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Homework answers / question archive / Class, In the following case we will identify pressures, opportunities and rationalizations

Class, In the following case we will identify pressures, opportunities and rationalizations

Accounting

Class,
In the following case we will identify pressures, opportunities and rationalizations. Please read on:
Plutonium was an internet start-up company founded in 1988 at the beginning of the technology boom.
One of the largest problems for Plutonium was developing the technological systems necessary to
support the rapidly expanding user base. Furthermore, due to rapid expansion in the recent years, many
of their systems had been added hastily, resulting in poor integration and eroding data integrity. As a
result, the CEO of Plutonium announced an initiative to integrate all systems and increase the quality of
internal data. In compliance with this initiative, Plutonium purchased an expensive and complex billing
system called Gateway, which would automate the billing for thousands of Internet accounts via credit
cards. During the integration, Gateway, in collaboration with Visa, created a phony credit card number
that could be used by developers and programmers to test the functionality and integration of the
Gateway system. Moreover, this credit card number was fully functional in “live” environments so that
testers and developers could ensure functionality without being required to use actual personal or
company credit card numbers. (The activity on this card was not monitored.) The integration went
smoothly; however, it created thousands of corrupt accounts that required fixing. 
Jonathan, the manager of the operations department, was responsible for the resolution of all data
integrity issues. His team was tasked with fixing all corrupt accounts created by the launch and integration
of the Gateway system. As a result, Jonathan was given the phony credit card number, which was kept
on a Post-it note in his drawer. 
One of the top performers on the operations team was a 29-year-old man named Chris. Chris worked in
operations for more than a year, making $15 per hour, the same salary at which he was hired. He was an
introvert working to support a family and put himself through school. Chris was the most technologically
savvy individual on the team and his overall systems knowledge even exceeded that of his manager,
Jonathan. Chris was brilliant in creating more efficient tools and methods to repair corrupted accounts.
Therefore, Chris was tasked with conducting training for new employees and updating team members on
new processes and tools that he had created. As a result, Chris quickly became a trusted and valuable
team member; thus, Jonathan gave him and other team members the phony credit card number in order
to further increase the productivity of the team. 
However, after six months of working at Plutonium, Chris received an official reprimand from the company
for using the company system to access Web sites containing pirated software and music. The FBI
attended the investigation and determined that Chris had not been a major player in the piracy. Therefore,
Chris was quietly warned and placed on a short-term probation. Jonathan was asked to write a warning
letter for the action; however, after a brief conversation with Chris, Jonathan determined that Chris’s
intentions were good and never officially submitted the letter because Chris was a trusted employee and
elevated the overall performance of the team. A few months after the piracy incident, Jonathan noticed
some changes in Chris’s behavior such as: his computer monitor was repositioned so that his screen was
not visible to other coworkers; he had almost all the latest technological innovations; new Palm Pilot, MP3
Player, Play Station, a new laptop, and a new car stereo system; he was going out to lunch more
frequently; and he had multiple fake user names and passwords that he frequently used for testing
purposes. 

Class, let’s evaluate this case using the three elements of the fraud triangle. Choose one (or more) of the
questions below to answer or comment on the responses of your classmates.
What are the potential pressures for Chris to commit fraud? 
What are the potential opportunities for Chris to commit fraud?
What potential rationalizations could Chris use to commit fraud?
What are some of the symptoms that fraud potentially exists in this situation? Based on these symptoms,
do you believe that it does exist? Why or why not?

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