What are general weaknesses in internal controls


Response to the following problem:

One of the largest fraud losses in history involved a securities trader for the Singapore office of Barings Bank, a British merchant bank. The trader established an unauthorized account number that was used to hide $1.4 billion in losses. Even after Barings' internal auditors noted that the trader both executed trades and recorded them, management did not take action. As a result, a lone individual in a remote office bankrupted an internationally recognized firm overnight.

What general weaknesses in Barings' internal controls contributed to the occurrence and size of the fraud?

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