Madoff Securities Inc., Had Limited Resources And Fragmented

1198 WordsApr 23, 20175 Pages
Madoff Securities Inc., had limited resources and fragmented oversight. The fragmented oversight led to the lack of coordination in preventing fraud at the company. The company has fragmented regulatory system that allowed unscrupulous people to engage in misconduct. For instance, the regulatory oversight was unable to examine the broker dealer operations of Madoff Investment securities. The lack of resources also affects the ability of the company to deal with financial and credit crisis (Hornuf & Haas, 2014). Most importantly, the company lacked regular examination of audit procedures in analyzing the fraudulent actions. The regulatory oversights have various gaps in regulation that allowed investment and broker dealers to form unclear…show more content…
It also focuses on the agreement of the initial investment balances with audited amounts in prior periods working papers examined. The substantive test would also include the activity in investment related accounts that should be reviewed to determine the presence of entries of unusual nature. I would also rely on client prepared schedules for all investments or disposals of the assets based on the underlying accounting records. Another audit procedure I would conduct is the analytical procedures. The analytical procedures forms an important part of the investment process in determining that the financial information subjected to audit is consistent with the auditor’s expectations. If performing analytical procedures, an auditor should develop an appropriate level of professional performance and investigation of abnormal findings. When the results of analytical procedures are consistent with the auditor’s expectations, the audit strategy might be adjusted to lower the level of details tests of transactions and balances. Additionally, the tests of details of transactions are an effective approach as an audit model when the entity has reduced volume of transactions. These substantive tests comprises of vouching the individual debts ad credits in different investment accounts.

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