Bernard Madoff Investment Securities LLC was the source of the largest financial fraud in U.S. history. Madoff perpetrated a simple Ponzi scheme whereby older investors were paid with newer investor funds, thus providing the impression of actual investment returns. The extent of the losses related to Madoff's Ponzi scheme has been estimated at $50 to $65 billion.
Many are astounded to hear that Bernard Madoff Investment Securities LLC was audited by a CPA. Unfortunately, Madoff's CPA apparently did not subscribe to the AICPA Code of Professional Conduct as most of the rules contained in the code were ignored. What follows is a case study examining the conduct of Friehling & Horowitz CPA's P.C., the CPA firm that audited Bernard Madoff Investment Securities LLC, within the context of the AICPA Code of Professional Conduct. The course covers the actual Madoff Ponzi scheme, the SEC complaint, the AICPA Code of Professional Conduct, and the Joint Ethics Enforcement Program.
Upon successful completion of this course, participants will be able to:
- Recall pertinent facts related to the Bernard Madoff case and the actions of his accountant, David Friehling
- Identify rules and regulations violated by David Friehling, noting how said rules would have prevented such a fraud had they been followed
- Note the requirements contained in the AICPA Code of Professional Conduct
- Note the role of the Joint Ethics Enforcement Program, including the steps in the complaint process, investigation procedures, and automatic disciplinary actions
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