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Focus on Fraud & Forensic Accounting<br />
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Recognizing the Red Flags<br />
of a Ponzi Scheme<br />
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Plus<br />
•Antifraud Tips<br />
•Criminal Tax Evasion<br />
•Hybrid Approach to Fair Value<br />
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C ONTENTS<br />
june<br />
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26 Accounting & Auditing<br />
❙ Standards Setting<br />
Fair<a title="The CPA Journal - June 1, 2009 page 1" href="http://viewer.zmags.com/publication/95cbd4ae?page=1">Focus on Fraud & Forensic AccountingRecognizing</a> Focus on Fraud & Forensic AccountingRecognizing<a title="The CPA Journal - June 1, 2009 page 2" href="http://viewer.zmags.com/publication/95cbd4ae?page=2"></a> <a title="The CPA Journal - June 1, 2009 page 3" href="http://viewer.zmags.com/publication/95cbd4ae?page=3"></a> <a title="The CPA Journal - June 1, 2009 page 4" href="http://viewer.zmags.com/publication/95cbd4ae?page=4">C ONTENTSjune 26 Accounting </a> C ONTENTSjune 26 Accounting <a title="The CPA Journal - June 1, 2009 page 5" href="http://viewer.zmags.com/publication/95cbd4ae?page=5">vol. LXXIX/no.66PERSPECT</a> vol. LXXIX/no.66PERSPECT<a title="The CPA Journal - June 1, 2009 page 6" href="http://viewer.zmags.com/publication/95cbd4ae?page=6"> PublisherLOUIS GRUMET Associate Pu</a> PublisherLOUIS GRUMET Associate Pu<a title="The CPA Journal - June 1, 2009 page 7" href="http://viewer.zmags.com/publication/95cbd4ae?page=7"></a> <a title="The CPA Journal - June 1, 2009 page 8" href="http://viewer.zmags.com/publication/95cbd4ae?page=8">P ERSPECTIVESemerging issuesStepping Up </a> P ERSPECTIVESemerging issuesStepping Up <a title="The CPA Journal - June 1, 2009 page 9" href="http://viewer.zmags.com/publication/95cbd4ae?page=9">publisher's column Navigating the State's</a> publisher's column Navigating the State's<a title="The CPA Journal - June 1, 2009 page 10" href="http://viewer.zmags.com/publication/95cbd4ae?page=10">(Continued from page 6)participants. That princi</a> (Continued from page 6)participants. That princi<a title="The CPA Journal - June 1, 2009 page 11" href="http://viewer.zmags.com/publication/95cbd4ae?page=11">small corporations, so long as we do notdevelop </a> small corporations, so long as we do notdevelop <a title="The CPA Journal - June 1, 2009 page 12" href="http://viewer.zmags.com/publication/95cbd4ae?page=12"> The record of the SEC in recent yearshas not </a> The record of the SEC in recent yearshas not <a title="The CPA Journal - June 1, 2009 page 13" href="http://viewer.zmags.com/publication/95cbd4ae?page=13">sidiaries can be very helpful in unwindingfailed</a> sidiaries can be very helpful in unwindingfailed<a title="The CPA Journal - June 1, 2009 page 14" href="http://viewer.zmags.com/publication/95cbd4ae?page=14">FDIC, then we would have a strong agencyregulati</a> FDIC, then we would have a strong agencyregulati<a title="The CPA Journal - June 1, 2009 page 15" href="http://viewer.zmags.com/publication/95cbd4ae?page=15">Mentoring the Next GenerationBy Stephe</a> Mentoring the Next GenerationBy Stephe<a title="The CPA Journal - June 1, 2009 page 16" href="http://viewer.zmags.com/publication/95cbd4ae?page=16"> From Crisis to Confidence: What Isthe R</a> From Crisis to Confidence: What Isthe R<a title="The CPA Journal - June 1, 2009 page 17" href="http://viewer.zmags.com/publication/95cbd4ae?page=17">And today, in the midst of the greatest eco-nomi</a> And today, in the midst of the greatest eco-nomi<a title="The CPA Journal - June 1, 2009 page 18" href="http://viewer.zmags.com/publication/95cbd4ae?page=18">Accounting Irregularitiesand Financial Fraud: A</a> Accounting Irregularitiesand Financial Fraud: A<a title="The CPA Journal - June 1, 2009 page 19" href="http://viewer.zmags.com/publication/95cbd4ae?page=19"></a> <a title="The CPA Journal - June 1, 2009 page 20" href="http://viewer.zmags.com/publication/95cbd4ae?page=20">FocusIn</a> FocusIn<a title="The CPA Journal - June 1, 2009 