Reference no: EM132607966

Question 1: What additional/meaningful responses do you have on the paragraphs below regarding new opportunities e-commerce solutions like EDI present for internal and external perpetrators trying to defraud companies? See paragraphs below.

• E-commerce such as EDI can present both positive and negative impact and new opportunities for internal and external perpetrators of fraud. On one hand, the EDI solution make a difficult for perpetrators to commit fraud. Compared to the traditional process where paper and pencil, phone call are involved, the EDI process will need technical and functional knowledge on EDI specs where it is for purchasing, receiving, inventory control and account receivable and account payable. Internal perpetrators need to login to the system with their own user id or with another person's user id to place a purchase order. The system has User Id stamp and date/time stamp on the transaction. Also, a managerial electronic approval is need to transmit the purchase order. In this respect, EDI system is a huge deterrence for many types of fraud. For external perpetrators, it is even more difficult. They have to hack the Darling Company's internal network to get inside the firewall. They have to use some sort of social engineering technique to obtain a legitimate user id and password. They also need to have technical and functional knowledge of EDI system and its complex setup to transmit the resulting money to their own bank account. All these process if difficult to learn.

• On the other hand, EDI will provide new opportunity for the internal and external perpetrators of fraud. Since the entire process is computer program driven, the internal perpetrator can fraudulently make EDI transaction setup and configure the system for a malicious purpose as long as the perpetrator is well versed in the EDI system. EDI system is hard to audit and easy to get overlooked. It will need auditors who are experienced and who has an in-depth EDI knowledge. For external perpetrators, it is also a new opportunity as long as they know how to hack the system and how to configure the EDI system setup.