Case Analysis Of Societe Generale

One of the internal control deficiencies that found in Societe Generale is the incapability of back office in detecting and inspecting the fraud activities. Based on the case study, we know that the back office staffs are unaware about the responsibilities to disclose the abnormal or significant transaction to their supervisor, because it is not specifically stated in their job description. Besides that, even though the back office staffs have discover some abnormal transactions that may cause by fraud, they did not carry out further investigation such as perform the inspection of records to get more evidence. They just slightly bring over the investigation process even though the result is lack of reasonableness. In addition, the back office …show more content…
Kerviel was able to conduct the fraud activity because he was using his colleagues’ user ID and password to conceal his fraud activity. Kerviel was able to steal or illegally use his colleagues ID and password, sending fake email, illegally access the organization’s system to exceed the trading limit that restricted to him and use the system to conceal his wrong doings. These show that the Societe Generale’s IT system was in poor control thus it provide kerviel opportunity to conduct and conceal the fraud.
This deficiency can be known as poor design effectiveness because the organization unable to design a good IT system that prohibit the employees from conducting the fraud activity and have the opportunity to conceal the fraud activity.
Societe Generale should have a restriction on the employees’ access to the organization’s system. For example, Societe Generale can restrict the employees to certain level of access to organization’s system that just allow them to key in the transaction, instead of allow them to delete or change the transaction. Besides that, employees are required to change their password after some period so that the illegal use of ID of colleagues can be minimize. Besides that, Societe Generale can implement Privileged Password management which used to secure the passwords for login …show more content…
For example, the bank controller should include the monitoring on both gross and net exposure of trade position during the inspection of trade position. Other than that, Societe Generale should send their bank controllers to attend training, in order to train their skill and knowledge on detecting the fraud transaction and also how the traders conceal their fraud transaction. In addition they should also get some tools, for example, effective software program that can help the bank controllers to detect the abnormal transaction and increase the efficiency and