GreenTea Investment Ltd (GIL) is an investment bank. In 2015, GIL decided to purchase software for asset management from specialized vendors. This software allowed fund managers to run analytics on portfolios and run detailed simulations of market trends. GIL finally appointed a software house to customize and install the analytics system. The software house sent a team of ten system analysts to complete this project. The software house also trained two computer operators from GIL who would be responsible for minor issues and basic maintenance of the system. The software house would deal with any big problems. The development team took six months to complete the system and to integrate it into GIL’s existing accounting information systems. The two GIL computer operators took two weeks to test the new system to ensure compatibility.
GIL was very satisfied with the performance of the analytics system. After using the system for 18 months, GIL decided to upgrade the system. This time, GIL decided to use new raw market data feedto run simulations. This required significant changes to the source code of the analytics system. The two computer operators were able to implement the changes in the analytics system within a month. To speed up the process, the updating of system documentation was postponed to six months after using the new data feed. The two computer operators were deployed back to their original roles afterwards.
GIL is now thinking of not renewing the maintenance contract with the software house. Instead, it believes that the two computer operators will be able to perform system maintenance work at a lesser cost.
Required:
(a) Discuss the major internal control problems in GIL’s system development approach.
(b) With reference to the COBIT 5 Process Reference Model, suggest an appropriate control activity for each of the control problems that you have identified in (a).