...Société Générale S.A. (SocGen) is a French multinational banking and financial services company headquartered in Paris. The company is auniversal bank split into three main divisions, Retail Banking and Specialized Financial Services (particularly in France and Eastern Europe), Corporate and Investment Banking (Derivatives, Structured Finance and Euro Capital Markets) and Global Investment Management and Services. Xavier Lofficial CEO, Societe Generale Global Solution Centre | | | Xavier moved to SG GSC in May 2011 as Chief Delivery Officer and then took over as the CEO from January 2012. His international experience, excellent knowledge of the Group and expertise in IT systems strategy was valuable in making GSC a major internal partner for the development of the Group. Backed by over 2000 staff, GSC operates both in the development and infrastructure of IT systems and in the execution of business processes for all of the Group’s core activities.Xavier joined Societe Generale’s Corporate and Investment Banking division in 1993. He held various management positions in the domains of IT and project management on SG CIB’s main markets in France, the USA and especially Asia. Between 2007 and 2011, he was SG CIB’s Chief Information Officer for the Asia-Pacific zone, based in Hong Kong.Xavier holds a Master in Information Systems from University Paris IX Dauphine, France. His interests are Squash, Scuba Diving and Travel. | Paris: Societe Generale chief executive Frederic...
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...Control related terms………..……………………………………………….. 3 2. Tone at the Top............................……………………………………………...8 3. Conditions of the fraud......…………………………………………………….10 4. Control reliance testing………………………………………………………..11 5. Control deficiency..............................…………………………………………12 6. Promoting personnel across functional departments………………......………14 7. Audit Materiality...……………………………………………………………..15 8. References……………………………………………………………………..16 1) CONTROL RELATED TERMS • CONTROL ENVIRONMENT It is the main component of the internal control that management designs and implements to provide reasonable assurance that their objectives would be met. The control environment consists of the actions, policies and procedures that reflect the overall attitudes of top management, directors and owners of an entity towards internal control and its importance to the entity. It provides discipline and structure, and encompassing both the ethical values and technical competence. Management has to be serious and provide indications to the employees that they are very serious about the policies and procedures that have been adopted by the company with respect to the controls. The biggest mistake that Societe Generale’s committed was to be least bothered about the Delta One desk. There should have been more frequency of interaction between the senior management...
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...Société Générale (A): The Rogue Trader Jérôme Kerviel and his lawyer, Elisabeth Meyer Photo © Agence France-Presse 01/2011-5613 This case was written by Mark Hunter, Adjunct Professor, and N. Craig Smith, INSEAD Chair in Ethics and Social Responsibility. It is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright © 2011 INSEAD TO ORDER COPIES OF INSEAD CASES, SEE DETAILS ON THE BACK COVER. COPIES MAY NOT BE MADE WITHOUT PERMISSION. NO PART OF THIS PUBLICATION SY MAY BE COPIED, STORED, TRANSMITTED, REPRODUCED OR DISTRIBUTED IN ANY FORM OR MEDIUM WHATSOEVER WITHOUT THE PERMISSION OF THE COPYRIGHT OWNER. ST O O LS D EM O capital-to-assets fell too low. Often the problem was a difference in values between the time a trade was made and the time it was finalised. ACFI would identify and correct the discrepancy to reflect the final value. A controller identified in reports only as “Agent 6”, working in the Accounting and Regulatory Reporting sub-division of ACFI, noticed a problem with the Cooke ratio for eight trades that originated from a trading desk called Delta One early in January 2008. The desk’s main product was “turbo warrants”, which are a form of “barrier” options. Such options become active or inactive when a price barrier is breached. The barrier can be above or below the spot price of the option. The effect is to provide the...
