Discussion 1
TYCO fraud case
Summary of the case
The fraud case happened when CFO and CE0 of the company inflated $500 million company income and stole $150. It involved CFO Mark Swartz and the company chief executive officer Dennis Kozlowski. They siphoned money through the fraudulent sale of stocks and took unapproved loans. Cohen, Ding, Lesage, & Stolowy (2012) argue that Tyco inflated its earnings and did not disclose correct financial information violating the security exchange act of 1934, which caused its allegation. It caused damage to the company as it was forced to pay $2.92 billion to its investors. Smuggling of money as executive benefits and bonuses led to a loss of profits as shareholders lost $74 billion, making the company bankrupt and employees lost pension benefits.
How the fraud was detected and red flags
Investigations from Manhattan and SEC uncovered the fraudulent accounting practices. Red flags before the detection of the fraud include large loans given to the CEO Kozlowski that were never paid and later forgiven. According to Cohen, Ding, Lesage, & Stolowy (2012), another red flag is when the CEO had the company to pay a $2 million birthday party for his wife.
How accounting and finance system could have deterred the fraud
The accounting and finance system could have deterred the fraud by implementing internal controls such as segregation of duties. It could not allow the CEO and CFO to control the significant accounting functions of record-keeping, authorization and custody of assets; hence the CEO would have to repay his loans.
Business policies and procedures that could have been in place
There should have external and internal auditors to check the reliability of financial reports, the efficiency of the operations and the compliance of regulations and law. It could have helped the company know there was money smuggling early. According to Peltier. (2014) the bookkeeper should not be let to reconcile the bank account. It could make the CEO and CFO difficult to manipulate financial records and inflate the stock to cover their tracks.
Discussion 2
The strategy
IBM company has used a Relational data technology management system as its system development strategy to develop its computer system. Sabherwal, & Robey (2015) shows that the approach involves preliminary analysis, whereby the company reviewed if the strategy is fit and the existing alternatives. Then there is system analysis, where stakeholders determined the requirements for the system. The next step is system design, which involved developing the technical details for the system. Then they programmed using a code, tested, implemented, and they are maintaining the computer system. IBM used the system to adapt to changes in 2017 by developing computer systems to include applications and security.
Business factors considered
IBM considered its resources, time, scope and risk before using the system development strategy. It considered time to ensure that it implemented the strategy when it was not in a busy season when stakeholders will be available to participate and when there are no other competing projects. DeLone (2018) shows how considering the available resources to finance the steering committee, the developers, the project manager, business analysts and solution architect helped IBM. They considered the risk of using the strategy and its side effects as well as the risk of other alternatives. They also considered the scope of the strategy, such as functionality, users, conversion and interfaces.
If it was the right approach
I believe it was the right approach as the developed computer system addressed the real needs of the management and users. According to DeLone (2018), the system is also aligned with corporate goals, and it drives the company to achieve its goals. The approach was not based on current operational processes but was designed to fit the current situation and respond to future changes within seconds or minutes.
Discussion 3
Summary of the case
The case involved Nirav Modi, who conspired with two IT staff from Punjab National Bank (PNB) to fraud the bank. He obtained letters of Undertaking fraudulently from the two employees of PNB. He used the Letters of undertaking (LoU) to act as a guarantee by PNB to engage in international banking transactions. They issued the LoUs via Society for Worldwide Interbank Financial Telecommunication (SWIFT) network without proper authorization. They allowed Choksi and Modi to obtain loans in other countries as the LoUs were not recorded in PNB’s record-keeping system. It caused damage to PNB as it lost almost $2 billion.
IT monitoring software
I would recommend PNB to use SAS Anti-money laundering monitoring software to monitor its services, applications, network protocols and operating systems. Wheeler & Aitken (2010) dictate that it will help them monitor suspicious activities, alert and report.
Pros and cons of the monitoring software
Pros
SAS Anti-money laundering analyses risks can monitor multiple servers and devices. Flores, Angelopoulou, & Self (2013) argue that SAS anti-money laundering can provide customizable data reports and reports on data performance. It prepares the regulator audit, has security features like antivirus and data backup.
Cons
Installing the monitoring software is costly, time-consuming and will bring a stressful atmosphere for the staff.
Convincing the higher management
The software is needed to detect suspicious activities, alerts and reports the events; hence it would have reported the instance of giving LoUs. It uses a web-based interface; therefore, it would help investigators to get easy access to databases. It also manages data by addressing data challenges and processing them to integrate into a single platform. It will simulate scenarios and test hypotheses to deliver insights. According to Flores et al. (2013), it would use alert consolidation, intelligent scoring and fuzzy matching algorithms to identify high-risk jurisdictions, organizations or persons.