Question

In his own words, Daniel Jones was 'The Dude." With his waist-long dreadlocks, part-time rock band, and well- paid job managing a company's online search directory--he seemed to have it all. Originally from Germany, Jones, now age 32, earned his doctorate and taught at the University of Munich before coming to the United States, where he started his career in computers. When Jones started working with the company as a director of operations for U.S.-Speech Engineering Service and Retrieval Technology-he was assigned to work on a new, closely guarded search engine tied to the company's .net concept. The company allows employees to order an unlimited amount of software and hardware, at no cost, for business purposes. In one year's time, Jones ordered or used his assistant and other employees (including a high school intern) to order nearly 1,700 pieces of software which had very low cost but were worth a lot on the street. He then resold them for reduced prices- reaping millions. When items with a cost of goods sold of more than $1,000 are ordered, an e-mail is sent to the employee's direct supervisor, who must click on an "Approve" button before the order is filled. In no individual order was the cost of goods more than $1,000-he made sure none of the orders required a supervisor's approval. The loosely controlled internal ordering system reflects the trust the company puts in its employees. During this time frame, FBI agents said they saw Jones exchanging a large box of software for cash in a department store parking lot. The FBI contacted the company's security and began monitoring Jones's bank accounts. Previously, one account with his bank had an average balance of $2,159. In a short time, however, the average balance ballooned to $129,775. Another account at another bank showed irregular deposits totaling $500,000—none of which appeared to be from any legitimate income or other source. Investigators also noted that Jones purchased a Ferrari, a Jaguar, and traded in lesser vehicles for a Hummer, a Mercedes, and a Harley-Davidson motorcycle. He also bought an $8,000 platinum diamond ring a $2,230 wristwatch, and a $4,000 bracelet. "You figured that I like big boy's toys by looking at some of my pictures," Jones wrote on his personal Web page. “I just can't resist." The Dude's Web page includes a camera for monitoring his cat and photos of his yacht, cars, and other treasures. For a relatively low-level manager, it was an impressive collection. But at his company, where teenage software engineers can earn more than company directors, no one noticed anything unusual. A neighbor across the street from Jones said that he was clearly wealthy, but not flamboyant with his money. He described Jones as an intelligent man who didn't flaunt his education, would loan neighbors tools, and was always friendly. The neighbor was surprised to hear the accusations against someone he called his friend. All he knew about Jones was that he was a good neighbor who loved cars. "He was very, very helpful. The few times I had problems with my PC, he'd come and help straighten them out," the neighbor said. "They are just ideal neighbors. I feel terrible for him and his wife." Jones and his wife lived in a modest home.

Answer 1

solution given that 1 The fellowing could be symptoms of found a. Posh Life style: Daniel Jones dove expensive clear from his site has that gones enjoyed telling people about his toys. It is likely he showed of talked about his varsious cars to his fellow employees. A clue to Jone's found is that he began to puschase most tife of these expensive cars in the last ten months of the fraud , not over period of time he wooked for his company b) Analytics; Jones geceived lange amants of softwaroo foee of change to be used on developmental projects.someon should have discovered that Jones was receiving looger quantities of materials than his colleagues His company could also oequu're setting the prosects Jones og working on and the decesons why he needed such large amounts of materials c) ante ancel contom deficiency: His company had no internal control checks for amounts under $1,000.

du). unusual. Behavior's! It is not one particulio behavio 9 that signals fraud but sether a change in entere behavior. Jones had coorked for the company long enough that employees and coworkers would be able to tell if he losas expediencing bell behavioral changes. 2.) positive consequences. Because manager's age encouraged to have fighter control over costs, their Scouting may prevent potential fraud poepetrators! Also , managers will take owneoship of their derastment because they will be in charge of a greates Postion of the assets and will likely be more careful with expenses especially if a bonus is given for keeping costs low. b) : Negative consequences, managers may be mose tempted to commit financial statement foaud, especially ik a bonus is attributed to keeping costs les revenues high. Controls wi need to be in place as a preventive measures other non quantitative meesgeroes should be looked upon gather than monetary benefits 3) a) pressure Fraud pressures canbe divided into fars types : financial pressures, viees, wosk-related poessays, and other posessuses. His desire for

luxuries was enough to motivate him to commit fraud. b) opportunity: His company has a weakness in its contods. It de quised approval only for software os hardware of more than $1000 Jones had oodesed software in the past for legitimate Pusposes. He saw that no one really checked up on him, since he was director of a very secret project. c) Rationalization Hes sutionalization his unethical acts in one way as another u It appears that his company tries vesy hood to create a culege of honesty openness, and assistance by focusing on hiring honest people. Howeved his company could benefit from developing a code of ethics in this situation thede was no questiding of existing contods; gather these were no internal controols in place on pochose of less than $ 2,000. His company could benefit from having some type of internal contools to prevent this type of fraud from occurring in the future. A whitsleblowerey mechanison should be in place whope when the coppey management is at fault external agencies can be contanched for prevention of fraud.