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...ASB Trading Enterprise 17th May 2013 Table of Content 1. Executive Summary 2. Case Study 2.1 Facts around the case 2.2 Risk Management Issues 2.2.1 Fraud Risk 2.2.2 Risk and Control Framework 2.2.3 Corporate Governance 2.3 Broader Consequence of the Case 2.4 Actions Taken by NAB after Crisis 3. Comparison to 2008 Trading Loss in SocGen 4. Conclusion: Lessons Learnt/Recommendations 5. References 1. Executive Summary: National Australia Bank (NAB) is the largest business bank in Australia and the fourth largest retail bank (by total assets) with net operating profit of $A6728 million in 2011. However, due to already competitive trading environment, every major banking institution is beset by increasing pressure on their trading performance – and NAB is no exception. NAB has responded to these challenges by increasing its proprietary trading positions within the Corporate & Investment Banking division, which was in contrary to the customer-focused strategy. The traders engaged in large unauthroised transactions with minimal supervision, which turned into fraud and significant trading loss due to volatile market conditions. However, the integrity of the traders was not the sole cause that led to the $360 million loss. Along with NAB’s unreliable internal risk and control framework and an inappropriate level of governance, the traders exploited the loopholes within NAB’s operations and created fictitious...
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...internal control Qver Financial Reporting CASES INCLUDED iN THIS SECTiON 1. Simply Steam, Co. 155 Evaluation of Internal Control Environment 2. Easy Clean, Co. 155 Evaluation of Internal Control Environment 3. Red Bluff Inn & Café 165 Establishing Effective Internal Control in a Small Business 4. St. James Clothiers 169 Evaluation of Manual and IT-Based Sales Accounting System Risks 5. Collins Harp Enterprises 177 Recommending IT Systems Development Controls 6. Sarbox Scooter, Inc. 185 Scoping and Evaluation Judgments in the Audit of Internal Control over Financial Reporting 7. Société Générale 195 How a Low-Risk Trading Area Caused a $7.2 Billion Loss case5.!-2 Easy Clean/Simply Steam, Co. Evaluation of Internal Control Environment Mark S. Beasley • Frank A. Buckless • Steven M. Glover • Douglas F. Prawitt INSTRUCTIONAL OBJECTIVES 1] To reinforce aspects relevant to the internal control environment. 2] To illustrate the degree of judgment involved in making internal control environment evaluations. 3] To provide students experience in making subjective evaluative judgments. 4] To provide a forum to discuss inquiry techniques as well as inquiry as a form of audit evidence. 5] To provide students direct experience with, and discovery of, issues surrounding the control environment, making inquiries, and the framing (e.g., positive or negative) of information provided by management. 6] To illustrate...
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...Date: 04.06.2012 A fraud, by definition, is the act of deliberate deception of people to secure an unlawful gain. These are mainly for the purpose of defrauding money as well as prestige rather than immediate financial gain. A study by BBC has revealed that the average woman lies twice a day while a man tells three lies a day. However, the lies they tell differ from each other a lot, both in essence and the results yielded. This is why we decided that the frauds and scams of the banking industry as well as their influence on other financial institutions would be quite interesting and intriguing. Let us together investigate how far a human mind can go to earn as much money and glory as we desire. Jerome Kerviel’s case-Societe Generale on the edge In January 2008, A French court sentenced former Société Générale trader Jérôme Kerviel to three years in prison for his role in one of the world's biggest-ever trading scandals and ordered him to repay his former employer €4.9 billion—a sum it would take him 180,000 years to pay at his current salary. In convicting Mr. Kerviel of breach of trust, forgery, and unauthorized computer use, the judge also handed Mr. Kerviel a lifetime trading ban. The prison sentence handed to Mr Kerviel is for five years, of which two years were suspended. Throughout the trial, Mr. Kerviel and his lawyers argued that Société Générale turned a blind eye on his illicit behavior as long as he was making money. Société Générale itself acknowledged in...
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...initially grew rapidly through absorbing a number a regional banks that got into financial trouble. After the Second World War it continued to grow steadily. It grew its retail business in France and its commercial business overseas in the French colonial empire. After the end of the Second World War, the French State decided to "put banks and credit to work for national reconstruction". René Pleven, then Minister of Finance, launched a massive reorganization of the banking industry. A law passed on 2 December 1945 and which went into effect on the 1 January 1946 Nationalized the four leading French retail banks: Banque nationale pour le commerce et l'industrie (BNCI), Comptoir national d'escompte de Paris (CNEP), Crédit Lyonnais and Société Générale. In 1966 the French government decided to merge Comptoir national d'escompte de Paris with Banque nationale pour le commerce et l'industrie to create one new bank called Banque Nationale de Paris (BNP). The bank was re-privatised in 1993 under the leadership of...
