Audits

Official report on New Mexico Finance Authority’s faked audit report – Part 1

1 Comment / Audits, Fraud /

The New Mexico Office of State Auditor (OSA) has issued several official reports on the fabricated June 30, 2011 financial statements from the New Mexico Finance Authority.

This will be the first in a series of posts on the report.

You can find a 47 page report dated December 3, 2012 here.  You can find a more detailed 174 page report dated December 12, 2012 here.

The longer report has a very helpful 10 page executive summary. If you are a CPA interested in learning about fraud, systemic failures of internal control, the importance of tone at the top, and all the other things that we CPAs look at, you will learn a lot by reading the executive summary.

Good news from the investigation

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Official report on New Mexico Finance Authority’s faked audit report – Part 1Read More »

Official report on New Mexico Finance Authority’s faked audit report – Part 1 Read More »

Guilty plea over faked audit report at New Mexico Finance Authority

Leave a Comment / Audits, Fraud /

The former controller of the New Mexico Finance Authority pled guilty to three felony counts on November 29, 2012. There were two forgery charges and one for securities fraud.

He was sentenced to five years probation.  The sentence includes the provision for a conditional discharge.

A special report from the Office of State Auditor dated December 12, 2012 stated:

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Guilty plea over faked audit report at New Mexico Finance AuthorityRead More »

Guilty plea over faked audit report at New Mexico Finance Authority Read More »

Focus is again on Big 4 consulting and independence

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More attention is coming to bear on the growing amount of consulting in the Big 4. The HP – Autonomy fiasco has called attention to the issue again.

The volume of consulting work is growing fast.

If you occasionally check in to see what the huge firms are doing, here are four five articles you can browse.

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Focus is again on Big 4 consulting and independenceRead More »

Focus is again on Big 4 consulting and independence Read More »

HP’s fraud allegations still a bit vague

3 Comments / Accounting, Audits /

I still can’t quite figure out what is in Autonomy’s accounting that was a severe problem and why that led to an $8.8 billion write-off.  That seems to be a common thread in the discussion of HP and Autonomy that I’ve been reading lately.

I won’t go into much detail. Just want to give a few links to leave a trail of the direction things seem to be going.

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HP’s fraud allegations still a bit vagueRead More »

HP’s fraud allegations still a bit vague Read More »

Time to let the dust settle on HP’s writeoff of Autonomy goodwill

2 Comments / Audits, Fraud /

The view of HP’s claimed fraud against its acquired sub is getting murkier.  Looks like we need to let the dust settle before we decide who gets the vigilante mob’s lynching.

News filtering out now is about a lot of revenue that can be recognized under IFRS but not under U.S. GAAP. Apparently, some things we would consider to be “channel stuffing” are allowed under IFRS.

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Time to let the dust settle on HP’s writeoff of Autonomy goodwillRead More »

Time to let the dust settle on HP’s writeoff of Autonomy goodwill Read More »

Umm. Looks like we need lots more info on the HP writeoff

2 Comments / Accounting, Audits /

I previously used the analogy of a train wreck in progress. Looks like the freight cars are still flying through the air.

Jonathan Weil, in his post at Bloomberg, HP’s Explanation Still Makes No Sense, says the numbers provided by HP aren’t adding up.

The allegation by HP is that

About $200 million of Autonomy’s revenue had been recorded prematurely or improperly over a two-year period beginning in 2009,

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Umm. Looks like we need lots more info on the HP writeoffRead More »

Umm. Looks like we need lots more info on the HP writeoff Read More »

This month’s accounting train wreck involves an $8 billion writeoff at HP

3 Comments / Accounting, Audits /

If you enjoy watching train wrecks while the freight cars are still airborne and the engine is still sliding down the track sideways, you really have to quickly check out HP’s investment in Autonomy.  You can watch it unfold in daily slow mo.

Fast background, amounts, Big 4 players, and some links

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This month’s accounting train wreck involves an $8 billion writeoff at HPRead More »

This month’s accounting train wreck involves an $8 billion writeoff at HP Read More »

An open letter to the CPAs who audit R&D charities receiving GIK meds

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(Cross-post from my other blog, Nonprofit Update.)

Dear colleagues:

If you would like some background on the GIK issues, please read my open letter to your clients.

The accounting is problematic for donated pharmaceuticals that you have been auditing for the last few years.

If you have a budget of 100 or 300 hours, it might be wise to allocate a few hours to read beyond AICPA risk alerts and Accord position papers. You can browse my blog for  discussions, which contain links to other resources that also discuss the accounting and valuation issues.

It is my considered opinion that many of the valuations are not supportable under GAAP.  The timing of SFAS 157 isn’t the issue.

The amount of scrutiny on your client’s valuation methodologies is high and increasing.

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An open letter to the CPAs who audit R&D charities receiving GIK medsRead More »

An open letter to the CPAs who audit R&D charities receiving GIK meds Read More »

Document retention timeline for auditors in California – also document retention policy needs to be in writing

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Another reminder for all of us from the California state law that applies to CPAs:  There is a requirement for auditors to retain audit documentation for 7 years from report release date.

Here’s the state code from section 5097:

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Document retention timeline for auditors in California – also document retention policy needs to be in writingRead More »

Document retention timeline for auditors in California – also document retention policy needs to be in writing Read More »

‘If it isn’t documented, it wasn’t done’ is almost the law in California

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While doing the required CPE for regulatory ethics, I reread the California state law on audit documentation. The standard is that if something wasn’t done documented, there is a rebuttable presumption that it was not done.  You can overcome that presumption, but the burden would be on you as the CPA to persuade a jury you really did something for which you prepared no documentation.

That gets back to a comment I’ve made in CPE courses that …

‘If it isn’t documented, it wasn’t done’ is almost the law in CaliforniaRead More »

‘If it isn’t documented, it wasn’t done’ is almost the law in California Read More »

New Mexico Finance Authority fiasco expands into criminal arena and doesn’t just involve a rogue employee

1 Comment / Audits, Fraud /

The mess involving a faked audit report in New Mexico is growing. The former controller wasn’t acting alone and the faked audit report isn’t the only issue.

The controller has been arrested for alleged securities fraud. It is now alleged that the former controller coordinated with the Chief Operating Officer (COO) in misstating the financial statements. The COO has also been arrested.

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New Mexico Finance Authority fiasco expands into criminal arena and doesn’t just involve a rogue employeeRead More »

New Mexico Finance Authority fiasco expands into criminal arena and doesn’t just involve a rogue employee Read More »

Watching and learning from the money laundering cases

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Those of us auditors outside the huge firms may not have to deal directly with the impact of banks engaging in money laundering, yet we can still learn by watching.  Here’s the background in one sentence –  – Many of the largest banks were systematically ignoring U.S. laws against sending money into certain countries.

On my other blog, Nonprofit Update, I have several posts discussing the mess.

Of interest to me as an auditor is the apparently intentional violation of laws and how the corporate tone at the top could have prevented the fiasco.

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Watching and learning from the money laundering casesRead More »

Watching and learning from the money laundering cases Read More »