Author Topic: Interesting Articles...  (Read 993842 times)

Offline aygart

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Re: Interesting Articles...
« Reply #5820 on: January 04, 2017, 08:55:47 PM »
I don't think there is any comparison between the two. Depositing a check multiple times is taking money out of someones account without their consent.
 Nordstrom sent them (or fatwallet) a check to deposit. That they sent it  due to cancelled orders should be their problem not the brother's.
that reasoning is great for a case where it wasn't intentionally manipulated.
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Offline churnbabychurn

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Offline Cheesecake

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Re: Interesting Articles...
« Reply #5822 on: January 05, 2017, 07:11:55 AM »

Offline efflpetzel

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Re: Interesting Articles...
« Reply #5823 on: January 05, 2017, 10:59:11 AM »

Offline henche

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Re: Interesting Articles...
« Reply #5824 on: January 05, 2017, 11:18:38 AM »
Crazy how smart people keep falling for this kind of thing & crazy how easy it is to get away with a ponzi scheme

So, how are they fooling the auditors?  Don't they have a big 4 accounting firm auditing them every year to report to the institutional investors?

Offline Menachem613

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Re: Interesting Articles...
« Reply #5825 on: January 05, 2017, 11:19:31 AM »
So, how are they fooling the auditors?  Don't they have a big 4 accounting firm auditing them every year to report to the institutional investors?

I doubt they would use the big 4.

Offline aygart

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Re: Interesting Articles...
« Reply #5826 on: January 05, 2017, 11:22:15 AM »
I doubt they would use the big 4.
Since we saw with Enron and Arthur Anderson that the big firms would NEVER let such stuff through.
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Offline churnbabychurn

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Re: Interesting Articles...
« Reply #5827 on: January 05, 2017, 11:27:28 AM »
So, how are they fooling the auditors?  Don't they have a big 4 accounting firm auditing them every year to report to the institutional investors?
They used cohn reznik . I'll post later how this audit was botched..

Basically, big 4 have internal valuation teams. Conhn reznik definitely also has some kind of "valuation specialist", but probably not one who knows anything at all about oil fields.

Even at big 4, utilizing valuation specialist does not mean that the auditors perform their own independent valuation. - that is prohibitively expensive.
Here they probably assessed that based on the inputs used by management they can say that the valuation is reasonable. - they did NOT audit the inputs though. A common error...

They also documented low valuation risk due to robust controls over valuation, specifically that the fund used an external independent valuation expert etc etc. These memos are long and winding.. But at the end of the day, there is a very very slim chance auditor has liability.
« Last Edit: January 05, 2017, 11:47:37 AM by churnbabychurn »

Offline ExGingi

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I've been waiting over 5 years with bated breath for someone to say that!
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Offline churnbabychurn

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Re: Interesting Articles...
« Reply #5829 on: January 05, 2017, 08:26:33 PM »
I doubt they would use the big 4.

Any audit partner who audits dozens of similar funds over the years would know something is up. No funds have such consistent good returns... And the asset mix is an automatic red flag anyway.
So it's not at all hard to imagine some audit partner accepting a bag of cash to just keep things moving.

But im not sure cohn reznik has sufficient experience in the alternative investment space.. They may have really not known what was flying ...

Offline ExGingi

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Re: Interesting Articles...
« Reply #5830 on: January 05, 2017, 08:47:42 PM »

Any audit partner who audits dozens of similar funds over the years would know something is up. No funds have such consistent good returns... And the asset mix is an automatic red flag anyway.
So it's not at all hard to imagine some audit partner accepting a bag of cash to just keep things moving.

But im not sure cohn reznik has sufficient experience in the alternative investment space.. They may have really not known what was flying ...
I used to work for a company that was audited by one of the big 5 (back in the day).

I can tell you first hand that the auditors job is NOT  to look for, or detect fraud. An auditor sample checks reports, asking for backup information. Give them a 1000 page register with all invoices on the A/R and they will never notice if the bottom line on the report adds up to the details (as long as there are thousands of lines of details per customer).

I've been waiting over 5 years with bated breath for someone to say that!
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Offline hvaces42

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Re: Interesting Articles...
« Reply #5831 on: January 05, 2017, 09:11:51 PM »
I used to work for a company that was audited by one of the big 5 (back in the day).

I can tell you first hand that the auditors job is NOT  to look for, or detect fraud. An auditor sample checks reports, asking for backup information. Give them a 1000 page register with all invoices on the A/R and they will never notice if the bottom line on the report adds up to the details (as long as there are thousands of lines of details per customer).
Except if your a government auditor. Then you have all the time in the world to examine every single line item.
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Offline ExGingi

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Re: Interesting Articles...
« Reply #5832 on: January 05, 2017, 09:14:18 PM »
Except if your a government auditor. Then you have all the time in the world to examine every single line item.
-1
Unless it's a forensic audit. Almost any fraud can get the auditors stamp of approval, if perpetrators know what they're doing (and that was even true before photoshop use was so widespread) just read up about what they were doing at some of the junk mortgage lenders before everything collapsed).
I've been waiting over 5 years with bated breath for someone to say that!
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Offline hvaces42

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Re: Interesting Articles...
« Reply #5833 on: January 05, 2017, 09:16:21 PM »
-1
Unless it's a forensic audit. Almost any fraud can get the auditors stamp of approval, if perpetrators know what they're doing.
From my experience, Most audits done by governmental agencies (IRS may be an exception) are forensic in nature.
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Offline MarkS

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Re: Interesting Articles...
« Reply #5834 on: January 05, 2017, 10:30:37 PM »
I used to work for a company that was audited by one of the big 5 (back in the day).

I can tell you first hand that the auditors job is NOT  to look for, or detect fraud. An auditor sample checks reports, asking for backup information. Give them a 1000 page register with all invoices on the A/R and they will never notice if the bottom line on the report adds up to the details (as long as there are thousands of lines of details per customer).


So there's this software called Excel. When our client exports their A/R detail from their accounting system to excel, we add up the detail and make sure it agrees to the total. Then we send confirmations to many places to get third party confirmation corroborating the receivable. Then we use sampling techniques with advanced methodologies to ensure that our sampling method gives reasonable assurance as to the lack of a material misstatement in the account. If there was a material misstatement it would likely be caught. 

Can a $10,000 error slip through in a $1,000,000 balance? Sure. But who cares about it. It's not material.
Can a $1,000,000 error slip through in a 100,000,000 balance? Sure. But who cares about it. It's not material.