Integrated Case Study: MCTG Commercial Bank's Internal Control Review

This case study examines MCTG Commercial Bank, a Malaysian financial institution facing issues of missing customer funds, internal control weaknesses, and potential ethical breaches. The report analyzes the major problems, including deficiencies in the control environment, risk assessment, information and communication, control activities, and monitoring. It identifies weaknesses such as inadequate employee training, poor risk identification, and insufficient segregation of duties. The study recommends improvements like enhanced employee training programs, proactive risk identification strategies, segregation of duties, and the development of written policies and procedures. Furthermore, the analysis emphasizes the importance of fostering a strong ethical culture within the bank to prevent fraud and improve customer trust and the bank's overall performance. The report provides a detailed assessment of the bank's internal control system and offers practical recommendations for the board to enhance the bank's operational efficiency and ethical conduct.

Integrated
Case Study

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. What are the major issues in this case study?.........................................................................1
2. What are the weaknesses in the bank’s internal control?........................................................2
3. Explain the possible ways for improvement and recommendation to the members of the
Board...........................................................................................................................................5
4. To what extent is ethical attitude being practised in this organisation?..................................6
CONCLUSION................................................................................................................................7
REFRENCES...................................................................................................................................8

INTRODUCTION
Banking services refers to various activities by which bank help customers such as
operating accounts, transferring money, selling of foreign currency,paying standing orders and
many more. When a bank operate there functions they face various issues and problems relate to
handling customer, money transactions, fraud, loss of money and so on (Couture, 2012). This
report is based on MCTG commercial bank which is established in 1988. It is one of the leading
and famous bank of Malaysia. Its major operations and functions are borrowing, lending and
investing funds into investments which is profitable. They operate there business operations and
functions in both local and abroad. According to case study currently they are facing issue of
missing of money in back account of three customers and they are not able to identifying reason.
This report include topics like major problems in respect of case study, weakness of bank's
internal control and how they can improve or overcome this situation. Along with this it explain
ethical attitude which is practised in respective bank.
MAIN BODY
1. What are the major issues in this case study?
This case study is based on MCTG commercial bank which is famous and leading bank
of Malaysia. Which is establish in 1988 and conduct activities or functions like borrowing,
investing and lending capitals and funds that seems profitable as well as beneficial. They offer
there banking servicies activities to local and abroad residency. Headquarter of MCTG
commercial bank is in Kuala Lumpur and they are conducting there busienss through 24
branches throughout Malaysia (Lipton, 2014). Respective bank is rapidely expanding there
customers bases by using attracting services and products, conducting traditional credit system,
do tarding, provide insurance and many more. There various role and responsibilities of MCTG
commercial bank, some major of them are mentioned below:-
 Analysis and conduct activities as well as data which help them in obtaining facts, reports
and figures.
 Evaluate and develop new or improve proposal of lending, negotiating terms use for
communicate with customers and clients.
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 Visit and communicate customers and organize meeting or conferences with them and
other professionals in order to enhance profitable ratio as well as customers base.
 Train and support staff and employees for improving there performance on continuous
basis.
While operating and conduct business activities MCTG commercial bank face various
issues and problems which affect there profitability ratio and loyalty of customers. So barnch
manger Mr. Hassan conduct meeting with employees to identify root cause fo reasons. Then
accordingly they try to develop strategiues which will help them in resolving respective issues.
The major issue which is face by MCTG commercial bank is that there 3 customers or clients
complain that they money is missing form there bank account. Aong with this there are several
issue which is also related to defiance of there business ethics and international fraud which is
conducted by MCTG commercial bank employees (Kumari and Pattanayak, 2017). They are also
facing issues related to internal control systme and ethical codes. Due to this respective bank is
facing reduction in profitability ratio, customers bases and loyality of clients get also reduce.
For identifying appropriate root cause of issue why clients of MCTG commercial bank
missing money from account they condut evoluation and analysis of internal control system.
Such as control environment, risk assessment information and communication, control activities
as well as monitoring. They find that in there internal control system there are some issue due to
which they are notr able to identify appropriate cause of situation. So to resolve issue they can
prove training to employees, appoint other team of professionals who will evaluate issues of
missing money from bank account of MCTG Commercial Bank.
2. What are the weaknesses in the bank’s internal control?
Internal control related to tool and techniques which is adopt by a bank in order to
manage operations and functions in effective and efficient manner. Moreover by this they able to
avoid various serious issues like overspending on ineffective work, faliure of operations,
violations of legilations and regulations and many more (Snedaker, 2013). Process of internal
control of an organization is get influenced by companies members like Board of directors,
management and other personnels.
