AUDIT QUESTION

Please elaborate you answer thoroughly! Thank you in advance!

A large international bank is experiencing bad publicity surrounding huge fraud losses in its foreign currency department. Accusations are being made in the press that a rogue trader blamed for the losses was operating outside the official bank 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 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. Discuss the control environment at this large international bank assuming the press reports are correct. Which parts appear to be most deficient?