REASONS CITED BY AUDITORS FOR THE DIFFICULTIES THEY ENCOUNTER IN DETECTING FRAUD IN COMPANIES THAT USE ELECTRONIC DATA-PROCESSING SYSTEMS ARE NOTED. ONE COMPUTER SCIENTIST STATES THAT COMPUTER TECHNOLOGY TENDS TO CONFOUND AUDITORS AND MANAGERS TO THE EXTENT THAT THEY RARELY DETECT OR PREVENT COMPUTER-BASED EMBEZZLEMENT. EXAMPLES OF COMPUTER CRIMES ARE NOTED, AS IS THE INCREASING USE OF COMPUTERS IN THE HANDLING OF FINANCIAL TRANSACTIONS IN A VARIETY OF CONTEXTS -BANKS, CHECK AUTHORIZING, GOVERNMENT OPERATIONS, ETC. IT IS POINTED OUT THAT COMPUTER CRIMINALS ARE FURTHER PROTECTED BY THE RELUCTANCE OF CORPORATIONS TO ADMIT THAT THEY HAVE BEEN DEFRAUDED. COMPUTER CRIMES ALSO PRESENT PROBLEMS RELATED TO GATHERING AND PRESENTING EVIDENCE. YET ANOTHER FACTOR IS THE LACK OF DEFINITION IN MANY CRIMINAL STATUTES REGARDING COMPUTER PROGRAMS AS PROPERTY. THE GENERALLY LENIENT TREATMENT OF CONVICTED COMPUTER CRIMINALS IS NOTED. ONE EXCEPTION -- A CHIEF ACCOUNTANT WHO EMBEZZELED OVER 1 MILLION DOLLARS FROM HIS COMPANY AND THEN, FAILING TO SHOW REMORSE FOR HIS ACT, WAS SENTENCED TO A 10-YEAR PRISON TERM -- EXPLAINS IN DETAIL HOW AND WHY HE CARRIED OUT THE EMBEZZLEMENT. THE COMPUTER INDUSTRY'S RESPONSE TO THE PROBLEM OF COMPUTER CRIME IS DISCUSSED. EXERCISES CONDUCTED BY THE MILITARY TO DEMONSTRATE HOW THE MOST COMPLEX AND SUPPOSEDLY SECURE COMPUTER SYSTEMS USED BY THE ARMED FORCES, BY CIVILIAN AGENCIES, AND BY GOVERNMENT CONTRACTORS CAN BE PENETRATED ARE DESCRIBED. (LKM)