For appropriate conducting of safe and sound banking business operations and functions
banks should develop as well as maintain effective internal control. When banks didnot develop
and maintain internal control system they may face various issues or problems. This would
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directly and indirectly affect profitability ratio and customer base of bank. So senior manager of
banks must develop appropriate system, policies, procedures, rules, legilations, process and
many more in effective manner.
In respect of MCTG commercial bank which is facing issues related to there internal
control system due to which their is reduction in customer base, profitability and clients loyality.
Weakness of respective bank internal control is metioned below:-
Internal Control Description Weakness
Control Environment The respective bank adopt
holistic plan of attack which
include their ethics,
philosophy, operating style,
structure, method which is use
to assign role and
responsibility to employees
(Jasso-Aguilar and Waitzkin,
2015). Respective company
hire only one quality personnel
to manage responsibilities and
provide training to employees.
Major weakness of MCTG
commercial bank in respect of
control environment is that
they have only one trainer or
quality personnel for manaing
and training employees. Due to
which they not able to
effectively train employees.
Also they not able to mange
work in appropriate manner.
Risk Assessment It refers to function by which
manager of respective bank
able to identify risk which is
included in business
operations and functions. By
this head or senior of MCTG
commercial bank able to
identify situation which can
arise risk and then accordingly
they develop strategies and
plans in order to serve clients
Weakness of risk assessment
in MCTG commercial bank is
that they are not able to
identify risk in appropriate
manner which leads to resuce
in profit and customers base
(Stoddart, 2017).
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in effective and appropriate
manner.
Information and
communication
It refers to method and
techniques which is use by a
respective bank in order to
communicate with employees
and clients in effective manner
(Parnes, 2012). Along with
this by it they able to
communicate role and
responsibilities to staff.
Here weakness of information
and communication is that
employees, manager and
clients not able to
communicate in effective
manner due to which it directly
and indirectly affect to
profitability. Along with this
due to improper
communication they not able
to identify reason of missing
money form back account.
Control Activities It refers to activities related to
policies and procedures which
is use by MCTG commercial
bank for conducting particular
operations and task. By it they
also make assurance that bank
attain goal and objective in
effective manner, prevent from
any fraud and many more.
In respective company control
activities is consider as
weakness because due to
ineffective control activities
they are not able to identify
reason of fraud.
Monitoring In this manager and superior
of MCTG commercial bank
monitor quality and work
effictiveness of workers
(Gibbons, 2017). Then
accordingly they develop
strategies, plans, rules and
In respect of respective bank
case superior's monitoring is
not up to the mark which is
come up as a weakness. This is
so because they not able to
identify reason why there
clients facing issues of missing
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regulations in effectively
manner.
money from account.
3. Explain the possible ways for improvement and recommendation to the members of the Board.
MCTG commercial bank comduct analysis and evaluation of there operations functions,
internal comntrol system, policies and procedures and many more so that they able to identify
appropriate reason behind fraud or missing of money from bank account. When they conduct
evaluation they find that their are some weakness which affect there working, operations and
internal system. So accordingly it can be recommended to members and senior authority that
they can use various methods like job rotation, develop right and appropriate culture and control
culture. Along with this they can create control on information system, identifying limiation and
overcome it, do inspections of working and operation, train employees according to need and
many more. By using these type of measures they able to improve and enhance respective bank
business ethics, fraud, ethical behavious and internal control system. Some major which can be
use by MCTG commercial bank in order to improve there internal control system are explained
below:-
 Train employees: By this manager or senior employees of an organisation conduct
training and development progrrammes which is required and essential at a workplace in
order to accomplish work in effective manner (Al-Khouri, 2012). For this senior manager
of MCTG commercial bank can arrange on the job training and off the job training which
is more essesntial for requirement. By this employers of respective bank able to conduct
there work in appropriate manner and they also able to adopt things or new trachnology,
law or regulations in effective ways. Along with this it will help employees and senior
manger in identifying root cause of issue why there 3 clients missing money from there
account.
 Identify Risks in Your Office: It can be recommended to respective company manager
to identify root cause of risk and accordingly then devlop strategies and plans. In this
senior or branch manager of MCTG commercial bank must idfentify risk and its reasons
so that they can develop rules and regulations in effective and appropriate mananer
(Barrington, 2015). This will help them in dealing with situation in effcient and proper
ways. Along with this when they adopt effctive rules, regualtions, policies, strategies and
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plans they able to attain there goal as well as objective in effective manner. They also
identify reason of fraud and improve business ethics, internal system, ethical behaviour
and many others.
