The control environment is a very important part of businesses because it is the foundation of the internal controls. It determines whether the ethical values, procedures and rules that provide reasonable assurance control objectives are met. If a business has a poor control environment, their business will not last very long, like Barings Bank.
Internal Control Weaknesses
From the beginning of this situation, the control environment was weak due to hiring untrained and young staff members to assist Nick. Simon Jones, the Regional Operations Manager, Chief Operating Officer and Director of Barings Futures Singapore should have given Nick a set of rules, regulations and training for the employees in order to reduce risks. …show more content…
One of his workers in this process, Risselle Sng, was in charge of writing the transactions. She handled the settlements in the back office in Singapore. Nick told her what to write and when to do it so that no one else knew. He took advantage of Baring’s client accounts and created a hole in the account that he claimed did not exist because of documents he forged and sent to the auditor. In order avoid this, segregation of duties should be required. It is important to have managers checking up on internal controls and what employees are doing. The company should also require another employee 's signature when asking for constant loans to double check Nick is handling the money the right way. The fake transactions Nick created should have been sent to a manager in the company in order to approve the process and what he was doing.
All of these factors contributed to the bankruptcy of Barings Bank. Nick Leeson observed that overall, Barings Banks was most concerned with the bottom line, making profit. All they cared about was the big numbers and few losses that led to salaries and big bonuses. Also, hiring staff at a young age with little training and not being monitored. The lack of training the employees received made them, especially Nick, unaware of the consequences of his actions until the very end. Employee should be required to receive extensive training before they begin their
Prior to Fuller’s transfer, management at the Carson’s location was poorly run using the classical approach. While this approach can be successful, management has to find a good middle ground between caring for the company and caring about their employees. A traditional classical approach recognizes that there are five important factors to running a successful business (Miller, 19). According to text, these factors are planning, organizing, command, coordination and control (Miller, 19-20). These factors can be seen when you look at Third Bank as a whole. In the study, the CEO saw the issues in his company and put a plan together to improve. He had meetings with management, like fuller, to organize a solution. He then commanded all locations
The costs associated with the online banking operation were out weighted by the benefits provide by the program. Resource had to be taking from other areas of the bank in order to start the program, which included creating the website, make it secure and promote it to customers. However, many benefits also came with the creation of this program. The first would be that it changes the patterns in customer uses of different banking channels. In active users of online banking there were drops in the use of some on the other banking channels. Another benefit is the retention that was created by online banking. This happened because once a customer entered all their information they saw it as a buried to switch bank and have to do it all over again. Therefore, customers would stay more and longer with their current bank.
Once he has found the necessary information to back himself up, he should bring this information upon the finance director, Finn. As well he should find any one else who also knows about this situation or find out others who are apart of this situation.
When conducting an audit, professional standard must require auditors to consider the clients control environment. According to (www.aicpa.org) professional standards is the comprehensive source of auditing and attestation pronouncements issued by the AICPA, along with the AICPA Code of Professional Conduct and Bylaws .The control environment refers to the overall tone of an organization as it relates to issues such as financial checks and balances. The tone reflects the attitude, awareness, and actions of the board of directors, management, and owners who influence the control consciousness of its people. There were some weaknesses that were evident in Lincoln’s control environment.
Ans. 7 From my point of view I would have reported the scheme to senior management. The scheme would have proved very harmful for the whole company and the harm of the company is bad for each and every employee of the company. Many people may have lost their jobs due to this scheme.
I believe that asset misappropriation by accounts payable fraud is occurring at Wayland Manufacturing Company due to a lack of proper internal controls. Making the company’s Chief Accountant responsible for additional day-to-day functions provides him with opportunity to commit by creating fictitious vendors with his information and then creating fictitious invoices. Newbaker can then conceal his fraud by approving the invoices for payment. Employees working at an organization for more than five years are more likely to commit fraud. Therefore, Newbaker’s six-year history with the company has made him trustworthy and very knowledgeable, which could indicate involvement in asset misappropriation. The high employee turnover could represent a past fraudster leaving before getting caught or employees refusing to continue with the asset misappropriation. In addition, the varying monthly accounts payable transactions ranging from the lowest being April 2014 and
After reading the article, I think the author of “Journal of Accountancy Fraud Criminal minds” articulate the details very well how fraud usually take place in this world. As they use all of the respondents who are very well educated and held the position of trusts in the organization, which I tend to believe was the best way to show how people who are trusted in the organization most likely to commit those kind of frauds very easily and as they think that they will never caught by anyone since they have been working for so long. After reading fraud No.1, the Ponzi scheme, it clearly shows that fraud can be also done for fancy lifestyle. I believe giving someone a complete control over handling money, and back account alone can be very risky as they can be embezzlement in some areas which no one will ever find it unless someone else decide to check it. I believe something that could be done differently for this scheme is that they should always have extra administrator with another trustee who can consistently check on their work occasionally, and for them to keep track that everything is going well and to make sure there is no scam happening at the company.
INTRODUCTION The Bank of Nova Scotia, commonly referred as “Scotiabank,” is one of the largest banks of Canada. It was founded in 1832 in Halifax by local merchants and citizens. They wanted a public bank, owned by shareholders and authorized by the government and that could provide currency for trade and transactions. The bank operates in three business lines: personal banking, commercial banking, and wealth management.” Scotiabank trades on the Toronto Stock Exchange as “BNS”.
During the past year Wells Fargo, a well-recognized bank of the United States, has been trying to clean its name and the mess it got itself into, when it was brought to the public that the bank was involved in generating fraudulent checking and savings accounts for its clients without their knowledge or their authorization. “The way it worked was that employees moved funds from customers' existing accounts into newly-created ones without their knowledge or consent”
I was given the task to make an assignment on the subject of Business Information Management. In this assignment, I have to read and analyse a case study entitled RBS failure caused by inexperienced computer operative in India. After that, I need to make a summary of this case study because it shows what I understand in this case study. Besides that, the objective of this case study is to know the factors that have caused the system failure at Royal Bank of Scotland. The reason I want to know this factor because Royal Bank of Scotland (RBS) has faced computer meltdown with the loss of its share price as well as millions of customers unable to access their account.
The Bardi banking family started to emerge in the eleventh century. The Bardi family grew by the twelfth century to be large enough to establish branches in the England and throughout Europe. They expanded further with a transistion into offering more financial services. This included the first usage of checks in banking.
In this case study it was stated that there were a problem happen in the outsourcing for the Royal Bank of Scotland. What happen was there were an error that happen during the routine software upgrade that cause million of that bank customer cant access to their account. The error happen when one junior technician in India was accidently wiped all the information during the routine software upgrade. The member of staff that was working under the program for the Royal Bank of Scotland, NatWest and Ulster Bank and it was based in Hyderabad, India.