In the early days of computers, Jerry Schneider was a very enterprising young man who, while attending UCLA, was also conducting a major fraud against Pacific Telephone and Telegraph Company (PT&T). At the height of his fraud in 1971, he was collecting approximately $30,000 a day from PT&T. In total, it was estimated that he stole as much as $900,000 from PT&T. Jerry"s fraud was fairly simple in concept, but he did work very hard at it. In 1969, he began a legitimate company refurbishing phone equipment for PT&T. As a supplier to PT&T, he became familiar with some of their operations. He also spent much time digging through dumpsters at PT&T and was able to salvage many reports that helped him understand the inventory and ordering systems. He purchased a telephone truck at an auction, and since he was a valid supplier to PT&T, he had keys to the loading dock. He began tapping into PT&T"s touch-tone ordering system, ordering equipment to be dropped off at certain locations. Using his truck, he would pick up the equipment and sell it, either to PT&T or to other companies, as refurbished equipment. His knowledge of computers and PT&T systems allowed him to alter their programs to erase any traces of his illicit activity. His operation became so large that he needed employees to assist him. One of his employees became disgruntled and tipped off police to Jerry"s illegal activities in 1972. Jerry was convicted of grand theft, burglary, and receiving stolen property and served 40 days in jail, with a three-year probation. He eventually became a computer security consultant.

Required:

List and describe internal controls from this chapter that may have helped prevent or detect Jerry Schneider"s fraud. Keep in mind that this case occurred before there was an Internet and large company computer networks.