10-17. The Resort The Mountain Top Resort Community is an elegant, thriving four

Question

10-17. The Resort

The Mountain Top Resort Community is an elegant, thriving four-season resort and community of over 1,200 single family homes, 1,000 time-share units, and a multimillion-dollar ski business. Guests visiting the resort can enjoy the indoor/outdoor water park, play golf on one of the two 18-hole championship golf courses, ski, snowboard, or snow tube in the winter on 14 trails that are all lighted for night skiing, or relax at the full-service spa. There are also three dining rooms, card rooms, nightly movies, and live weekend entertainment.

The resort uses a computerized system to make room reservations and bill customers. Following standard policy for the industry, the resort also offers authorized travel agents a 10% commission on room bookings. Each week, the resort prints an exception report of bookings made by unrecognized travel agents. However, the managers usually pay the commissions anyway, partly because they don’t want to anger the travel agencies and partly because the computer file that maintains the list of authorized agents is not kept up-to-date.

Although management has not discovered it, several employees are exploiting these circumstances. As often as possible, they call the resort from outside phones, pose as travel agents, book rooms for friends and relatives, and collect the commissions. The incentive is obvious: rooms costing as little as $100 per day result in payments of $10 per day to the “travel agencies” that book them. The scam has been going on for years, and several guests now book their rooms exclusively through these employees, finding these people particularly courteous and helpful.
Requirements

    Would you say this is a computer crime? Why or why not?
    Is this fraud? Why or why not?
    What internal controls would you recommend that would enable the resort’s managers to prevent such offenses?

Explanation / Answer

Q1) Would you say this is a computer crime? Why or why not?

NO, This is definitely not a computer crime as we dont see any hacker/attacker who is trying to attack on the Hotel Reservation System or is trying to cause any harm to the Hotel via any technical means or by using any malware or virus to corrupt the data stored in the Hotel Management Database. So definitely this isnt Computer Crime.

Q2) Is this fraud? Why or why not?

YES, this is fraud which is continoulsy done by the external Travel Agents/Contacts that help in Room Reservation as they are making fake calls to the hotels daily and book rooms which helps them to earn commission, without generating any revenue for the Hotel. Also there are these Managers who are paying these cheaters reluctantly without even checking that rooms are occupied by the visitors who booked them, and they pay the commission to the Travel agents to keep them happy and never keep the Database list of Agents updated. So here its the manager's mistake, because of which fraud agents are taking undue advantage of the situation.

Q3)  What internal controls would you recommend that would enable the resort’s managers to prevent such offenses?

Please let me know in case of any clarifications required. Thanks!

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