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Starter… Starter… Starter…Again February 25, 2016

Posted by Audit Monkey in The Joy & Pain of Internal Audit.
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This is a continuation of my ‘Fire Starter’ posts but I promise that I won’t add any more.

I was reminiscing about that interview during the course of this week and I recalled a line of questioning that I haven’t commented upon. The Interviewer told me about an incident about a dealer who wasn’t booking trades. I can’t recall the exact detail but the Interviewer posed a question along the lines of “how would you investigate that?” I replied, “one would expect exception reports to throw out the relevant items or someone in Settlements to start to ask questions because a counterparty is demanding payment or a reconciliation doesn’t agree”. (Actually, I am being slightly fanciful when I say a ‘reconciliation doesn’t agree’ as the traditional weakness of Banks has been the failure to reconcile their suspense and nostro accounts completely but still.)

However, I didn’t stop there. I said “Well surely this is a disciplinary matter as it is tantamount to gross misconduct as the Bank doesn’t know its exposure? After all the incidents with Hayes, Kerviel and Adoboli, dealing outside of the book has to be dealt with accordingly”.

And you know the response? A rather nonplussed look from the Interviewer. I sensed that they had missed a trick and the dealer was still in situ. There’s a surprise.

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