Plutonium: Credit Card and Chris

Topics: Credit card, Political corruption, Fraud Pages: 5 (1449 words) Published: June 24, 2012

Week 3 Case Study: Plutonium Company Fraud
Kyle Harrison
Keller Graduate School of Management
AC 572: Accounting Fraud Examination Concepts
Instructor Sherwin Cord
January 25, 2009

Week 3 Case Study: Plutonium Company Fraud
Plutonium, an Internet start-up company founded in 1988, was in the midst of a massive project to improve integration and internal data quality of its disparate information systems. At the heart of this project was an endeavor to implement a complex billing system called Gateway. Gateway, working with Visa, would automate billing for Plutonium’s large customer base; however, once implemented, Gateway had thousands of corrupt accounts that needed to be resolved in order to improve the system’s data integrity. Jonathan, Plutonium’s operations manager, was tasked to fix these corrupt accounts. After six to nine months, Jonathan noticed that his top and most trusted performer on the task, Chris, was acting suspiciously and had recently acquired several high dollar electronic items. Unbeknownst to Jonathan, Chris was committing employee fraud right under his nose.

All three elements of the fraud triangle were present in this case. Beginning with perceived pressure, Albrecht, Albrecht, & Albrecht (2006) state that “most pressures involve a financial need, although nonfinancial pressures . . . can also motivate fraud” (p. 31). Chris certainly faced financial pressures to commit fraud. Financially, Chris was trying to support his entire family on only $15 per hour and probably had plenty of bills and personal debt to deal with. Moreover, Chris was trying to put himself through college. On top of all this, I think Chris felt a need to uphold his “techie” image, meaning he had to live beyond his means to afford the latest technological gadgets.

Chris also faced nonfinancial pressures to commit fraud. From a work-related perspective, Chris received little recognition for his exemplary job performance and probably felt dissatisfied with his job because he was not challenged. The case stated that even though Chris was considered to be Jonathan’s top performer, he was still only being paid the same $15 an hour as when he started. The case also revealed that Chris was more skilled than Jonathan at resolving corrupt accounts, meaning Chris was not challenged by his job and probably felt dissatisfied. With Jonathan or any of his peers unable to challenge his expertise, Chris felt challenged to beat the system: if no one else would challenge him, then Chris would challenge himself.

Perceived opportunity, the second element of the fraud triangle, is simply the perception that one can conceal fraud (Albrecht, Albrecht, & Albrecht, 2006). Several opportunities existed in the case for Chris to conceal his fraud. First and foremost, he was trusted. Chris was so creative and efficient at resolving corrupt accounts that Jonathan had Chris teach others his processes and techniques. Having earned Jonathan’s trust, Chris was given the number to the dummy credit card. Providing further opportunity, Chris believed he could prey on the ignorance of others. Chris was far more skilled than Jonathan or any of his peers at resolving corrupted accounts, so how could anyone possibly judge or question Chris’s actions? Consequently, Chris could easily conceal his fraud.

Plutonium also had a weak control environment and poor control activities in place, allowing opportunities to flourish. There was no evidence of any tone at the top such as a corporate code of conduct, and Chris’s previous piracy misconduct went unpunished because Jonathan felt Chris was too valuable to reprimand. Both of these factors contributed to a weak control environment. Control activities around the use of the dummy credit card number were also extremely weak: there was not a system of authorizations in place; there were no independent checks on Chris’s or anyone’s use of the...

References: Albrecht, W. S., Albrecht, C. C., & Albrecht, C. O. (2006). Fraud examination (2nd ed.). Mason, Ohio: Thomson/South-Western.
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