An attorney for the city of Dixon filed a civil complaint this morning against the accounting firms that conducted the city's audit for the past 5 years. The complaint says that Samuel S. Card, CPA, P.C., and Janis Card Company, LLC, both located at 501 E. Fourth St. in Sterling, were negligent when their audits did not catch the $53 million prosecutors say the city's former comptroller misappropriated over two decades and should recoup the city's losses.
For now, former Dixon auditor CliftonLarsonAllen (fka Clifton Gunderson) is only listed as a "respondent in discovery," which will allow the city to request documents to decide if should sue anyone else. In other words: gird your loins, CLA.
Earlier this week we shared with you the latest analysis from KPMG that listed “key fraudster traits” and some of them seemed to describe a lot of the people you have worked or are currently working for. Things like “volatile,” “unreliability,” “unhappy,” and “self-interested” describes everyone I’ve ever been in around in the corporate world to one extent or another.
Since I was skeptical of this list, I asked Sam Antar what he thought of it. If you’ve been reading us for awhile, you’re familiar with Sam. If you’re new, I’ll do a quick refresher. Sam was the CFO of Crazy Eddie’s and was one of the masterminds behind one of the biggest financial frauds of the 1980s. While you (and I) were eating cereal in front of the TV on Saturday morning, Sam and his cousin Eddie were selling electronics and home appliances to our parents for rock bottom prices, while ripping off the government and investors for untold millions of dollars. In other words, the guy is a crook and knew/knows lots of crooks and knows their hopes (read: money), their dreams (read: money) all that crap (read: more money) and what they’ll do to get them. With that, Sam told me what he thought of KPMG’s analysis:
I was both a friendly and likable crook who treated my enablers real well as I took advantage of them. I treated my victims even better than my enablers, as I emptied their pockets. Old saying, “You can steal more with a smile, than a gun.” KPMG knows nothing about the character traits of criminals. They couldn’t even catch me as Crazy Eddie’s auditors. They trusted me!
So maybe – JUST MAYBE – you should also be wary of the client or co-worker that you really like because he/she takes you to lunch every day, gets you laid, takes you for rides in a fancy car or invites you to coke-fueled weekend ragers with seemingly no strings attached. Plus any client that has a viral marketing campaign should get an extra look:
The Association of Certified Fraud Examiners (“ACFE”) is bellyaching about the Garret-Adler amendment.
This is the measure that was passed by the House Financial Services Committee that would exempt small issuers (market cap less than $75 mil) from complying with section 404 of Sarbanes Oxley.
ACFE President, James Ratley:
“At a time when the economic downturn has heightened the risk of fraud for organizations large and small, it simply does not make sense to weaken accounting rules that are in place to protect investors,” he said in a statement. “The bottom line is that internal controls are one of the best fraud prevention tools for any organization to have in place. Providing exemptions for some public companies from the SOX 404 requirements only leads to an increased risk of fraud.”
Ratley very well may be right but let’s not forget who we’re talking about. Nobody — especially accountants — is going to stop the train wreck that is the U.S. Congress. Accordingly, the ACFE should embrace this as a golden opportunity to boost their membership and shout from the rooftops about the benefits of having a CFE certification.
Nobody seems to understand that it isn’t auditors’ job to detect fraud and most companies only seem interested in detective controls, so what’s the point? Get on this ACFE. It’s fraud awareness week after all. We shouldn’t have to explain this to you. ACFE Warns Not to Change SOX Rules [Web CPA]
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