2 CPE Bernard Madoff Investment Securities LLC was the source of the largest financial fraud in US history. Madoff perpetrated a simple Ponzi scheme whereby older investors were paid with newer investor funds, thus providing the impression of actual investment returns. The extent of the losses related to Madoff’s Ponzi scheme has been estimated at $50 – $65 billion. Many are astounded to hear that Bernard Madoff Investment Securities LLC was audited by a CPA. Unfortunately, Madoff’s CPA apparently did not subscribe to the AICPA Code of Conduct as most of the rules contained in the code were ignored. What follows is a case study examining the conduct of Friehling & Horowitz CPA’s P.C., the CPA firm that audited Bernard Madoff Investment Securities LLC, within the context of the AICPA Code of Professional Conduct.
Topics covered:
- Madoff - Ponzi Scheme
- SEC Complaint
- AICPA Code of Conduct
- Joint Ethics Enforcement Program
Review Questions and Final Exam are completed under section "Review and Test".
Learning Objectives
- Recognize professional conduct expected of a certified public accountant and consequences of misconduct under AICPA guidelines.
- Recognize key components of the AICPA Code of Professional Conduct with regard to independence.
- Recognize the AICPA Code of Professional Conduct rules on confidential information and acts discreditable.
- Identify ethical safeguards as outlined by the AICPA.
- Recognize the AICPA Joint Ethics Enforcement Program and its disciplinary actions.
Last updated/reviewed: August 7, 2023
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29 Reviews (94 ratings)
Reviews
Anonymous
(Assurance Specialist)
I really liked this review. Ethics courses are much easier to review with powerful examples just as the Bernie Madoff case, which had such a big impact in our life, economy and culture. The course takes the Madoff case and explains all the ethical misconducts in detail. Well done!
Sydney Ziemba
(Accounting Manager at TGG Accounting)
It's still so wild to me that this happened. The fact that this firm had 1 CPA, only 2 employees total, somehow acted as if they were successfully able to audit a multi-billion dollar investment company, is an insane concept.
Laura Reames
(Owner at Reames CPA Services)
This was well done and interesting. It kept my attention and clearly explained the role and failures of the Madoff auditors. I hadn’t given much thought to the ancillary players who aided the fraud.
Corell Bradford
(Student at Wayland Baptist University)
“The staff was great. The receptionists were very helpful and answered all our questions. The room was clean and bright, and the room service was always on time. Will be coming back! Thank you so much.
Fidencio Salinas
(Truancy Officer at RGCGISD)
The course was fantastic! This review is excellent. With strong examples and PowerPoint to examine, such as the Madoff case, which had such a significant impact on our economy, and society.
Anonymous
()
Very interesting course! Great breakdown and comparison to the Code of Conduct. Definitely provides good reason for why ethics and codes of conduct in our profession are important.
Anonymous
(Accounting Manager)
The case study is interesting but a bit too obvious given the CPA did not perform any audit procedures. A more nuanced example may have been a better case study.
Anonymous
(Senior Accounting Spec)
Not only was this very interesting, but a nearly point by point example of how the involved CPA and his firm violated nearly every rule of ethics for CPAs.
Hans Doughtie
(Student at Wayland Baptist University)
Nice course! Helped me understand the content fully. However, I would like to take the exam again to fully understand and not just pass it.
Anonymous
(student)
i like the bernard madoff scandal because it is one of the biggest incidents in accounting, and audit history. so this one was fun to read
Anonymous
()
This course provides an understanding of the AICPA Code of Conduct and what constitutes a non-compliance with the AICPA Code of Conduct.
Anonymous
(Accountant)
The article was really interesting! It would have been nice to have videos, but being able to reference back to the article was helpful.
Jim Ahern
(Principal at AFM)
interesting to learn more about the Madoff case; good way to introduce some of the regulations (which could be dry otherwise)
Inna Shmukler
(Controller at Fornetix LLC)
A well-known case. I was very informative to see the analysis of this case in relation to the AICPA Code of condact.
Kali Garza
(Student at Wayland Baptist University)
the material presented was helpful and informative. However, I felt that quiz and exam were hard to understand.
Anonymous
(Internal Audit Manager)
Good overview and it was interesting to intertwine Madoff's case in this to keep the material relevant.
Bobbie Clerkley
(CFO at Resurrection Baptist Church)
Only two surprises... 1) no video assistance and 2) what was the outcome of the $7 billion owed?
Anonymous
(Private Wealth Advisor)
Great case study, thank you!! A great reminder of the necessary safeguards to have in place.
Anonymous
()
Great use of Madoff case for AICPA Code of Conduct - not seen it explained this way before.
Anonymous
()
Interesting and informative. Lots of detail interspersed with the regulations that apply.
Anonymous
(Associate Professor)
Liked breakdown of the case but contained too much verbatim from the code of conduct
Anonymous
()
course was easy to follow and more interesting way to understand the subject matter
Anonymous
(Grant Analyst)
It was short, but the reading material was long. I barely got through this course.
Anonymous
(Student)
All the reading is up to us, no lecture or insight from instructor/professor/CPA.
Monte Smith, CMA
(Chief Executive Officer at Gerding Companies, Inc)
Well-written and full of links to documentation for further study.
Anonymous
(Director Net Revenue)
Language was a bit hard to understand. Not much discussion included
Anonymous
(Student)
Enjoyed learning from a past example of when ethics were ignored.
Anonymous
(Staff Accountant)
A lot of information that goes far past the Madoff case.
Anonymous
(Risk and Control Manager)
Interesting case study describing a high profile case
Prerequisites
Course Complexity: Intermediate
No advanced preparation or prerequisites are required for this course.
Education Provider Information
Company:
Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA
95113
Contact:
For more information regarding this course, including complaint and
cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to
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Course Questions and Answers1 Question
Joe HelstromCPA
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What is the course number for" Bernard Madoff Investment Securities' Auditor: A Case Study in the AICPA Code of Conduct"? My state board requires it for reporting purposes. All the other CPE places put the course # on the certificate which is very helpful.