page 21" href="http://viewer.zmags.com/publication/95cbd4ae?page=21">Recognizing the Red Flagsof a Ponzi SchemeWil</a> Recognizing the Red Flagsof a Ponzi SchemeWil<a title="The CPA Journal - June 1, 2009 page 22" href="http://viewer.zmags.com/publication/95cbd4ae?page=22">demand his money at any time was noreassurance, </a> demand his money at any time was noreassurance, <a title="The CPA Journal - June 1, 2009 page 23" href="http://viewer.zmags.com/publication/95cbd4ae?page=23">investors by promising steady and above-market r</a> investors by promising steady and above-market r<a title="The CPA Journal - June 1, 2009 page 24" href="http://viewer.zmags.com/publication/95cbd4ae?page=24">the year 2000, only the scheme remained.He calle</a> the year 2000, only the scheme remained.He calle<a title="The CPA Journal - June 1, 2009 page 25" href="http://viewer.zmags.com/publication/95cbd4ae?page=25">author's opinion, the auditing firms mayclaim th</a> author's opinion, the auditing firms mayclaim th<a title="The CPA Journal - June 1, 2009 page 26" href="http://viewer.zmags.com/publication/95cbd4ae?page=26">Analyzing the Fraud EXHIBIT 4Risk Fact</a> Analyzing the Fraud EXHIBIT 4Risk Fact<a title="The CPA Journal - June 1, 2009 page 27" href="http://viewer.zmags.com/publication/95cbd4ae?page=27">the plaintiff justifiably relied upon.There must</a> the plaintiff justifiably relied upon.There must<a title="The CPA Journal - June 1, 2009 page 28" href="http://viewer.zmags.com/publication/95cbd4ae?page=28">A CCOUNTING & AUDITINGstandards setting</a> A CCOUNTING & AUDITINGstandards setting<a title="The CPA Journal - June 1, 2009 page 29" href="http://viewer.zmags.com/publication/95cbd4ae?page=29">standard exacerbate the problems ormerely illumi</a> standard exacerbate the problems ormerely illumi<a title="The CPA Journal - June 1, 2009 page 30" href="http://viewer.zmags.com/publication/95cbd4ae?page=30">cretion. The complexity of such assets sug-gests</a> cretion. The complexity of such assets sug-gests<a title="The CPA Journal - June 1, 2009 page 31" href="http://viewer.zmags.com/publication/95cbd4ae?page=31">highly publicized transactions in the fall of200</a> highly publicized transactions in the fall of200<a title="The CPA Journal - June 1, 2009 page 32" href="http://viewer.zmags.com/publication/95cbd4ae?page=32">is preferable as a level one input. As seenin th</a> is preferable as a level one input. As seenin th<a title="The CPA Journal - June 1, 2009 page 33" href="http://viewer.zmags.com/publication/95cbd4ae?page=33"></a> <a title="The CPA Journal - June 1, 2009 page 34" href="http://viewer.zmags.com/publication/95cbd4ae?page=34">A CCOUNTING & AUDITINGinternational auditi</a> A CCOUNTING & AUDITINGinternational auditi<a title="The CPA Journal - June 1, 2009 page 35" href="http://viewer.zmags.com/publication/95cbd4ae?page=35">ity these standards offer, the audit processwill</a> ity these standards offer, the audit processwill<a title="The CPA Journal - June 1, 2009 page 36" href="http://viewer.zmags.com/publication/95cbd4ae?page=36"> </a> <a title="The CPA Journal - June 1, 2009 page 37" href="http://viewer.zmags.com/publication/95cbd4ae?page=37"> Inherent risk and control risk are thecompany</a> Inherent risk and control risk are thecompany<a title="The CPA Journal - June 1, 2009 page 38" href="http://viewer.zmags.com/publication/95cbd4ae?page=38">19 differences, IFRS requires or permits theuse </a> 19 differences, IFRS requires or permits theuse <a title="The CPA Journal - June 1, 2009 page 39" href="http://viewer.zmags.com/publication/95cbd4ae?page=39"></a> <a title="The CPA Journal - June 1, 2009 page 40" href="http://viewer.zmags.com/publication/95cbd4ae?page=40">T AXATIONcompliance & enforcement</a> T AXATIONcompliance & enforcement<a title="The CPA Journal - June 1, 2009 page 41" href="http://viewer.zmags.com/publication/95cbd4ae?page=41"> the way §§ 301 and 316(a) are written (to dist</a> the way §§ 301 and 316(a) are written (to dist<a title="The CPA Journal - June 1, 2009 page 42" href="http://viewer.zmags.com/publication/95cbd4ae?page=42">the monies