Controls contributed to the occurrence and size of losses

Assignment Help Financial Management

Reference no: EM131185346

One of the largest losses in history from unauthorized securities trading involved a securities trader for the French bank, Societe Generale. The trader was able to circumvent internal controls and create over $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 bank-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?

Reference no: EM131185346

Questions Cloud

Determine the project after-tax net present worth : A corporate expects to receive $35638.0 each year for 15 years if a particular project is undertaken. There will be an initial investment of $104820.0. The expenses associated with the project are expected to be $7440.0 per year. Assume straight-line..

Two popular approaches used by automobile dealers : The following are two popular approaches used by automobile dealers: Buying Versus Leasing You are interested in a $25,000 car. A simplified leasing contract includes the following: purchase cost of $12,000 at the end of the lease. What are the “impl..

Maximum annual withdrawal from the investment account : Lee plans to retire in 22 years with a nest egg of $8M. He has already saved $500,000 in an investment account that generates a nominal rate of return of 12%, compounded quarterly. Numerically show that whether Lee’s investment account balance will r..

Aboriginal trackers were each promised the equivalent : In 1880 five aboriginal trackers were each promised the equivalent of 50 Australian dollars for helping to capture the notorious outlaw Ned Kelley. In 2003 the granddaughters of two of the trackers claimed that this reward had not been paid. How much..

Controls contributed to the occurrence and size of losses : One of the largest losses in history from unauthorized securities trading involved a securities trader for the French bank, Societe Generale. The trader was able to circumvent internal controls and create over $7 billion in trading losses in six mont..

What is the addition to retained earnings : Shelton, Inc., has sales of $396,000, cost of $184,000, depreciation expense of $49,000, interest expense of $30,000, and a tax rate of 35%. What is the net income for the firm? Suppose the company paid out $39,000 in cash dividends. What is the addi..

Corporate bonds-what is the current price of the bond : Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 15 years to maturity, and a coupon r..

Fixed cost affects breakeven in units and breakeven in sales : Managers have some flexibility in setting the estimated useful lives of depreciable assets. Explain how this could allow managers to manipulate earnings. Would depreciation be considered a variable cost or a fixed cost?Explain how a change in sales p..

Requires an initial fixed asset investment : Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.49 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $2,010,000 in annual sale..

User Account

All Pages