=+As an internal auditor ofFirst Capone Bank, how would you respond to this change in policy?

E5-5 Internal controls Objs 2, 3 One ofthe largest fraud losses in history involved a securities trader for the Singapore office ofBarings 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 recog¬

nized firm overnight.