The Disgruntled HR Director George Schmelzle* Professor School of Accountancy Carl Keller Associate Professor School of

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The Disgruntled HR
Director George Schmelzle*
Professor School of Accountancy
Carl Keller Associate
Professor School of Accountancy
Paul Ashcroft Associate
Professor School of Accountancy
The Disgruntled HR Director Introduction Regan Carter, the
human resource director for an online accounting firm, was angry.
She had just been terminated from her position as Human Resource
Director at a staffing firm for accountants. Carter was terminated
for “failing to meet the minimum qualifications for her job.” The
firm also noted that Carter had an argument with a colleague and
downgraded the colleague’s computer access after the argument.
Carter was also angry that the organization terminated her with a
phone call. While sitting at her desk after finishing the phone
call, Carter noticed that she still had access to her account.
Employees could see Carter repeatedly hit the delete button on her
computer. Security was notified and Carter was escorted from the
building. Once Carter went home, she noted she still had access to
her organizational account. Using this access, Carter logged into
the system and deleted 17,000 job applications and resumes that had
been sent to the organization; resumes/applications the company
needed for their business. Essentially, these were all of the
organization’s resumes. It took two days for Carter to omit the
resumes. Carter also added expletives into the system, leaving no
doubt as to who did the damage. The organization spent $100,000
trying to retrieve the files and rebuild the system which had been
damaged by Carter. Some of the files/resumes were never retrieved.
Carter was arrested and later convicted of one count of damaging
computers and one count of recklessly damaging computers. In
addition to the actions of Carter, who else is at fault? Why did
the organization’s backup systems fail? How could this attack have
been prevented? Background of the Online Accounting Firm The online
accounting firm was started in 1999 by former employees of the
accounting firm PriceWaterhouseCoopers. They started offering
online accounting and tax preparation services to small businesses.
The firm’s employees include certified public accountants, enrolled
IRS agents, bookkeepers, and support staff such as human resources
and customer service representatives. Employees can be full-time or
part-time, and work either remotely or on site. Services include
tax advice including IRS audit defense, tax compliance, accounting,
bookkeeping, and payroll. Services are mostly offered on a virtual
basis, but some services are on site. The company’s mission is to
make professional tax and accounting services available to small
businesses by providing these services at a very competitive price.
The organization needs a large number of professional accountants
to provide services to many small companies. It is important for
the organization to have a large number of resumes and applications
on file so that the organization can effectively meet their
client’s needs, and the deletion of the resumes affected the
relationship of the organization with their clients. “Her actions
wiped out information vitally important to the employer company and
cost the company money and time to repair.” Forensic Information –
HR Director Regan Carter had worked in human resources in various
capacities. Prior to being hired as Human Resource Director she
served as a human resource manager for seven years and a corporate
recruiter for three years. Carter had legal and financial issues
earlier in her life. In 2008 Carter was convicted of forgery while
in 2002 she was arrested for writing a bad check. Her stint as
Human Resource director for the online accounting firm lasted only
six months and did not go smoothly. Carter got into an argument
with an employee, and downgraded their computer status shortly
thereafter, making it much more difficult for the employee to do
their job. In court documents, the organization noted that Carter
was not able to do the “minimum requirements” her position
warranted.
Timeline of the fraud
January 2019 Carter hired by the online accounting firm as Human
Resource Director
Jan 2019-June 2019 Carter’s employment term with the firm.
June 2019 Carter terminated for failing to “meet the minimum
requirements of her position” and maliciously downgrading the
computer rights of an employee.
June, 2019 Carter deletes 17,000 applications and resumes,
damages to the system are $100,000.
August 16, 2021 Carter was found guilty of one count of
intentionally damaging computers and one count of recklessly
damaging computers.
Questions 1. Using the Enterprise Risk Management Model
(internal environment) describe the company’s adherence to human
resource standards. 2. List and discuss some controls that should
have been in place over human resources at the online accounting
firm. (LO 2 and 3) The Disgruntled HR Director
TEACHING NOTES Critical Incident Synopsis This case examines a
human resource director who deleted 17,000 resumes and applications
from the organization’s computer system. This case requires
students to apply the standards required for human resources in the
Enterprise Risk Management Model to assess the risk to the online
accounting firm. The case also examines best practices for
assigning computer rights and backing up data and determining
effective internal controls over human resources.
Learning Objectives Upon completion of the critical incident,
students should be able to: 1) Apply the human resource section of
the internal environment of the Enterprise Risk Management Model to
the online accounting firm. 2) Discuss internal controls over human
resources. 3) Be familiar with best practices for assigning
computer rights and backups.
Answer these questions:
1. Using the Enterprise Risk Management Model (internal
environment) describe the company’s adherence to human resource
standards (LO 1 and 2.
2. List and discuss some controls that should have been in place
over human resources at the online accounting firm. (LO 2 and
3)