Madoff’s Accountant Is Charged With Fraud

The root cause of the numerous number of corporate collapses which nations must address is that there have just too many qualified and unqualified shameless and greedy accountants who had gotten away with dual roles of performing pretentious audits for millions of businesses in the US to Asia beginning from the early eighties.

The effects of globalization and rapid changes in technology complicated further the fluidity of movements in transactions and loose recordings of vital information which millions of ordinary investors in the world today who remain ill equipped in monitoring their assets. In particular danger are the those who do not technological access or finance know how including surprise, surprise a great majority of Americans.

What market participants need in an overdose of healthy skepticism of all matters related to accounting transactions. If you do not protect your own significant interests, be assured that no one else will, and even if paid, the accountant in the majority of cases will only have time to humor you with limited information on the protection of your savings and if need be, enrichment of your investments. This incapacity to provide optimum information extends to markets advisors as in the case of fiascos in the likes of AIG.

The image of the accountancy profession is scarred beyond recognition with the numbers of high profile corporate scandals costing markets billions and harming industries across the globe. Yet accounting professional bodies world wide continue to espouse principles of ethics reflected in their voluminous guidelines and regulations, pride themselves competitively on the numbers in their ranks and lucratively governing members’ behaviours with impotent professional development courses. Adjunctively, dreaded behaviours condoned by some professionals in the forms of fee competition, sloppy supervisions and lackadaisical adherence to standards attach parasitically to lumbering failing markets. Without providing concrete final answers on the practices of qualified accountants members flouting the profession’s rules rapidly and suspending immediately any member’s work upon the slightest suspicion, world accounting bodies serve to invite further scrutiny and questioning of its real relevance in market functions.

True, markets are never perfect and cannot be expected to be so, but witness the denigration of the markets and corporations by the unscrupulous despicable greedy few, it is dreadfully disappointing to think if so called professionally trained thousands frontline practitioners with substantial years of experiences of this once noble profession armed with the best of accounting principles cannot withstand and overcome the onslaughts of corporate greed and financial debaucheries practices by financial deviants or commercial terrorists, who can you really trust to protect your investments?

Show anyone without accounting qualifications audit rules and regulations in any developed nation with a mature accounting profession, he or she will be astounded with the overwhelming amount of do gooder audit principles promulgated for all accountants to adhere to in their practices. Nothing less of the best in audit practice would have been expected of Freihling, yet his continuing practice as a CPA in showing disdain for objectivity in the audit and certification of the Madoff investments vehicle clearly show him to have low regard of the true and fair view principle that is ultimately the objective of a sound and credible audit exercise. When Friehling is found guilty with the weight of the evidence stacked against him, the appropriate sentence must send a deterrent message to future would be accountants; that the life savings of ordinary folks are not trinkets to be trifled with at accountants’ pleasures, particularly those who are CPAs. Sad to say, hundreds of thousands of books will continue to be ‘cooked’ or audited without proper applications of strict audit guidelines and accounting standards with the increased chaos in world markets and the experienced flouters fearlessly signing off on unreflective and inaccurate accounts until and unless market participants purge the accounting profession significantly of cowardly bean counters!  Until the heaviest of deterrence exist, hapless and naive market participants who will lose again in the tumultous and turbulent tsunamis of corporate scams and scandals can only hope for repentance, return of takings or divinely, retribution on sons of those who sin against the markets.

http://dealbook.blogs.nytimes.com/2009/03/18/madoffs-accountant-is-charged-with-fraud/#comment-215051

Fool’s Gold

As the story went, Emperor Madoff scoffed at ideas of the dukes and earls wishing to admire his chests of gold, Off with all patronages, and previous favors too, those who doubted his manners of old,

 Fools that some suspected they were, the nobles had no galls to question the Emperor’s usual brow beating, like ancient days, it was business as usual, It was fool’s gold, rumors swirl, their hearts took a pounding as the Emperor’s inner circles took to acting, hush all must be casual,

Fleeced again, the dames and baronesses could only weep and lament, for nothing must be said that would offend the royal Madoffs, Numeracy and alchemy were sacred royal knowledge, suffice the Emperor’s words were law, else it would be ‘heads off!’