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...Ponzi scheme The alleged fraud is over $200 million. Durham’s main holdings were his leveraged buyout firm Obsidian Enterprises, Inc. and Fair Financial Services, both headquartered in Indianapolis, IN. When Durham acquired Fair in a 2002 leveraged buyout, it was a factoring company that purchased accounts receivable from businesses at a discount, profiting when the accounts were paid in full. It financed its operations by selling “investment certificates” to individual investors. According to the indictment, Durham and his cohorts immediately changed Fair’s business. Rather than using the $200 million they raised from investors to purchase receivables, they instead loaned the funds to themselves and their various business entities. When the loans went unpaid, Fair turned into a Ponzi scheme—taking money from new investors to pay certificates that came due. Now that the merry-go-round has stopped, it is estimated that over 5,400 parties—many of them small mom-and-pop investors—have lost over $200 million. The legal battles began with claims from disgruntled investors. In November 2009, the FBI raided the Obsidian offices in Indianapolis and seized its records. On February 8, 2010, the unpaid investors forced Fair into an involuntary bankruptcy proceeding. Shortly after his appointment, the bankruptcy trustee filed suit seeking to recover the money that had been improperly diverted from Fair. The lawsuit language promised to prove a “fraud of shocking proportions and...
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...1. Corporate malfeasance is defined as deceptive and/or fraudulent activities carried out by corporate officers. Usually the CEO is held responsible for corporate problems, but a firm’s board is essential to preventing malfeasance and ensuring that management acts with integrity. I would describe some of Messier’s actions as corporate malfeasance. For example, Messier repurchased a significant amount of Vivendi Universal’s stock (i.e., 6.4 billion Euros from 2001-2002) to fund employee stock option grants. Because Messier was so focused on the firm’s stock, his focus was not on the firm’s financial stability nor did he make the best use of excess cash. Further, the accounting rules used were questionable, as Vivendi Universal used, and switched between, US GAAP guidelines as well as French accounting methods. Messier also allowed the firm to artificially raise its EBITDA by incorporating the firm’s subsidiaries’ profits. In addition, Vivendi Universal tripped a covenant, as it wrongfully allowed Cegetal (one of its subsidiaries) to lend money to the parent firm without the approval of some major shareholders. Finally, even as the firm lost billions of dollars each year, Messier’s salary and bonus kept going up. He even awarded himself 835,000 in stock options in 2001, while purchasing a $17.5 million penthouse in Manhattan with company funds. All these actions are consistent in that they are extremely deceptive. 2. At the beginning of his term he added value, however, as his...
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...ACCOUNTING INFOMRATION SYSTEM TABLE OF CONTENT INTRODUCTION ............................................................................................................................................. 2 FRAUD ........................................................................................................................................................... 3 Internal Fraud ........................................................................................................................................... 3 Procurement fraud.................................................................................................................................... 4 Online safety ............................................................................................................................................. 5 Cheque Fraud ............................................................................................................................................ 5 INTRODUCTION OF COMPUTER VIRUS TO THE SYSTEM .............................................................................. 7 UNINTENTIONAL ACTS/MISTAKES. ............................................................................................................... 7 CONCLUSION................................................................................................................................................. 8 REFERENCES ......................................................................
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...work with our business partners to embed ethical standards throughout the diamond value chain. 34 Report to Society 2010 Ethics The ethical provenance of diamonds is an important element of both their financial and emotional value – what we call ‘diamond equity’. To ensure that the journey from mine to finger meets the highest ethical standards, we have a mandatory, third party assured, code of ethical business conduct – the Best Practice Principles Assurance Programme (BPPs) – that applies not only to our own operations, but also to our Sightholders, contractors and suppliers. HIGHLIGHTS • All diamonds sold by De Beers are 100% conflict free. Compliance with the Kimberley Process and System of Warranties for 2010 was verified by Société Générale de Surveillance (p38) To support ethical standards more broadly we work with sectoral initiatives such as the Responsible Jewellery Council, and comply with and promote the Kimberley Process and the Extractive Industries Transparency Initiative protocols. Together, these initiatives assure the provenance of our diamonds and facilitate the responsible distribution of the revenues our business generates in producer countries. • No significant incidents of corruption were identified during...
