Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Initial analysis on faked financial statements

with 2 comments

If you are an auditor, you really ought to be watching the story unfolding in New Mexico about the allegedly faked 6-30-11 financials for the New Mexico Finance Authority. Is it okay to drop the alleged when the person submitting the report said it isn’t the real audit report? My previous posts here and here.

If you want an evaluation of the quality of the forgery, you can check out Jim Scarantino’s post on July 19:  The Cheap Forgery That May Cost New Mexico Millions. He has an extended discussion of the report.  He’s talking photocopies and whiteout.

One more thing to watch for is the idea of photocopies being present when originals are expected. Look at the visual quality of the accountant’s reports. Typically those would be printed originals, if not electronically generated. In the copy on the web site, the accountant’s reports appear to be a second or third generation copy. The pages in the basic financials are not as ‘dirty’ as the opinion. That should be odd to an auditor’s eyes.

If you have never seen fabricated documents, you really want to read his discussion.  He includes images from the current report with comparisons to a known legitimate report from the prior year.

The public copy of the report is still available here. Grab a copy and save it in case the NMFA pulls it. Then you can look at the document yourself.

The scanned copy that is on the web site isn’t as useful for anti-fraud training as the hard copy that Mr. Scarantino used, but you can still learn from it.

One final observation – the scandal appears to have broken into public view on July 12Mr. Scarantino’s analysis of the document is dated July 19. Good job! And fast!

Like I said, if you are an auditor, check out the post for a very quick, short education on fraud. Have your staff read it too.

Written by Jim Ulvog

July 25, 2012, 7:16 am at 7:16 am

2 Responses

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  1. […] more recent example is the New Mexico Finance Authority, where an audit opinion visibly looks like a copy of a copy of a copy while the rest of the […]


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