‘The idea was really simple’, the wiry bean counter stammered when pressed by the lords at the inquisition. ‘I just put on different caps when I tagged the nobles’ gold and bagged it for his Highness, just as the court jester does with his dunce caps in transition.’

Bullish bailouts

Recent history of financial collapses since Enron show ordinary Americans to be real push overs when it comes to the threats from financial terrorists. Even with the best of many technologies and talents in non financial fields, the American people flounder helplessly in the aftermaths of financial scandals. America is the only nation capable of proclaiming itself to be bastion of sound financial systems and credible promulgator of financial regulations. However, recent events indicate that lawmakers and ordinary righteous American people continue to be held at ransom by shameless, unconscientious and greedy groups of insiders.

In this, the Obama administration must find its own invisible mettle and embark with the American people on a relentless pursuit of justice in the face of the tsunamis of financial scams, swindles and scandals. The American people need to show unpliable cohesion and outright fortitude towards unconscientious and shameless greedy recipients of any form of unjustified rewards. The American people must inform the world that nothing of the magnitude and nature of financial scams and advertent mismanagements can ever be tolerated again. It is insane and humiliating to see many ordinary non market participants in the world today go without meals much less jobs whilst a few thousand ‘best and brightest’ collusive insiders in complex webs of artificially created financial instruments hold the world’s financial systems ransom. Intelligence in the state of being of employment is not a stand alone attribute, it must come in a package that includes the requisite qualities of conscience and sense of responsibility. To ALL stakeholders which includes the public at large. The ‘best and brightest’ in any field must be reminded; to whom much is given, much is expected.

The frequent bailouts are consequences of clearly dishonest and incompetent acts; dishonest because knowledgeable employees should know that the funds are being advertently placed in the wrong funds possibly to enrich the employees first and incompetent, because carefully screened rightfully candidates engaged for sophisticated investment work simply cannot engage in investment activities that threaten the savings of investors! These consequences of repeated high profile corporate failures are similar to unprovoked attacks on peaceful economies and must be defended against with overwhelming means just as in a war since lives are consistently being harmed and possibly destroyed eventually. These threats should not be taken lightly, as the consequences of irresponsible management of the billions of shareholders have a cascading effect to ordinary common non stakeholders. Amongst the terms in all employment contracts is the requirement that employees must act in the best interests of the company and this implicitly includes stakeholders a condition even the ‘best and brightest’ cannot simply deny not knowing.

Mr. Obama with his own ‘best and brightest’ will not have all the credits for successfully thwarting the leakages of taxpayers funds into the hands of the greedy unrepentant few. Yet, neither should they take all the blame that come with the failure to stop the dispensing of gargantuan amounts of bonuses into the gutter at the expense of the needy majority.

Every responsible and conscientious individual on this planet has a role to play in overcoming the scourge of corporate greed that continues to plague the world’s economies similar to the responsibility to protect other assets of the world. With the best of brains in America, it is not only insulting to humanity throughout the world that livelihoods of millions can be strangled to oblivion at the hands of so few who believe that their lackaidaisical approaches to financial investments and management account for something whilst the great numbers of struggling householders and millions of job seekers face dark prospects of better lives ahead. Hence, Americans or not, all must join forces to overcome the seemingly insatiable greed that is prevalent in environments where cynical deception and unremitting schemings continue to be trade practices used to hoodwink ordinary investors just as they were employed to subdue the minds of ordinary millions in wars.

With thousands of brilliant lawyers in America, there is no excuse of not thwarting the thievery and repeated siphoning activities of identified undeserving traders. The solutions can be found in the faces of the young children who have parents and family members with lost jobs and homes lost. Name the undeserving recipients, shame them and fire them. To paraphrase Bush’s words, bring them on! No one is indispensable. Experience can be learnt and performances bettered by righteous people. History is filled with countless examples of financial hardships overcomed by conscientious and correct acts by responsible people who truly have the welfare of good ordinary folks at heart. Teach the world the real meaning of good old American ethics and shower real benevolence to those most, not reward stupidly over and over again, the acts of snakes in suits.

http://www.economist.com/finance/displayStory.cfm?story_id=13312913

Business schools are largely responsible for the U.S. financial crisis. Pro or con?

