GreenTea Investment Ltd (GIL) isan investment bank. In 2015, GIL decided to purchase software forasset management from specialized vendors. This software allowedfund managers to run analytics on portfolios and run detailedsimulations of market trends. GIL finally appointed a softwarehouse to customize and install the analytics system. The softwarehouse sent a team of ten system analysts to complete this project.The software house also trained two computer operators from GIL whowould be responsible for minor issues and basic maintenance of thesystem. The software house would deal with any big problems. Thedevelopment team took six months to complete the system and tointegrate it into GIL’s existing accounting information systems.The two GIL computer operators took two weeks to test the newsystem to ensure compatibility.
GIL was very satisfied with theperformance of the analytics system. After using the system for 18months, GIL decided to upgrade the system. This time, GIL decidedto use new raw market data feedto run simulations. This requiredsignificant changes to the source code of the analytics system. Thetwo computer operators were able to implement the changes in theanalytics system within a month. To speed up the process, theupdating of system documentation was postponed to six months afterusing the new data feed. The two computer operators were deployedback to their original roles afterwards.
GIL is now thinking of notrenewing the maintenance contract with the software house. Instead,it believes that the two computer operators will be able to performsystem maintenance work at a lesser cost.
Required:
(a) Discuss the major internalcontrol problems in GIL’s system development approach.
(b) With reference to the COBIT 5Process Reference Model, suggest an appropriate control activityfor each of the control problems that you have identified in (a).
