Attestation Update – A&A for CPAs. – Page 68 – Technical stuff for CPAs providing attestation services.

On capital punishment of organizations – Arthur Andersen and Penn State – corporate death versus mild sanctions

Jim Peterson explores the hesitancy our society has to carry out capital punishment on seriously misbehaving organizations. See his post, Of Crimes and Punishments – And Where Shall Justice Be Found?

He starts by pondering a question from a retired Arthur Andersen partner. The retired CPA wonders if the conviction of a mid-level manager in the Roman Catholic Church who hid abuse by priests will result in the indictment of senior-level executives or the church itself. The painful irony felt by the questioner is that Arthur Andersen was indicted and put out of business because of the bad behavior by one partner and his audit team in following the bad advice of their general counsel.

Essentially, the penalty for Arthur Andersen was capital punishment. Not so for the Catholic Church, Penn State football, or a long string of financial institutions in the news during recent years.

The question is when does our society carry out capital punishment against misbehaving organizations?

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On capital punishment of organizations – Arthur Andersen and Penn State – corporate death versus mild sanctionsRead More »

On capital punishment of organizations – Arthur Andersen and Penn State – corporate death versus mild sanctions Read More »

Working draft of the NPO audit and accounting guide expected in August

Leave a Comment / Accounting / Jim Ulvog

(cross-post from Nonprofit Update.)

The 7-26-12 edition of CPA Letter Daily says a working draft is expected soon:

The AICPA’s Financial Reporting Executive Committee is expected to issue a working draft of the accounting content of a proposed Audit and Accounting Guide, Not-for-Profit Entities, on Aug. 15

If you work in the financial area of the NPO world, this would be something to watch for. The revised guide has been in development for a number of years.

Working draft of the NPO audit and accounting guide expected in August Read More »

Initial analysis on faked financial statements

2 Comments / Audits, Fraud / Jim Ulvog

If you are an auditor, you really ought to be watching the story unfolding in New Mexico about the allegedly faked 6-30-11 financials for the New Mexico Finance Authority. Is it okay to drop the alleged when the person submitting the report said it isn’t the real audit report? My previous posts here and here.

If you want an evaluation of the quality of the forgery, you can check out Jim Scarantino’s post on July 19: The Cheap Forgery That May Cost New Mexico Millions. He has an extended discussion of the report. He’s talking photocopies and whiteout.

One more thing to watch for is the idea of photocopies being present when originals are expected. Look at the visual quality of the accountant’s reports. Typically those would be printed originals, if not electronically generated. In the copy on the web site, the accountant’s reports appear to be a second or third generation copy. The pages in the basic financials are not as ‘dirty’ as the opinion. That should be odd to an auditor’s eyes.

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Initial analysis on faked financial statementsRead More »

Initial analysis on faked financial statements Read More »

Accountant who allegedly fabricated audit report appears on camera

2 Comments / Audits, Fraud / Jim Ulvog

The New Mexico State Auditor claims audited financial statements for the New Mexico Finance Authority were fabricated in their entirety. I mentioned this in my previous post, Faked audit report in New Mexico.

This has been the cause of an uproar in Santa Fe and Albuquerque, as you can imagine. The local news station, KOB 4, found the controller allegedly behind the fiasco at his home on Friday. They spoke to him before the investigators did. You can read KOB’s report at NMFA Comptroller on bogus audit: Not malicious.

His explanation at the moment is that he prepared a draft report for the audit. This would be fine up to a point. The concept is that the client ought to prepare the financial information, including all necessary notes. Even the single audit schedules ought to be prepared by the auditee.

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Accountant who allegedly fabricated audit report appears on cameraRead More »

Accountant who allegedly fabricated audit report appears on camera Read More »

Audit fees for private companies started increasing in 2011

Faked audit report in New Mexico

4 Comments / Audits, Fraud / Jim Ulvog

Wow. Check out the report in the Albuquerque Journal – State finance authority audit faked, officials say. The New Mexico Finance Authority issues bonds to raise funds and then loans the money to public entities.

The state auditor says the audited financial statements for the agency’s year ended June 30, 2011 were fabricated. From the Journal’s article:

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Faked audit report in New MexicoRead More »

Faked audit report in New Mexico Read More »

Q: If LIBOR fiasco is a world class scandal, then where were the regulators? A: They knew all along.

