPUT PRIVACY
No sensitive information from the customer’s private data can be derived by the cloud server during performing the encryption and transfer.
4.1.2 EFFICIENCY
The local computations done by customer should be substantially less than. The computation burden on the cloud server should be within the comparable time complexity of existing practical algorithms for encryption and decryption of files.

4.2 SYSTEM ARCHITECTURE
Here the client sends the query to the server. Based on the query the server sends the corresponding file to the client. Then the client authorization is done by checking user id and password. In the server side, it checks the client name and its password for security process. If it is satisfied and then received the queries form the client and search the corresponding files in the database. Finally, find that file and send to the client. If the server finds the intruder means, it set the alternative Path to those intruders. If any intruders tries to access any file then multiple times password is asked to them and at last the intruders are directed to fake file. Here intruders will not know that the file he obtained is fake. They think that the file they got is original one.

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Fig 4.1 System Architecture

4.3 DATA FLOW DIAGRAM
The Data Flow Diagram(DFD) is also named as bubble chart diagram which is a simple graphical representation that can be used to represent a system. The system representation is done in terms of the input data to the system, the various processing carried out on these data, and the output data is generated by the system.

Fig 4.2 Data Flow Diagram

4.4 SEQUENCE DIAGRAM
The sequence diagrams are an easy way of describing the system’s behavior. It focuses on the interaction between the system and the environment. This UML diagram shows the interaction arranged in a time sequence. It has two dimensions: the vertical dimension and the horizontal dimension. The vertical dimension used in UML sequence diagram represents the time and the horizontal dimension used represents the different objects. The vertical line is also called the object’s lifeline. It represents the object’s presence during the interaction.

Fig 4.3 Sequence Diagram

4.5 USE CASE DIAGRAM

A use-case diagram is a graph of users or actors. It is a set of use cases enclosed by a system boundary which is also the participation associations between the actors and the use-cases, and generalization among the use cases.
So, the use-case is the description of the outside (actors or users) and inside(use-case) of the system’s typical behavior. An ellipse having the name is used to show the use case which is initiated by actors or users.
.
An Actor or a user is the one that communicates with a use-case. Name of the actors is written down and a arrow symbol is used to show the interaction between actor and use-case.

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