Case Study: Baring Bank

915 Words4 Pages
3. Internal Audit of operations: If the managers of Baring bank would have instituted internal audit of operations then they would have been able to uncover Leeson teeming and lading acts, Fraudulent cover up and grave misjudgment made while undertaking his duties.However this was not in place and their isn’t evidence of any manager who undertook to review Leesons work as they viewed Leeson to be independent. 4. Background Review: Due to the fact that the management of Baring Bank had created a wrong impression of Leeson they failed to investigate him even to the claims of the 88888 account letting the culprit handle the case and do a report to them. This was wrong and led to Leeson falsifying documents to cover up his tracks. 5. Limits to…show more content…
Organization chart and Hierachy in reporting: Financial institions should have a clear chart depicting its reporting structure to define ‘who is to report to who’. This will be important in ensuring separation of roles and powers is in place in the company and will roll out the sense of accountability on each individual employee. 8. Training: The movie did not shed light on how to train the art of speculative trade and how to control the risk in the trading market. It only shows that people should be finishan intended goal, such as the profits and these is seen in Barings bank relying on Leeson's success to attain that goal. 9. Duties and responsibilities: Baring Bank had not issued specific job descriptions to its staff and this greatly affected the staff perfomance as they was uncertainity in what the firm expected them to do. If duties were properly spelled out Baring bank employees would have been able to question Leeson on the roles that were out of his job description and help the firm mitigate risk of loss. 10. Accounting role: Bank reconciliation is an accounting role. Baring Bank failed to hire an accountant to man bank reconciliation and check the bank balances. By giving this power to Leeson, he was able to carry out fraud and falsification of documents without the knowledge of accounting…show more content…
Many financial institutions trade in the foreing markets and also carry out their banking services which is similar to Baring Bank. The case study can be used by other banks to study their operations and learn of ways to combat such threats posed to them. This leads to the knowledge of Fraud triangle to detect and prevent risk. The audit triangle is composed of the three items that include pressure, rationalization and opportunity. Opportunity ensures no loophole for fraud is created. All transactions should be checked by a control system. Effective communication between the audit committee, the internal audit department and the board of directors should be in place. COSO framework also comes in handy to solve problem of control of activities thereby reducing risk greatly. Pressure is another factor in the audit triangle which cannot be controlled. Employees with problem regarding poor stress handling capabilities, Drugs and drinking disorders can be helped to reduce this through rehabilitation and seeking professional help through counselors. Rationalization can be checked through carrying out effective staff rercruitment place that will step in to curb ethics related issues, intergrity and meet overall goal of obtaining suitable
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