received constituted a tax-freereturn</a> the monies received constituted a tax-freereturn<a title="The CPA Journal - June 1, 2009 page 43" href="http://viewer.zmags.com/publication/95cbd4ae?page=43">Covina Publications, Inc., and related com-panie</a> Covina Publications, Inc., and related com-panie<a title="The CPA Journal - June 1, 2009 page 44" href="http://viewer.zmags.com/publication/95cbd4ae?page=44">such distributions were intended to be sucha ret</a> such distributions were intended to be sucha ret<a title="The CPA Journal - June 1, 2009 page 45" href="http://viewer.zmags.com/publication/95cbd4ae?page=45">tions “in a tax status limbo in criminalcases.” </a> tions “in a tax status limbo in criminalcases.” <a title="The CPA Journal - June 1, 2009 page 46" href="http://viewer.zmags.com/publication/95cbd4ae?page=46">T AXATIONfederal taxationHow Deductions, </a> T AXATIONfederal taxationHow Deductions, <a title="The CPA Journal - June 1, 2009 page 47" href="http://viewer.zmags.com/publication/95cbd4ae?page=47">ly believe that this income is tax-free.Consider</a> ly believe that this income is tax-free.Consider<a title="The CPA Journal - June 1, 2009 page 48" href="http://viewer.zmags.com/publication/95cbd4ae?page=48"> The increase in tax of $350 representsa margi</a> The increase in tax of $350 representsa margi<a title="The CPA Journal - June 1, 2009 page 49" href="http://viewer.zmags.com/publication/95cbd4ae?page=49">JUNE 2009 / THE CPA JOURNAL </a> JUNE 2009 / THE CPA JOURNAL <a title="The CPA Journal - June 1, 2009 page 50" href="http://viewer.zmags.com/publication/95cbd4ae?page=50">F INANCEsuccession planningGuiding Fami</a> F INANCEsuccession planningGuiding Fami<a title="The CPA Journal - June 1, 2009 page 51" href="http://viewer.zmags.com/publication/95cbd4ae?page=51">The CPA's Role What is the CPA's role in the s</a> The CPA's Role What is the CPA's role in the s<a title="The CPA Journal - June 1, 2009 page 52" href="http://viewer.zmags.com/publication/95cbd4ae?page=52">cess floundered until the son-in-law forcedthe i</a> cess floundered until the son-in-law forcedthe i<a title="The CPA Journal - June 1, 2009 page 53" href="http://viewer.zmags.com/publication/95cbd4ae?page=53"> A financial arrangement must be crafted to all</a> A financial arrangement must be crafted to all<a title="The CPA Journal - June 1, 2009 page 54" href="http://viewer.zmags.com/publication/95cbd4ae?page=54">M ANAGEMENTcpa consultant</a> M ANAGEMENTcpa consultant<a title="The CPA Journal - June 1, 2009 page 55" href="http://viewer.zmags.com/publication/95cbd4ae?page=55">client results in increased client-specificexper</a> client results in increased client-specificexper<a title="The CPA Journal - June 1, 2009 page 56" href="http://viewer.zmags.com/publication/95cbd4ae?page=56">from Going Concern Audit Opinions,”Journal of Ac</a> from Going Concern Audit Opinions,”Journal of Ac<a title="The CPA Journal - June 1, 2009 page 57" href="http://viewer.zmags.com/publication/95cbd4ae?page=57">ly affecting bond rater perceptions, theresearch</a> ly affecting bond rater perceptions, theresearch<a title="The CPA Journal - June 1, 2009 page 58" href="http://viewer.zmags.com/publication/95cbd4ae?page=58">M ANAGEMENTfraudPractical and Ethical Co</a> M ANAGEMENTfraudPractical and Ethical Co<a title="The CPA Journal - June 1, 2009 page 59" href="http://viewer.zmags.com/publication/95cbd4ae?page=59">nesses, and the legal process. Guaranteeingsucce</a> nesses, and the legal process. Guaranteeingsucce<a title="The CPA Journal - June 1, 2009 page 60" href="http://viewer.zmags.com/publication/95cbd4ae?page=60"> There are other disclosure issues thataren't </a> There are other disclosure issues thataren't <a title="The CPA Journal - June 1, 2009 page 61" href="http://viewer.zmags.com/publication/95cbd4ae?page=61">M ANAGEMENTpractice managementThe Human</a> M ANAGEMENTpractice managementThe Human<a title="The CPA Journal - June 1, 2009 page 62" href="http://viewer.zmags.com/publication/95cbd4ae?page=62">under IFRS guidelines, they are recognizedwhen i</a> under IFRS guidelines, they are recognizedwhen