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

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’.