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Case 5.7

Auditing Cases: An Interactive Learning Approach (4th Edition)

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Case 5.7 – Societe Generale [1] [a] control environment – consists of the actions, policies and procedures that reflect the overall attitudes of top management, directors and owners of an entity [b] segregation of duties – also known as the separation of duties; contains four general guidelines to aid in the prevention of both fraud and errors; four guidelines are separation of the custody of assets from accounting, separation of the authorization of transactions from the custody of related assets, separation of operational responsibility from record-keeping responsibility, and separation of IT duties from user departments [c] restricted access – this makes it so a person within a company cannot single handedly commit fraud; having restricted access provides a system of checks and balances so potential fraud can be caught [d] preventative and detective controls – steps that are taken before some emergency, loss or problem occurs; includes the use of alarms, locks and segregation of duties [e] design and operating effectiveness – the evaluation of whether controls are designed and put into place in order to prevent or detect material misstatements in the financial statements; operating effectiveness tests the design [2] I feel that the tone of Societe Generale was kind of like every-man-for-himself. Top traders seemed to look down on lower-level traders instead of encouraging them, and lower-level traders were willing to do just about anything to get noticed. I feel like
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Case 5.7 - Case 5.7 Societe Generale[1[a control...

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