Jeremy Said:

Is this deception - what can I do?

We Answered:

It does sound a bit dodgy, and as you know only to well you should have done your homework more, but eh if you thought the person was above suspicion it is easy to be wise afterwards, don't beat yourself up too much.

Looking in from the outside I would say it should be clear to an auditor that the problems stem back to before your tenure in the post. Clearly you need extra resources and support. If I was in your shoes I think I would put my concerns in a formal report to your manager (leaving out the bit about feeling deceived) and put the ball in her court. You have had time to take stock, list the problems and suggest how it could be managed. If she chooses not to act, or you are blamed further down the line you have documented evidence that you did rightly assess the situation but that your manager choose to ignore your advice and has left you to flounder.

Are you in a union or could you copy any report to her manager or the board. You are a long time dead friend, it is not worth the risk to your health to drown in a situation not of your making. Good luck (geez how can I wish luck to a banker who has destroyed the western world as we know it :0) )