i<a title="The CPA Journal - June 1, 2009 page 63" href="http://viewer.zmags.com/publication/95cbd4ae?page=63">necessary to adopt strategic financial per-spect</a> necessary to adopt strategic financial per-spect<a title="The CPA Journal - June 1, 2009 page 64" href="http://viewer.zmags.com/publication/95cbd4ae?page=64">R ESPONSIBILITIES & LEADERSHIPethics</a> R ESPONSIBILITIES & LEADERSHIPethics<a title="The CPA Journal - June 1, 2009 page 65" href="http://viewer.zmags.com/publication/95cbd4ae?page=65">learned were materially false. More diffi-cult c</a> learned were materially false. More diffi-cult c<a title="The CPA Journal - June 1, 2009 page 66" href="http://viewer.zmags.com/publication/95cbd4ae?page=66">Whistleblowing Under the SecuritiesLaws In 19</a> Whistleblowing Under the SecuritiesLaws In 19<a title="The CPA Journal - June 1, 2009 page 67" href="http://viewer.zmags.com/publication/95cbd4ae?page=67">can be claimed by the accountant, theclient, or </a> can be claimed by the accountant, theclient, or <a title="The CPA Journal - June 1, 2009 page 68" href="http://viewer.zmags.com/publication/95cbd4ae?page=68"> EXHIBITDecision Table for CPAs</a> EXHIBITDecision Table for CPAs<a title="The CPA Journal - June 1, 2009 page 69" href="http://viewer.zmags.com/publication/95cbd4ae?page=69">not violate the provisions of the AICPA Codeof P</a> not violate the provisions of the AICPA Codeof P<a title="The CPA Journal - June 1, 2009 page 70" href="http://viewer.zmags.com/publication/95cbd4ae?page=70">T ECHNOLOGYthe cpa & the computer</a> T ECHNOLOGYthe cpa & the computer<a title="The CPA Journal - June 1, 2009 page 71" href="http://viewer.zmags.com/publication/95cbd4ae?page=71"> Similarly, Statement on AuditingStandards 109</a> Similarly, Statement on AuditingStandards 109<a title="The CPA Journal - June 1, 2009 page 72" href="http://viewer.zmags.com/publication/95cbd4ae?page=72">placed in a library, which will allow all mod-ul</a> placed in a library, which will allow all mod-ul<a title="The CPA Journal - June 1, 2009 page 73" href="http://viewer.zmags.com/publication/95cbd4ae?page=73">the FICA percentage into the source code; if the </a> the FICA percentage into the source code; if the <a title="The CPA Journal - June 1, 2009 page 74" href="http://viewer.zmags.com/publication/95cbd4ae?page=74">T ECHNOLOGYwhat to bookmarkWebsite of </a> T ECHNOLOGYwhat to bookmarkWebsite of <a title="The CPA Journal - June 1, 2009 page 75" href="http://viewer.zmags.com/publication/95cbd4ae?page=75">form number, and can also be located bytype of f</a> form number, and can also be located bytype of f<a title="The CPA Journal - June 1, 2009 page 76" href="http://viewer.zmags.com/publication/95cbd4ae?page=76">Classified PROFESSIONAL OPPORTUNITY l BUSINESS l</a> Classified PROFESSIONAL OPPORTUNITY l BUSINESS l<a title="The CPA Journal - June 1, 2009 page 77" href="http://viewer.zmags.com/publication/95cbd4ae?page=77">SPACE FOR RENTAAA PROFESSIONAL OFFICES FOR REN</a> SPACE FOR RENTAAA PROFESSIONAL OFFICES FOR REN<a title="The CPA Journal - June 1, 2009 page 78" href="http://viewer.zmags.com/publication/95cbd4ae?page=78">SALES TAX, ISAAC STERNHEIM & CO.Sales tax consu</a> SALES TAX, ISAAC STERNHEIM & CO.Sales tax consu<a title="The CPA Journal - June 1, 2009 page 79" href="http://viewer.zmags.com/publication/95cbd4ae?page=79">PEER REVIEW PE</a> PEER REVIEW PE<a title="The CPA Journal - June 1, 2009 page 80" href="http://viewer.zmags.com/publication/95cbd4ae?page=80"> </a> <a title="The CPA Journal - June 1, 2009 page 81" href="http://viewer.zmags.com/publication/95cbd4ae?page=81">E CONOMIC & MARKET D ATAmonthly update</a> E CONOMIC & MARKET D ATAmonthly update<a title="The CPA Journal - June 1, 2009 page 82" href="http://viewer.zmags.com/publication/95cbd4ae?page=82">E DITORIALa message from the editor-in-chie</a> E DITORIALa message from the editor-in-chie<a title="The CPA Journal - June 1, 2009 page 83" href="http://viewer.zmags.com/publication/95cbd4ae?page=83"></a> <a title="The CPA Journal - June 1, 2009 page 84" href="http://viewer.zmags.com/publication/95cbd4ae?page=84"></a>