Deloitte & Touche Baring Case Study

The audit firm of Barings, Deloitte & Touche failing to spot the activities of Nick Leeson when performed audit jobs. Deloitte & Touche, which audited the accounts of Barings Futures Singapore, fail to detect "window dressing" in the accounts and signs of unauthorised trading. Deloitte & Touche have not investigated further and revealed Leeson 's unauthorised trading even though BFS 's balance sheet showed the company had deposited more margins with the Singapore futures exchange than it had received from its customers as it was an indication of unauthorised trading. Although the audit team have it own responsibility to prevent the collapse of Barings but most of the fault for Barings ' collapse lay with the bank itself.

1. Internal control of a corporation must be improved to avoid the similar crisis to occur in the future. Failure to strengthen the internal control system will lead to collapse of the corporation. This is because a weak internal control will accumulate problem from the business operation and thus increase operation risk as a whole. This is a very common problem in the banking industry.

Example that describes the importance of internal control would be UBS. UBS is a Swiss bank that hit by an alleged rogue trading incident, admitted its internal controls had failed and the investment bank posted a pre-tax loss of 650 million Swiss Franc

Effective risk management requires a clear line of demarcation between the back office and the front office. Otherwise, there will always be temptation to fix the books to enhance performance. Without this separation, control systems that monitor risks will fail. Besides, senior managers ignored internal audit reports which again highlight the failure of its internal control. Therefore, risk management should be practices within the organisation in order to minimise the possibility of problems occurring at