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Madoff Effectively Unaudited

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by Felix Salmon
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Dec 12 2008 12:00pm EDT

Madoff: Effectively Unaudited

Floyd Norris asks, of Bernie Madoff:

I assume his funds' books claimed to be audited. Who were the auditors? How were they fooled?

It turns out that investor Jim Vos already looked into that:

Madoff's auditor, Friehling & Horowitz, operated from a 13-by-18-foot office in Rockland County, New York, a small operation for the auditor of such a large firm.

In other words, Madoff might as well have got a chimpanzee to audit the books, for all the checks and balances that Friehling & Horowitz provided. Which, of course, is why he chose them in the first place. I'm sure they were well compensated for not asking too many awkward questions; it would be nice if they, too, go to jail.

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