DeVry University Ponzy Scheme Discussion

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DeVry University

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Provide a narrated power point or a Kaltura video with answers to these questions:

  1. Research recent developments involving this case. Summarize these developments in a bullet format. There are two news summaries in order to get you started
  2. Suppose that a large investment firm had approximately 10 percent of its total assets invested in funds managed by Madoff Securities. What audit procedures should the investment firm's independent auditors have applied to those assets?
  3. Professional auditing standards discuss the three key "conditions" that are typically present when a financial fraud occurs and identify a lengthy list of "fraud risk factors." Briefly explain the difference between a fraud "condition" and a "fraud risk factor" and provide examples of each. What fraud conditions and fraud risk factors were apparently present in the Madoff case?
  4. In addition to the reforms mentioned in this case, recommend other financial reporting and auditing-related reforms that would likely be effective in preventing or detecting frauds similar to that perpetrated by Madoff.

DONT FORGET HOW TO PUT THE REFS AT THE END OF END INDIVIDUAL QUESTION

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Explanation & Answer

Kindly find attached the final copy of your assignment ahead of the deadline. Please review and complete. Thank you

Madoff Case
Auditing

Question 1
• Madoff was arrested in 2008 after confessing to his sons that his business
was a Ponzi scheme
• His business begun in 1960s and had grown to be a big fifty billion dollar
firm
• He operated by replacing lost investments with cash from new investors
• His scheme became know after failing to provide the requested seven billion
dollars by investors.
• In 2018, he was doing his 150 years prison sentence in medium security
federal prison.
• Madoff told Scott that running the Ponzi scheme was challenging
• Prosecutor Lit faced challenge in collecting evidence in a short time
• Fifteen employees were convicted for falsifying records

Question 2
• The nature and also amounts of liabilities, transactions, and assets
executed
• Specific risks providing a possibility of misstatement of materials to
firm’s consolidated financial statements
• The investment materiality

Question 3
Conditions of Fraud
• Opportunities- circumstances that encourage fraud
• Rationalization- existing ethical values allowing people to commit
fraud
• Pressure- conditions forcing one to commit fraud
• Examples; Madoff’s need to maintain rich life, required high returns
to investors, and lack of proper monitoring controls

Fraud risk factors
They are the conditions encouraging one to commit fraud
Example; Madoff’s firm experienced high competition with its
decreasing margins

Question 4
• Conducting a detailed research on the firm to invest in and its owner
to determine their legibility
�...

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