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Ohio University Beta Alpha Psi Awards Banquet Gary Zeune, CPA The Pros & The Cons 10356 Wellington Blvd, Suite D Powell, OH 43065 Phone614-761-8911 Fax206-202-0880.

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Presentation on theme: "Ohio University Beta Alpha Psi Awards Banquet Gary Zeune, CPA The Pros & The Cons 10356 Wellington Blvd, Suite D Powell, OH 43065 Phone614-761-8911 Fax206-202-0880."— Presentation transcript:

1 Ohio University Beta Alpha Psi Awards Banquet Gary Zeune, CPA The Pros & The Cons Wellington Blvd, Suite D Powell, OH Phone Fax

2 © Gary Zeune, CPA Satyam Computer Services 1.Satyam = India’s Enron 2.4 th largest Indian IT outsourcing firm 3.Fake cash balance of ________ 4.Reported employees 53,000 Actual _________ 5.6,400 Satyam employees quit 9/08-3/09 6.Others arrested: CFO, 3 in finance 7.Served 1/3 of Fortune 500 Ramalinga Raju Founder+CEO $1+ billion 40,000

3 © Gary Zeune, CPA Satyam Computer Services Audit Partners S. Gopalakrishnan, left, and Srinivas Talluri, were arrested on charges of criminal conspiracy, cheating, forgery, falsification of accounts and causing the disappearance of evidence.

4 © Gary Zeune, CPA Firm Vice Chairman 1.Thomas Flanagan, 30 year partner 2.Filed lawsuit October puts and calls trades January 2005 – clients and advisory partner on 7 5."The independence policy is really the most important thing to this business. If you're not independent then you're not going to be an auditing firm," [firm attorney Paul] Lockwood said, noting the collapse of Arthur Andersen

5 © Gary Zeune, CPA Bernie Madoff 1.$50 Billion 2.30 years 3.NASDAQ 4.Affinity fraud 5.Feeder funds 6.Exclusivity

6 © Gary Zeune, CPA Bernie Madoff’ “Auditor” 1.Securities fraud, aiding and abetting investment advisor fraud, filing false reports with SEC 2.Lied about performing audits to avoid peer review 3.Possible sentence of 105 years 4.$2.5 million bond 5.Prosecutors going after people who didn’t know but didn’t do their jobs and/or lied 6.Watch his arrest at 1.Click Videos, Fraud, scroll to Bernie Madoff

7 © Gary Zeune, CPA RCI Uses Illegal Workers 1.RCI national janitorial services 2.Grand Traverse Resort and Spa; House of Blues; Planet Hollywood; Hard Rock Café; Dave and Busters; Yardhouse; ESPN Zone; China Grill 3.$54 million billings 2001 to Evaded $18.6 million in various Federal taxes 1.63% operating expenses 2.37% lifestyle

8 © Gary Zeune, CPA RCI Uses Illegal Workers 1.Christina Flocken, comptroller 2.Pleaded guilty to… 1.Conspiring to defraud the United States 2.Harboring illegal aliens. 3.Financial forfeiture of $1.5 million

9 © Gary Zeune, CPA Partner False Sign-Off 1.Stephen Nardi, Philly assurance practice director 2.Technical guidance, scheduling and assignment of personnel, directly supervised most audit managers, influenced promotion decisions 3.Assigned audit manager Anne Marie Fitzpatrick to Hemispherx Biopharma’s 2004 audit 4.She completed planning then Nardi stopped her Hemispherx work and assigned her to another client 5.Field work was completed without ___________ and was never _________ as required by firm ________ supervision reviewedpolicy

10 © Gary Zeune, CPA Partner False Sign-Off 1.Nardi authorized release of _________________ which was included in the company’s _________ 2.QC partners announced routine inspection and Hemispherx had been selected 3.Pre-QC Review of the file disclosed ______________ 4.Nardi told Fitzpatrick to ______________________ 5.Nardi has been barred from public accounting but can petition after 1 year 6.Fitzgerald was censured and resigned report Form 10K lack of initials on work initial, sign and backdate

11 © Gary Zeune, CPA False Sign-Off Survey Results Signing off on work when in fact __________________ Sample slice% % of CPAs who observed False Sign-off25 Auditing experience last 10 years27 Auditors with some Big 4 experience26 Auditors with only Big 4 experience25 Auditors with only Big 4 in last 10 years28 it wasn’t done

12 © Gary Zeune, CPA False Sign-Off 1.WHY COMMIT ______________________________ 2.WHAT TO SIGN OFF _________________________ 3.PAY AND PROMOTION _______________________ 4.WHY NOT DETECTED ________________________ 5.WHY _____________________________________ 6.HOW TO MINIMIZE __________________________ Come in under budget Something not expected to change Keep client and boss happy Assume the work was done TRUST Audit the auditors

13 © Gary Zeune, CPA Judge Sentences 3 In Massive Tax Fraud….AP Headline Robert Pfaff Former tax partner 588+ yrs$3MMJailed John Larson Former tax manager 5710 yrs$6MMJailed Ray RubleFormer Attorney 636½ yrs$0Free on appeal Firm has signed a deal admitting its role in the tax shelter scheme. The firm avoided criminal prosecution by cooperating with authorities but was fined $456 million, including $128 million in forfeited fees from sales of the shelters.

14 © Gary Zeune, CPA Judge Sentences 3 In Massive Tax Fraud….AP Headline 1.Set up own firm 2.Marketed BLIPS 1.Bond Linked Issue Premium Structure 3.$1+ billion phony tax shelters 4.Brazen tax shelter "that didn't pass the smell test from Day 1“ 5.7% of amount their clients saved Tip: People behave the way they’re ________________ paid to behave

15 © Gary Zeune, CPA Prof. Roger D. Blackwell 1.Ohio State multi-million $$$ marketing prof 2.Worthington Foods board member 3.Sale of company 4.Sentence 6 years and $1 million fine 5.Defense cost $____________ 6.Blackwell and his law firm suing each other 7.U.S. Supreme Court denies appeal 8.Blackwell profited $__________ Ethics tip: _____________________________ OSU picture 2007 convict 6 million ZERO/NONE/NADA Some people commit fraud for no $$$ gain


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