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Chapter 7 Question 7 of 9 -/1 woo View Policies Current Attempt in Progress International Bank is experiencing bad publicity surrounding huge fraud losses in its foreign currency department. Accusations are being made in the press that the rogue trader blamed for the losses was operating outside the official guidelines with the tacit approval of senior management in the department because of the large profits made by this trader in previous years. The press claims that it was common knowledge in the foreign currency department that strict policies and procedures surrounding the size of trades and the processes for balancing out trades at the end of each day were not to be followed if the trader had verbally informed his supervisor of the trade. The press is also suggesting that the problems are not confined to the foreign currency department, and that poor attitudes are prevalent throughout all commercial departments at International Bank. (a) Which of the following apply to International Bank? (Several choices may be correct.) The risk assessment processes at International Bank appear to not have considered the potential problems in the foreign currency department, or at least not to have addressed them in full. O) The trader was acting alone and it was an isolated incident; therefore, there should be no impact on the audit. The information system should have produced reports to more senior levels of these irregularities. O) Control activities, such as performance reviews, should have detected the common occurrence of the risky trading behaviour, or alerted senior management to excessive profitability based on risky activity. O Transaction-level controls should have prevented or detected the large trades and unbalanced positions. O) The organization structure at International Bank was strong as the trader reported to the supervisor. O The control environment in the department reinforced integrity and ethical values and encouraged risk-taking in pursuit of profit. eTextbook and Media Save for Later Attempts: 0 of 3 used (b) The parts of this question must be completed in order. This part will be available when you complete the part above