Bernard Madoff Fraud
Bernard Madoff Fraud | Auditings & Due Diligence
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Bernard Madoff Hedge Fund Fraud Case Summary
Below is an excerpt from a recent Time article on the Madoff scandal from an auditors perspective. Many groups are pointing fingers at the auditing and due diligence firms which provided clean bills of health to Madoff's funds and connected feeder funds prior to discovering his fraudulent activities last week.
Here are two excerpts from this article:
Add the nation's largest accounting firms to the list of watchdogs and regulators that didn't catch the multibillion-dollar Madoff investment scam.Read the full article by clicking here.
KPMG, PricewaterhouseCoopers, BDO Seidman and McGladrey & Pullen all gave clean bills of health to the numerous funds that invested with Bernard Madoff and his asset-management firm. Clients say the large accounting firms signed off on statements that said the Madoff investment vehicles had billions of dollars in assets as well as an unlikely track record showing years of always-positive returns. The billions have vanished, and the impressive returns now look to have been made up...
Accountant Ronald Niemaszyk, whose firm, Jordan Patke & Associates, specializes in reviewing the books of hedge funds, agrees that in many cases it is common to rely on brokerage statements when auditing funds. But in this case, Niemaszyk says, the auditors most likely should have looked deeper. "You have to look at the auditors' work that you are relying on," he says. What's more, Madoff acted as his own broker instead of going through another firm.
Niemaszyk says it is up to auditors to decide how far they go to verify a fund's assets and trades. But the fact that Madoff used an unknown auditor and was reporting his own trades probably should have prompted the auditing firms to do more than usual to check that the fund's assets were indeed there.
One of the experts in this article, Ron Niemaszyk helps supports HedgeFundBlogger.com. You may read about his firm's services on his own website here.
Read more about the Madoff Case here:
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