Where is Fraud Likely? – Part 12: Cooking the Books

Lawrence R. Beebe, CPA

In this series, we are discussing specific areas where fraud might be likely to occur within an organization and the steps management can take to detect and prevent fraud.

Cooking the Books isn’t What Julia Child was Doing

Cooking the books is fraud used to falsify the company’s financial statements.  It is often used to improve the earnings of a company by recording revenues that are either nonexistent or have not been earned by year end.  In recent […]

Where is Fraud Likely? – Part 3: Kiting

Lawrence R. Beebe, CPA, Principal

In this series, we are discussing specific areas where fraud might be likely to occur within an organization and the steps management can take to detect and prevent fraud.

Kiting Isn’t Child’s Play

Kiting is a very old scheme and is not as likely to happen as it once was, but any entity with multiple bank accounts should be aware of the possibility.  For kiting to work, an individual must have complete authority over two or more […]

Auditor Suspicions Lead to Investigation

John Merchant, CPA, CFE

Those who question the value of independent audits and investigations by certified public accountants and certified fraud examiners may wish to consider a court case recently initiated by the SEC.  On July 6, 2009, the SEC filed a complaint in United States District Court alleging that the former CFO of UCI Medical Affiliates, Inc., a public company based in South Carolina, had embezzled nearly $3 million from the Company.  The Complaint alleges that the embezzlement was […]

Madoff’s Auditor Charged With Securities Fraud

Lawrence R. Beebe, CPA, Principal

David G. Friehling and his firm,Friehling& Horowitz, CPAs, P.C., have been charged with securities fraud by the Securities and Exchange Commission in connection with audits of the financial statements of Bernard L. Madoff Investment Securities LLC.  The SEC charges that from 1991 through 2008, Friehling& Horowitz issued audit reports on the financial statements of Madoff’s company, indicating that the statements were fairly presented in accordance with generally accepted accounting principles, when in reality no legitimate […]

SEC Alleges Multi-million Dollar Fraud in Virginia

Lawrence R. Beebe, CPA, Principal

While Bernard Madoff dominates the financial news with his conviction for cheating investors out of billions of dollars by operating a Ponzi scheme, the SEC continues to investigate lesser known advisors who may have mirrored Madoff on a smaller scale.  The SEC recently filed charges against John M. Donnelly of Charlottsville, Virginia, accusing him of running a Ponzi scheme that defrauded as many as 31 investors out of $11 million.  The SEC alleges that Donnelly […]

Former SEC Chief Accountant Credits Auditors

John Merchant, CPA, CFE

CFO.com reports that Lynn Turner, former chief accountant of the Securities and Exchange Commission, credited financial statement auditors for contributing to the general decline in major financial statement frauds since the collapse of Enron and WorldCom.  Turner noted that auditors have stood behind fair value and tried to “get the numbers right”.  At the same time he criticized the Financial Accounting Standards Board for doing an abysmal job in standards setting, particularly with regard to rules […]