Business
Engineering
Math
Science
Social Science
Internal controls One of the largest losses in history from unauthorized securities trading involved a securities trader for the French bank, Societe Generale (SCGLY). The trader was able to circumvent internal controls and create more than $7 billion in trading losses in six months. The trader apparently escaped detection by using knowledge of the bank’s internal control systems learned from a previous back-office monitoring job. Much of this monitoring involved the use of software to monitor trades. In addition, traders were usually kept to tight trading limits. Apparently, these controls failed in this case. What general weaknesses in Societe Generale’s internal controls contributed to the occurrence and size of the losses?
Financial And Managerial Accounting
Solutions
Financial And Managerial Accounting
Internal controls
One of the largest losses in history from unauthorized securities trading involved a securities trader for the French bank, Societe Generale (SCGLY). The trader was able to circumvent internal controls and create more than $7 billion in trading losses in six months. The trader apparently escaped detection by using knowledge of the bank’s internal control systems learned from a previous back-office monitoring job. Much of this monitoring involved the use of software to monitor trades. In addition, traders were usually kept to tight trading limits. Apparently, these controls failed in this case.
What general weaknesses in Societe Generale’s internal controls contributed to the occurrence and size of the losses?
Identify the general weakness in SG’s internal controls contributed to the occurrence and size of losses.
Explanation of Solution
Internal Control: Internal control refers to the policies, and plans of the business organization along with other measures with a view to safeguard its assets, encourage the employees to adhere to the plans, to improve on the operational efficiency, and to ensure correct and reliable accounting information. Internal control is a process which ensures continuous reliability of accomplishment of a company’s objectives, related to operations, financial reporting, and in conformity with laws and regulations.
The following are the some of the internal control procedures:
- • Competent personnel, rotating duties, and mandatory vacations
- • Separating responsibilities for related oper...
Chapter 7 Solutions
Additional Business Textbook Solutions
Financial & Managerial Accounting
Cornerstones of Financial Accounting
Accounting Information Systems
Corporate Financial Accounting
Principles of Macroeconomics (MindTap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
Fundamentals of Financial Management (MindTap Course List)
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
Essentials of Business Communication (MindTap Course List)
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Principles of Microeconomics (MindTap Course List)
Foundations of Business (MindTap Course List)
STATISTICS F/BUSINESS+ECONOMICS-TEXT
Principles of Economics (MindTap Course List)
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Probability and Statistics for Engineering and the Sciences
College Accounting, Chapters 1-27
Financial Accounting
Essentials of Economics (MindTap Course List)
Management, Loose-Leaf Version
Intermediate Accounting: Reporting And Analysis
College Accounting (Book Only): A Career Approach
Managerial Accounting: The Cornerstone of Business Decision-Making
Accounting Information Systems
MKTG 12:STUDENT ED.-TEXT
Contemporary Marketing
Financial & Managerial Accounting
Financial Accounting
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
Accounting (Text Only)
College Accounting (Book Only): A Career Approach
Pkg Acc Infor Systems MS VISIO CD
Exploring Economics
Statistics for Business & Economics, Revised (MindTap Course List)
Fundamentals of Financial Management (MindTap Course List)
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
Survey of Accounting (Accounting I)
Corporate Financial Accounting
PAYROLL ACCT.,2019 ED.(LL)-TEXT
Practical Management Science
Purchasing and Supply Chain Management
Economics For Today
Cornerstones of Cost Management (Cornerstones Series)
Macroeconomics
Microeconomics
Economics (MindTap Course List)
Managerial Accounting
Principles of Microeconomics
Economics: Private and Public Choice (MindTap Course List)
Macroeconomics: Private and Public Choice (MindTap Course List)
Microeconomics: Private and Public Choice (MindTap Course List)
MACROECONOMICS FOR TODAY
Understanding Management (MindTap Course List)
