Computer Frauds and Missing Control Procedures. The following are brief stories ofactual employee thefts and embezzlements perpetrated in an IT environment.Required:What type of control procedure that might have prevented or detected the fraud was missingor inoperative?a. An accounts payable terminal operator at a subsidiary entity fabricated false invoicesfrom a fictitious vendor and entered them in the parent entity’s central accounts payable/cash disbursement system. Five checks totaling $155,000 were issued to the “vendor.”b. A bank provided custodial and record-keeping services for several mutual funds. Aproof-and-control department employee substituted his own name and account numberfor those of the actual purchasers of some shares. He used the accounting informationsystem to conceal and shift balances from his name and account to names and accountsof the actual investors when he needed to avoid detection because of missing amounts inthe investors’ accounts.c. The university’s accounting information system was illegally hacked. Vandals changedmany students’ first name to Susan, student telephone numbers were changed to the number of the university president, grade point averages were modified, and some academicfiles were completely deleted.d. A computer operator at a state-run horse race betting agency set the computer clock backthree minutes. After the race was completed, he quickly telephoned bets to his girlfriend, aninput clerk at the agency, gave her the winning horse and the bet amount, and won every time!
Computer Frauds and Missing Control Procedures. The following are brief stories of
actual employee thefts and embezzlements perpetrated in an IT environment.
Required:
What type of control procedure that might have prevented or detected the fraud was missing
or inoperative?
a. An accounts payable terminal operator at a subsidiary entity fabricated false invoices
from a fictitious vendor and entered them in the parent entity’s central accounts payable/
cash disbursement system. Five checks totaling $155,000 were issued to the “vendor.”
b. A bank provided custodial and record-keeping services for several mutual funds. A
proof-and-control department employee substituted his own name and account number
for those of the actual purchasers of some shares. He used the
system
of the actual investors when he needed to avoid detection because of missing amounts in
the investors’ accounts.
c. The university’s accounting information system was illegally hacked. Vandals changed
many students’ first name to Susan, student telephone numbers were changed to the number of the university president, grade point averages were modified, and some academic
files were completely deleted.
d. A computer operator at a state-run horse race betting agency set the computer clock back
three minutes. After the race was completed, he quickly telephoned bets to his girlfriend, an
input clerk at the agency, gave her the winning horse and the bet amount, and won every time!
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