 Ensure Duties Are Segregated: It refers to situation where a particular duty is conduct
and control by two or more persons. By this cross check of process can be done and then
there is less chance of fraud (Bagheri and Jahromi, 2016). If a compnay adopt and ensue
about segreation of duties they get major benefits like chnace of fraud get decreased
beacuse one particular task is checked by two or more persons. Along with this if a
company adopt this factors there is less chance of occurance of errors at a work place. So
senior or branch manger of MCTG commercial bank conduct segeation of work by
which their is reduction in the situation and occurance of fraud and error. This will help
respective banks in ensuring effectivness of work, enghance in profitability and
customers bases along with loyality.
 Develop Written Policies and Procedures: It is related to policies and procedures which
is develop at a workplace in order to conduct work in effective and appropriate manner. It
is responsibilities of branch manager and senior authority of MCTG commercial bank to
evaluate and understand situation of workplace and accordingly designa policies. By
which employees conduct work in effective manner and there is also less chance of
conducting fraud and errors. Along with this manager of respective company develop
policies and procedures accordiong to situation and convey those rules to employees or
staff sin written form. If respective bank develop as well as adopt appropriate polices and
procedures and communicate effectively to employees then there is less chance of
occurance of fraud and error at MCTG commercial bank.
4. To what extent is ethical attitude being practised in this organisation?
In MCTG commercial bank branch manager and senior authority develop ethical code of
ethics which include various internal control system. Such as control environment, risk
assessment, information and communication, control activities and monitoring. Control
environment is related to business ethics, structure, style, method and other which help manger,
employees and authority in handling cash deposits, sales of credit cards, mainting of returns and
reports in effective and appropriate manner (Al-Khouri, 2012). By risk assessment respective
banks able to identify and analysis risk situation which help them in developing strategies
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accordingly, MCTG commercial bank employer use this for record accounting transactions.
Moreover respective banks adopt information and communication to convey and gather
information and data in effective and appropriate manner. This will help MCTG commercial
bank to conduct work or task in proper manner in order to attain goal and objective. Along with
this branch manger and senior authority at MCTG commercial bank implement control activities
which is use to direct, guide and control employees or staff so that they conduct work in proper
manner in order to attain goal (Couture, 2012). This will leads to reduction in fraud situation,
condcut activities in appropriate manner, authorization of physical control and many more. At
last they adopt monitoring through which senior authority monitor and asses policies and
procedures which is conducting at MCTG commercial bank. For this they hire internal auditors
that review internal control system of company and identifying staff are working or conducting
there work in appropriate manner or not. Then accordingly senior authority and branch manager
develop strategies, policies, procedures, rules and regulations and plans in order to attain goal
and objective in effective and efficient manner. When MCTG commercial bank conduct and
manager these ethical and internal control system they face some limitation or bariers which
leads to major issues which they are facing. That is 3 clients of respective bank complain that
their is missing of money from there bank account even when they didn't do withdrawal form
last many months. Managers finds that there are vasrious limitation in coducting these factors
like they have only one professionals to train employees and conduct analysis. Along with this
they also not able to identify appropriate risk situations due to this they not able to take actions at
effective time.
CONCLUSION
From the above discussed point it can be evaluate and conclude that when a bank operate
there business operations and functions they face various issues and problems. Such as loss of
money in account, fraud, leaking of clients or customers personal informations, front desk issues
and many more. These type of issues may be occur due to limitation of internal control of related
bank. For this it is responsibility and duty of head management of bank that they take care of
thinks which is conducting in bank. Such as they must hire appropriate number of security, adopt
security system which is effective and secure. Along with this bank must provide training and
development courses to there staffs so that they conduct there work in effective and appropriate
manner.
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REFRENCES
Books and journals
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governance system with the firms’ financial performance: A study of Indian commercial
banks. Journal of Financial Crime. 24(2). 223-241.
Snedaker, S. (2013). Business continuity and disaster recovery planning for IT professionals.
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alternative future in medicine and public health. Monthly Review. 67(3). 130.
Stoddart, B. (2017). At the end of the day’s play: reflections on cricket, culture and meaning.
In The imperial game. Manchester University Press.
Parnes, D. (2012). Modeling operational risk for good and bad bank loans. The Journal of
Operational Risk. 7(4). 43.
Gibbons, J. (2017). Policy recontextualisation: the proposed introduction of a multiple-choice
test for the entry-level assessment of the legal knowledge of prospective solicitors in
England and Wales, and the potential effect on university-level legal
education. International Journal of the Legal Profession. 24(3). 227-241.
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Digital Economy (IJIDE). 3(4). 1-28.
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and the case of the United Arab Emirates. International Journal of Innovation in the
Digital Economy (IJIDE). 3(4). 1-28.
Barrington, R. (2015). The Juvenile Court System: Your Legal Rights. The Rosen Publishing
Group, Inc.
Bagheri, M., & Jahromi, M. J. G. (2016). Globalization and extraterritorial application of
economic regulation: crisis in international law and balancing interests. European
journal of law and economics. 41(2). 393-429.
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