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...Auditing Cases An Interactive Learning Approach FIFTH M F S D E D ITIO N S. B A. B M. G F. P Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo Editor in Chief: Donna Battista Acquisitions Editor: Stephanie Wall Editorial Project Manager: Christina Rumbaugh Senior Managing Editor: Cynthia Zonneveld Production Project Manager: Carol O'Rourke Senior Operations Supervisor: Diane Peirano Printer/Binder: BindRite Graphics, Robbinsville Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within text. Copyright © 2012, 2009, 2006, 2003, 2000 by Pearson Education, Inc., publishing Prentice Hall. All rights reserved. Manufactured in the United States of America. This publication is protected by Copyright, and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. To obtain permission(s) to use material from this work, please submit a written request to Pearson Education, Inc., Permissions Department, One Lake Street, Upper Saddle River, New Jersey 07458, or you may fax your request to 201-236-3290. Many of the designations by manufacturers and sellers to distinguish...
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...coordinated with other banks to alter their rates as well." During this period, Libor was maneuverer both upward and downward based "entirely on a trader's position," explains the London School of Economics' Ronald Anderson. The banks are supposed to submit the actual interest rates they are paying, or would expect to pay, for borrowing from other banks. The Libor is supposed to be the total assessment of the health of the financial system because if the banks being polled feel confident about the state of things, they report a low number and if the member banks feel a low degree of confidence in the financial system, they report a higher interest rate number. In June 2012, multiple criminal settlements by Barclays Bank revealed significant fraud and collusion by member banks connected to the rate submissions, leading to the scandal. (Bride, 2015: 10) 4.4. WHAT BARCLAYS DID WRONG The Libor rate is used as the benchmark for trillions of loans, mortgages and financial products traded around the world. Barclays trades in these products, so in attempting to fix the Libor rate, they are rigging the market in its favour. As a result, they made bigger profits and traded at an advantage over others. But during the credit crunch, banks became concerned about lending to one another and the Libor rate rose significantly. Barclays Senior Management told staff to lie, saying that they could borrow at lower interest rates than they could, in order to show the bank in a better light than it actually...
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.... . . . . . . . . . . . 25 2.2 2.3 2.4 Dell Computer Corporation Evaluation of Client Business Risk Flash Technologies, Inc. Asher Farms Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Risk Analysis and Resolution of Client Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Understanding of Client’s Business Environment s e ct ion 3 Professional and ethical issues . . . . . . . . . . . . . . . . . . . . . . . 59 S o l u tio nS inc lu de d in t h iS Section 3.1 3.2 3.3 3.4 3.5 A Day in the Life of Brent Dorsey Staff Auditor Professional Pressures Nathan Johnson’s Rental Car Reimbursement Solving Ethical Dilemmas–Should He Pocket the Cash? Recognizing It’s a Fraud and Evaluating What to Do . . . . . . . . . . . . . . . . 63 The Anonymous Caller WorldCom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 The Story of a Whistleblower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79...
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..._________________________________________________________________________________________ Multi-lingual glossary (English, French, German, Italian and Spanish) Corporate Financial Reporting: a global perspective Co-authored by Hervé Stolowy and Michel Lebas Authors of the glossary: Eva Eberhartinger (Professor, Chair of accounting and tax management, University of Muenster, Germany), José Antonio Gonzalo (Professor of Accounting and Financial Economics, Department of Managerial Science, University of Alcalá, Spain), Michel Lebas (Professor, Department of Accounting and Management Control, HEC School of Management and Hanson Endowment Distinguished Visiting Professor, University of Washington, School of Business Administration, Seattle, WA, USA), Hervé Stolowy (Professor, Department of Accounting and Management Control, HEC School of Management), and Stefano Zambon (Professor of Business Economics, Faculty of Economics, University of Ferrara, Italy) Copyright Thomson 2002 Glossary – p. 1 List of abbreviations (A) Austrian German (D) German from Germany (ESP) Spanish from Spain (MEX) Spanish from Mexico (ARG) Spanish from Argentina (US) US English (UK) British English [Pension accounting] Terminology related to pension accounting [Deferred taxation] Terminology related to deferred taxation English absorption costing accelerated cost recovery system accelerated depreciation account account captions account form accountant accounting changes accounting decree accounting...
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