It maybe altruistic to expect all graduates to adhere or even respect moralistic philosophy when the issues of pay and perks come into play.
Yet it this very neglect of ethics by all concerned from Main Street to Wall Street that has continued to allow negligent irresponsible acts to recur resulting in the loss in values of many investors’ funds.
To allow executives strong leverage in dictating salaries and perks based on credentials is one thing; providing opportunities for self gain without proper checks and balances to the detriment of stakeholders is simply careless and deserving.
The rate at which blue chip companies had been failing for the last fifteeen years under the management of greedy and negligent stewards surely must be embarrassing to the discerning alma maters.
The time is nigh for renowned academic institutions from where Wall Street frequently head hunts to self examine their programmes on inculcation of moral values and leadeship principles be the source Socrates or Sun Tzu.
Having rules to revoke qualifications and licences thus removing opportunities for deviant executives to repeat careless and negligent performances in new companies are insufficient today. Boards of universities should provide means to enhance and maintain long term faculty contact with former graduates in Wall Street as a way to monitor conduct.
The recurrent cycles of management failures must at least point to some oversight on the part of prestigious universities which frequently pride themselves on their graduates’ successful employments in equally renowned financial institutions.
Board of universities must realise that dispensing qualifications comes with a degree of responsibility and realisation that universities too owe an indirect duty of care to the public because any qualification conferred is a pass on which employers allow entry into companies’ realms and ultimately access to stakeholders’ funds.
It should be a norm for universities to adequately inform the public of actions taken on former graduates should their graduates’ proven guilty of irresponsible, greedy, negligent incompetences and fraudulent activities in the markets. This should only act to further strengthen the credibility of the university concerned in addition to being a reflection of the university fulfilling its social responsibility.
Making executives aware of the possibility of being named and shamed provides an excellent safeguard against temptations to enrich themselves unethically. Surely, stakeholders should always have a right to know from which tree the rotten apples came from?

http://blogs.businessweek.com/debateroom/archives/2008/11/us_financial_cr.html

http://crimesandpunishment.blogspot.com/

http://www.npr.org/templates/story/story.php?storyId=98435438

Can auditors be sure a firm will survive the next 12 months?

http://www.economist.com/displaystory.cfm?story_id=12636345&mode=comment&intent=readBottom

The auditor does not need to be sure on any entity’s survivability because if the reader forgets, the auditor is ultimately not responsible for the company as a going concern which is the management’s. This concept is among a few other protectionist clauses available to auditors for the last fifty years or more.
The opinion of the auditor is reached on the basis of reasonable expectations that the management has conducted its financial transactions in a true and fair manner. In effect, the auditor assures nothing as far as the viability of the firm but support to an extent the credibility of the accounts concerned.
The crucial question bearing on us in the midst of repeated failures of entities for the last fifteen years from the dotcom bubble to this subprime crisis, is where should the role of auditors extend?
If the role merely ends upon giving an unqualified opinion if the firm ‘appeared’ to have fulfilled stringent audit criteria for that opinion including no awareness of any significant uncertainty; with no further onus on the auditors, what is the economic significance of the auditors in today’s changed market demographics and economic challenges?
Sure, many know that the auditors cannot act as ‘watchdog’ but obtain reasonable assurance that the financial statements have been prepared in accordance with strict accounting standards. Yet, it is precisely these statements that are relied upon by nvestors and other stakeholders.
And ironically, the colossal volumes of accounting and audit standards promulgated and exported by the US and UK institutions have not been adequately followed to protect the firms from misguided management of assets.
These institutions’ success appears to be in fostering highly demanded accounting education for export. A great majority of audit apprentices will be able to recite audit standards in toto based on their solid academic and practical training. But ask any auditor to stake paychecks and reputations on the line to assure the viability of firms as going concerns for even short term, the response will be most certainly condescendingly disapproving.
The damaged economic landscapes hurting the lower and middle class today demonstrate once again, that the stringent standards promulgated through a century of experience are by themselves merely legacies on paper when greed and ‘irrational exuberance’ become the orders of the day.
If the role of the auditor is not dissected and reengineered to enhance the responsibility of auditors, not only will vicious cycles continue but perhaps profession of auditors will become even more minuscule applying only to small firms; waiting to be relegated to pages of history when true automation of companies become a reality where firms submit their financial transactions direct to the exchanges to be ‘audited’.