2 Comments / Accounting / Jim Ulvog

We are now supposed to think that cooking the LIBOR index is the crime of the century. Yet U.S. and U.K. regulators knew of it in 2007 and 2008. If this is now considered a horrid crime, then why didn’t the regulators do something about it at the time?

The nonchalant reaction of the New York Fed is described in The Wall Street Journal’s editorial New York Fed to Barclays: “Mm hmm”.

Here’s what the Fed says they did:

In June 2008, Timothy Geithner, then head of the New York Fed, sent Bank of England Governor Mervyn King two pages of recommendations for “Enhancing the Credibility of LIBOR” and wrote that he would be “grateful if you would give us some sense of what changes are possible.”

This is not exactly the language of a regulator who has just uncovered what we’re now told is the financial crime of the century.

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Q: If LIBOR fiasco is a world class scandal, then where were the regulators? A: They knew all along.Read More »

Q: If LIBOR fiasco is a world class scandal, then where were the regulators? A: They knew all along. Read More »

SEC report that doesn’t address when to implement IFRS reads more like a position paper against IFRS

3 Comments / Accounting / Jim Ulvog

As expected, the SEC staff released a report on IFRS that does not contain a recommendation on whether to adopt IFRS or when to adopt.

The report is called Work Plan for the Consideration of Incorporating International Financial Reporting Standards into the Financial Reporting System for U.S. Issuers.

I have not read the full 137 page report, and don’t plan to. As I browsed the first 28 pages, what struck me is the large number of observations in the report that are actually fairly major criticisms of IFRS and reasons not to adopt it.

Here’s a small number of examples:

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SEC report that doesn’t address when to implement IFRS reads more like a position paper against IFRSRead More »

SEC report that doesn’t address when to implement IFRS reads more like a position paper against IFRS Read More »

More info on the financial condition of the city of San Bernardino

Select paragraphs of criminal complaint in Peregrine fiasco

1 Comment / Fraud / Jim Ulvog

The Wall Street Journal has a copy of the criminal complaint filed against the owner of Peregrine Financial Group. You can find it here.

I’m going to take a shot at developing a fraud case study of the Peregrine fiasco and try to do so in real-time.

Here is what I know so far:

Post 1 – Regulators apparently deceived in PFGBest fraud
Post 2 – Peregrine CEO charged – allegation is he ran fraud for 20 years.

I will pull in some of the info provided publicly by the FBI. This provides more depth of interest to CPAs that is currently visible in the media.

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Select paragraphs of criminal complaint in Peregrine fiascoRead More »

Select paragraphs of criminal complaint in Peregrine fiasco Read More »

Peregrine CEO charged – allegation is he ran fraud for 20 years

2 Comments / Fraud / Jim Ulvog

The Wall Street Journal article Peregrine CEO Arrested says that the suicide note left by Mr. Wasendorf claims to have been running a fraud for 20 years.

The article reports Mr. Wasendorf was arrested and arranged on Friday, July 13.

In just one paragraph, here is a very rough outline of the length and depth of the alleged fraud:

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Peregrine CEO charged – allegation is he ran fraud for 20 yearsRead More »

Peregrine CEO charged – allegation is he ran fraud for 20 years Read More »

Regulators apparently deceived in PFGBest fraud

2 Comments / Fraud / Jim Ulvog

Things are falling apart faster on the PFGBest fiasco than I can read the news articles. So I’ll take this on just one bite at a time.

The Wall Street Journal reports in their article, Red Flags at Failed Broker, that the regulators of Peregrine Financial Group, Inc. were successfully mislead by the company. Far more details will follow in the near future, I’m sure. Perhaps every few hours.

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Regulators apparently deceived in PFGBest fraudRead More »

Regulators apparently deceived in PFGBest fraud Read More »

Perhaps IFRS can be postponed to death

2 Comments / Accounting / Jim Ulvog

The Wall Street Journal reports that the SEC staff will have a report in a few weeks addressing adoption of IFRS for the US. The report won’t have a recommendation on whether or how to make the switch.

The expectation is a final decision has been pushed off until at least 2013.

The article is Delay Seen (Again) for New Rules on Accounting, by Michael Rapoport.

For more detail that will actually tell the story better for us accountants, check out Tom Selling’s post, What the Chief Accountant’s Resignation Means for the Future of IFRS in the U.S., posted two days before the above article from the Wall Street Journal.

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Perhaps IFRS can be postponed to deathRead More »

Perhaps IFRS can be postponed to death Read More »