Review the Madoff Securities case
Write a four to five (4-5) page paper in which you:
1) Determine the regulatory oversight that was in place while the Ponzi scheme was operating, and speculate on the main reasons why they did not discover the scheme.
2) Assume you are an auditor for a firm that had $10 million dollars invested in Madoff Securities.
3) Determine the fundamental audit procedures that you should have applied to this investment.
4) Predict the way in which a peer review of Friehling and Horowitz would have uncovered the scheme related to Madoff Securities.
5) Pretend you are Harry Markopolos and suggest one (1) strategy, different from that of the case study, to expose the potential fraud. Provide a rationale to support the suggestion.
6) Analyze the role of the audit committee for Madoff Securities in regard to the discovery of Ponzi scheme, and suggest one (1) action the audit committee could have taken in order to prevent or detect the fraud. Provide a rationale to support the suggestion.
7) Use at least two (2) quality academic resources in this assignment. Note: Wikipedia and similar type Websites do not qualify as academic resources.
I HAVE PROVIDED THE CASE STUDY FOR THIS PAPER!
CASE 3.1 Madoff Securities Bernie wanted to be richi he dedicated his life to it John Maccabee, longlimae rietal ofBernie Madoff Bernard Lawrence Madoff was born on April 29, 1938, in New York City. Madoff spent his childhood in a lower middle-class neighborhood in the Borough of Queer After graduating from high school, Madoff enrolled in the University of Alabama but trans ferred to Hofstra College on Long lsland, now known as Hofstra University, at the 1960, he graduated with a po- beginning of his sophomore year. Three years later litical science degree from Hofstra cording to a longtime friend, the driving force in Madoff's life since childhood was to become wealthy Bernie wanted to be rich: he dedicated his life to it. That compelling force no doubt accounted for Madoff's lifelong fascinat on with the stock market. As a teenager, Madoff frequen ly visited Wall Strect and drcamed of becoming a "major player" in the world of high finance. Because he did not have the educational raining or personal connections to land a prime job on Wall Street after he graduated from college, Madoff decided that he would set up his own one-man brokerage firm. While in college, Madoff had accumulated a $5,000 nest egg by installing sprinkler systems during the summer months for wealthy New Yorkers living in e city s al ent suburbs. In the summer of 1960, Madoff used those funds to establish Bernard L. nvestment Securities LLC, which was typically referred to as Madoff Securi Mado e new business from office space that was provided to him ties. Madoff operate by his fatherin-law, who was a partner in a small accounting firm. For nearly five de cades, Madoff served as the senior executive of Madoff Securities. During that time the shy New Yorker who had an occasional stammer and several nervous tics would cumulate a fortune estimated at more than one billion dollars Taking on Wall Street Madoff's brokerage firm initially traded only securities of small over-the-counter com referred to as "perny stocks. At the time, the securi panies, securities commonly ties of most large companies were traded on the New York Stock Exchange (NYSE) The rules of that exchange made it extremely difficult for small brokerage firms such as Madoll's lo compete with the cartel of large brokerage firms that effectively con trolled Wall Street. Madoff and many other small brokers insisted that the NYSE's rules were anlicompetitive and inconsistent with a frec market economy. Madoff was also convinced that the major brokerage firms kept securities uansaction costs arti ficially high to produce windfall profits for themselves to the detriment of investors particularly small investor Because of Madoff's resentment of the major Wall Street brokerage firms, he made it his mission to "democratize" the securities markets in e United States while at the me time reducing the transaction costs of trading securitics. "Bemie was the king o democratization. He was messianic about this. He pushed to automate the [securities tradingl system, listing buyers and sellers on a computer that anyone could acc cabee, 'Mom and Dad and Ruth and Bernie," New York Magazine Gymag.com), 22 FehnEary 206 J. 2, S. Fishman, The Monster Mensch." New York Magazine (nymag.com), 22 February 09 125 CASE 3.1 Madoff Securities Bernie wanted to be richi he dedicated his life to it John Maccabee, longlimae rietal ofBernie Madoff Bernard Lawrence Madoff was born on April 29, 1938, in New York City. Madoff spent his childhood in a lower middle-class neighborhood in the Borough of Queer After graduating from high school, Madoff enrolled in the University of Alabama but trans ferred to Hofstra College on Long lsland, now known as Hofstra University, at the 1960, he graduated with a po- beginning of his sophomore year. Three years later litical science degree from Hofstra cording to a longtime friend, the driving force in Madoff's life since childhood was to become wealthy Bernie wanted to be rich: he dedicated his life to it. That compelling force no doubt accounted for Madoff's lifelong fascinat on with the stock market. As a teenager, Madoff frequen ly visited Wall Strect and drcamed of becoming a "major player" in the world of high finance. Because he did not have the educational raining or personal connections to land a prime job on Wall Street after he graduated from college, Madoff decided that he would set up his own one-man brokerage firm. While in college, Madoff had accumulated a $5,000 nest egg by installing sprinkler systems during the summer months for wealthy New Yorkers living in e city s al ent suburbs. In the summer of 1960, Madoff used those funds to establish Bernard L. nvestment Securities LLC, which was typically referred to as Madoff Securi Mado e new business from office space that was provided to him ties. Madoff operate by his fatherin-law, who was a partner in a small accounting firm. For nearly five de cades, Madoff served as the senior executive of Madoff Securities. During that time the shy New Yorker who had an occasional stammer and several nervous tics would cumulate a fortune estimated at more than one billion dollars Taking on Wall Street Madoff's brokerage firm initially traded only securities of small over-the-counter com referred to as "perny stocks. At the time, the securi panies, securities commonly ties of most large companies were traded on the New York Stock Exchange (NYSE) The rules of that exchange made it extremely difficult for small brokerage firms such as Madoll's lo compete with the cartel of large brokerage firms that effectively con trolled Wall Street. Madoff and many other small brokers insisted that the NYSE's rules were anlicompetitive and inconsistent with a frec market economy. Madoff was also convinced that the major brokerage firms kept securities uansaction costs arti ficially high to produce windfall profits for themselves to the detriment of investors particularly small investor Because of Madoff's resentment of the major Wall Street brokerage firms, he made it his mission to "democratize" the securities markets in e United States while at the me time reducing the transaction costs of trading securitics. "Bemie was the king o democratization. He was messianic about this. He pushed to automate the [securities tradingl system, listing buyers and sellers on a computer that anyone could acc cabee, 'Mom and Dad and Ruth and Bernie," New York Magazine Gymag.com), 22 FehnEary 206 J. 2, S. Fishman, The Monster Mensch." New York Magazine (nymag.com), 22 February 09 125
