Weak Internal Control
Internal controls are systems put in place by an organisation to ensure its efficient performance and delivery of its services to stakeholders. It also ensures that in situations where activities does not go as planned, the damage does not affect the productivity of the organisation by having contingency plans. Internal Control also has to do with reliable financial reporting and compliance with rules, policies and laws which are all ensured by the management of the organisation (Chartered Banker Professionalism, Ethics and Regulation 2015/16 page 353). The following came to fore as regards the Internal Control system of the Bank;
• There were no sufficient checks in place to monitor and validate the transactions carried …show more content…
Ethical behaviour is our priority in the banking industry as we deal with money that belongs to other people hence the need to maintain positive standards of behaviour (Bob Souster, 2016).
• Integrity is a core principle of Ethical behaviour. This was totally absent in the two scandals that occurred at the Bank. The rogue trader displayed lack of moral standards so also the members of the credit team that were under pressure to falsify figures. A person of integrity will adhere steadfastly to his moral values no matter the pressure he may face.
• Probity: this is another core principle of ethical behaviour. It can be said that the board of directors lacked probity as they did not endeavour to evaluate the bank properly before agreeing with the senior executives at the expense of the advice given by the auditor.
• Openness and transparency are core principles of ethical behaviour. There was lack of the two principles in the case study as the rogue trader and certain members of the credit team concealed the true picture of the …show more content…
Also no one individual at the apex of the bank should have full control of a system. Thus there should documented separation of roles.
Non-Executive Directors should be part of the board of directors since they will be able to take more objective view of the operations of the bank. A functional audit committee should be established.
The Chartered Institute for Personnel Management suggested the following policies to help tackle staff fraud and dishonesty (CIPD, 2016):
• Fraud management policy
1. There should be segregation of duties such that different individuals are given different roles to play. The person that initiates a transaction should not be the same person that will authorize the transaction.
2. Maker and checker approach should be adopted to monitor how funds enter the system and how or where funds leave to from the
Internal controls are systems put in place by an organisation to ensure its efficient performance and delivery of its services to stakeholders. It also ensures that in situations where activities does not go as planned, the damage does not affect the productivity of the organisation by having contingency plans. Internal Control also has to do with reliable financial reporting and compliance with rules, policies and laws which are all ensured by the management of the organisation (Chartered Banker Professionalism, Ethics and Regulation 2015/16 page 353). The following came to fore as regards the Internal Control system of the Bank;
• There were no sufficient checks in place to monitor and validate the transactions carried …show more content…
Ethical behaviour is our priority in the banking industry as we deal with money that belongs to other people hence the need to maintain positive standards of behaviour (Bob Souster, 2016).
• Integrity is a core principle of Ethical behaviour. This was totally absent in the two scandals that occurred at the Bank. The rogue trader displayed lack of moral standards so also the members of the credit team that were under pressure to falsify figures. A person of integrity will adhere steadfastly to his moral values no matter the pressure he may face.
• Probity: this is another core principle of ethical behaviour. It can be said that the board of directors lacked probity as they did not endeavour to evaluate the bank properly before agreeing with the senior executives at the expense of the advice given by the auditor.
• Openness and transparency are core principles of ethical behaviour. There was lack of the two principles in the case study as the rogue trader and certain members of the credit team concealed the true picture of the …show more content…
Also no one individual at the apex of the bank should have full control of a system. Thus there should documented separation of roles.
Non-Executive Directors should be part of the board of directors since they will be able to take more objective view of the operations of the bank. A functional audit committee should be established.
The Chartered Institute for Personnel Management suggested the following policies to help tackle staff fraud and dishonesty (CIPD, 2016):
• Fraud management policy
1. There should be segregation of duties such that different individuals are given different roles to play. The person that initiates a transaction should not be the same person that will authorize the transaction.
2. Maker and checker approach should be adopted to monitor how funds enter the system and how or where funds leave to from the