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BankIt Financial Institution Essay Example

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BankIt Financial Institution

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BankIt Financial Institution. Report from the Board of Banking supervision showed that there was lack of authorization and approval of most of the activities that were carried out by Smith. This made him do all his activities undetected. According to Harrer (Harrer, 2008, p. 25) authorization and approval refers to the act of conferring legality, sanction or formal warrant. In any organization or company, the different levels of management should be issued with authority limits as to what they can commit or authorize the company’s resources. This depends on the position, integrity, competence and qualifications (Tseng & University of Maryland, 2007, p. BankIt management should have put measures on the authorization of most of the activities that were carried out by Smith since the Shangai branch was still under the management of the BankIt in London.

The authorization in BankIt should have been under a responsible person.The Board of Banking supervision also established that there was no segregation of duties in the BankIt Company under Smith. Segregation of duties according to Spencer and Pickett (Spencer Pickett & Pickett, 2001, p. 20) refers to the separation of the various roles and responsibilities, such that an individual cannot process and record complete transactions from the start to finish without being checked by someone else. It is stated that Smith held two positions, the head of settlement operations and Floor manager. These positions were supposed to be held by different people but the weak internal controls of the company allowed it. The two positions held by Smith allowed him to be able to hide his losses that the company had incurred because of his doings. Segregation of duties is always complimentary to the activities of another individual and that the doings of an individual should be subjected to independent inspection.The BankIt management failed to install the arithmetic and accounting controls within the accounting department. This procedure ensures that all the transactions are accurately and correctly recorded and therefore accuracy and correctness of the accounting records (Leitch, 2008, p. Smith would report to BankIt in London that he had incurred profits while the truth was that he had incurred losses. If this measure had been in place, he would not have been able to hide the losses that he had caused the company. Due to the absence of the accounting and arithmetic measures Smith was able to make gambles in the futures markets at BankIt Futures. BankIt Financial Institution.

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