Question

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. Answer the following True or False questions about Societe Generale's internal controls. These will assist you in determining the weaknesses. 1. The loss could have been avoided with a number of internal controls. 2. Required vacation time may have alerted managers to the hidden losses. 3. If traders have access to the monitoring software, then the separation of duties control is violated. 4. The trader was not under managerial oversight.

Answer 1

Answer: 1.true, 2.true , 3.true, 4.true

Step-by-step explanation:

The Societe Generale trading losses is an eye opener that shows how poor management of the internal control can lead to huge consequences and loses.

The accumulated losses could have been avoided with proper segregation of duties in the internal controls with supervisors relating with the traders regarding their trades which would not have allowed the trader,Kerviel to manipulate the monitoring software due to his extensive knowledge from his previous job. If traders have free access to the monitoring software, then the separation of duties control is violated.

---Also, If the trader had an required vacation time, he would have been vacant in his duties and maybe enabling detection of fraud by management although we cannot conclude he had note gone for his vacation and returned before perpetuating the act

---In addition if the trader was able to fraud the company over a span of 7 months then there , then he was not under managerial oversight else he would have been caught and his acts rectified on time.

1. The loss could have been avoided with a number of internal controls.---TrUe

2.. Required vacation time may have alerted managers to the hidden losses

3. If traders have access to the monitoring software, then the separation of duties control is violated---TrUe

4. The trader was not under managerial oversight-- true