Bernie Madoff was a successful business man until his business came crashing down. Madoff had a securities company by the name of Cohmad securities. This company was in the same building of Madoff 's firm and was designed to introduce new investors to Madoff 's investing firm. GAAP principles are put in place for companies to abide by so financial records are kept as accurate as possible. Not to mention, accurate financial statements provide information to future investors and shareholders to know the company financial standing.
The Full Disclosure Accounting Principle says that if a business have a close relationship with a party that does a significant amount of business with it is a violation of the principle. The Wall Street Journal Stated. …show more content…
Although Madoff was very sly in his conn efforts, if the people around him performed their duties, as they should, he may not have gotten away with the scheme for so long. It is incorrect to believe that just because the auditors were provided with false information, they are not also liable for overlooking any such discrepancies that should raise awareness. Even the Wall Street Journal made reference to the auditors, specifically stating that it is important when considering making an investment to look into the actual accounting firm that performs audits and whether they are a recognized firm with a strong reputation (Stewart) hinting that because Madoff’s books were audited by an unknown firm, allowing him to take control of the scene forcing the odds in his favor. From this, it can be inferred that if Madoff or one of his investors had gone with a reputable accounting firm to audit the material, discrepancies would surface, and therefore Madoff would not have gotten off with his scheme for so long. In fact, after the scheme had surfaced and the truth was revealed, Scott Berman, an attorney at Freidman Kaplan Seiler * Adelman made a comment with regards to the auditors. He stated, “The fact that they didn 't catch the fraud leads me to believe that they blew it” (Stewart).The auditors of these funds should have somehow at least tested or dug deeper into the material provided to them to discover whether or not the underlying assets were
The Full Disclosure Accounting Principle says that if a business have a close relationship with a party that does a significant amount of business with it is a violation of the principle. The Wall Street Journal Stated. …show more content…
Although Madoff was very sly in his conn efforts, if the people around him performed their duties, as they should, he may not have gotten away with the scheme for so long. It is incorrect to believe that just because the auditors were provided with false information, they are not also liable for overlooking any such discrepancies that should raise awareness. Even the Wall Street Journal made reference to the auditors, specifically stating that it is important when considering making an investment to look into the actual accounting firm that performs audits and whether they are a recognized firm with a strong reputation (Stewart) hinting that because Madoff’s books were audited by an unknown firm, allowing him to take control of the scene forcing the odds in his favor. From this, it can be inferred that if Madoff or one of his investors had gone with a reputable accounting firm to audit the material, discrepancies would surface, and therefore Madoff would not have gotten off with his scheme for so long. In fact, after the scheme had surfaced and the truth was revealed, Scott Berman, an attorney at Freidman Kaplan Seiler * Adelman made a comment with regards to the auditors. He stated, “The fact that they didn 't catch the fraud leads me to believe that they blew it” (Stewart).The auditors of these funds should have somehow at least tested or dug deeper into the material provided to them to discover whether or not the underlying assets were