Barings Bank Case Study

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Control Environment

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

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