Rogue Trader COSO Control Questionnaire
1). The possibility of Nick Leeson being able to defraud Barings can be explained by the lack of management supervision. Since Leeson was making a lot of money for the company, senior executives didn’t punish him. Here are three examples of this: * The funding kept coming even after company realized that Singapore law had funding restrictions * Senior Executives didn’t punish Leeson for the violations he had committed * After Leeson was arrested, management didn’t seek any ways to comment on his actions.
2). Barings bank was more concerned with the bottom line profits rather than compliance with the code of conduct. The film didn’t exactly show if Barings had a
…show more content…
Leeson was able to keep an 88888 account running for a long time without being questioned by the board members. When Leeson got called in my Simon into his office, his own thoughts were how it was possible to not get caught for so long. He was positive that that was the end. However, to his surprise Leeson was informed that the bonuses were in and he was up for 134,000 bonus himself because of the enormous revenues he had generated for the company. Risk Assessment 1). Leeson’s ability to generate big profits for the company made board of directors to wonder how that was possible. Therefore Ash Lewis, an auditor, was sent to check on Leeson’s paperwork. However, right after her arrival she got called off by the board members since Barings was facing problems with their securities. Ash Lewis was replaced by two less experienced auditors. Barings should have focused more on the potential business risks than on generating more profits for the company. 2). Management and the board failed to properly evaluate risks when expanding lines of business. Barings decided to merge Hong Kong and Tokyo markets to replicate Leeson’s success. In the course of such a decision no risks and future controls were discussed. “Keep up the good work” was the only feedback from the board. 3). Control issues were not at all discussed when entering new markets.