Madoff's Involvement In The Ponzi Scandal

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Recommended: Ethical issues surrounding accounting scandals

In today’s business world, an accountant and business owners should work together in order to become aware of scandals that occur in corporate companies. Since 2008 a series of corporate scandals and collapses have highlighted the importance of effective board oversight. One of the largest scandals in the corporate world was known as the Madoff’s Ponzi scheme. I will discuss the details of how an accountant allowed Maddoff to continue with his involvement in the Ponzi scheme. Since then, the board of accountancy is mandating that all corporate companies have good internal controls and getting more involved managing risks within the organization. This is becoming an essential role in maintaining a good system of internal control. David G. Friehling was the outside auditor for Bernard L. Madoff’s securities firm (BMIS) during the Ponzi scheme and also handled Madoff’s …show more content…

enabled the Madoff’s Ponzi scheme to go on for a long time by falsely stating that BMIS financial statements during an annual audit report time it was pursuant to Generally Accepted Accounting Standards, including the requirements to maintain auditor independence and perform audit procedures regarding custody of securities. According to the SEC’s complaint, David “did not conduct any audit procedures to BMIS internal controls.” He routinely failed to make inquiries about the paperwork or request backup documents. He also lied to the American Institute of Certified Public Accountants for years and denied that he conducted audit work so he did not have to go through the peer review process. He invested his and his family’s personal money into Bernard L Madoff Investment Company. Accountants aren’t allowed to audit broker-dealers with whom they are investing. They would be violating the code of Ethics, which state that an accountant or their families should not personally invest in a client’s company having the insight knowledge that it will turn a

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