An auditor has a tougher job than many people would often think. Much of the information that is processed through an auditor is not easily found. Although it may seem that an auditor's most valuable asset is technology, many would argue that it is the information finished by the employees that is the most valuable. This is why the SEC comes down very harshly when employees give false or misleading information to auditors.
When an auditor goes to a company to perform an audit, they are strangers to the personnel and often times are given only information in which they ask for, but not all the information they need. It is this reason why it is very important that when an employee gives an auditor information, it can be relied upon and used as a reference, because most of the time, the information that is not in the computer is the most crucial.
It is these reasons, referenced above, that the SEC nailed down on San Fransisco-based United Commercial Bank ex-executive John Cinderey. During the financial crisis of 2008, Cinderey allegedly altered memorandum that independent auditors needed. The SEC also accuses Cinderey of delaying the audit and changing policies that caused the audit team to determine the Bank, and its subsidiaries, in an inaccurate light. In Cinderey's defense, he states that he was acting on behalf of his superiors, although this gives him no right to do what he did.
In a settlement, in which Cinderey neither confirms nor denies the allegations, he is permanently banned from any types of bookkeeping. However, he will not be forced to pay a fine or penalty due to the $40,000 penalty he paid in a civil action against him from the FDIC. The courts ruled that this fine is sufficient for the alleged violates he is accused of. The reason he was let off so easily is that he is has assisted the SEC heavily in a similar case and has given personal insight on the related enforcement.
Cinderey is not the only executive from United Commercial Bank or its subsidiaries, that has been accused of securities fraud and misleading auditors. Chief executive officer Thomas Wu, chief operating officer Ebrahim Shabudin, and senior officer Thomas Yu were all accused of such allegations of hiding assets and misleading auditors. This gives a bad reputation to UCB, but shows how important accurate and reliable data can be. With the ever increasing revolutions in technology, it can become even easier to get side tracked, or to be lead astray due to unfamiliar territory, however auditors are faced with this situation with every audit they complete. This is why the consequences of misleading, hiding, or lying to auditors, is severely punishable.
Source: http://inaudit.com/regulatory/sec/ex-bank-exec-settles-sec-suit-16637/;
http://www.sec.gov/news/press/2011/2011-202.htm
Saturday, March 31, 2012
Friday, March 23, 2012
New York Medicaid Audits Become "Softer"
Corruption within the government has not been a new accusation. For years, people knew, understood, and acknowledged that it wasn't how strong your policies were, but how deep your pockets could go. The deepest pockets of all seemed to always be associated with the medical industry. This multi-billion dollar industry has influenced government and politicians for years, allowing (or not allowing) laws to be passed. It seems that, in New York State, this theory has proven fact.
New York State has the nations largest Medicaid Program, which reaches $53 billion. However, according to a 2005 investigate, thousands of fraudulent cases were missed, that cost New York State billions of dollars. For example, Health Department regulators missed dentists who billed for 991 procedures daily, and nursing-home operators with $1.5 million salaries. In retaliation to this investigation, the federal government gave New York State a deadline; recoup $1.5 billion dollars of Medicare fraud in 5 years or pay for the mistakes. A large task to take on, but one in which Gov. Eliot Spitzer assigned James G. Sheehan to accomplish. With this strict deadline, Sheehan took extra measures to gain back the stolen money. He exceeded these targets placed on by the federal government and reclaimed 1.2 percent of its total Medicaid spending - the highest in the nation.
This accomplishment came with some unhappy customers. Mr. Sheehan was accused to "gangster-like" tactics, and was supposedly "making up his own rules". The medical industry reached into their pockets, and Mr. Sheehan was fired last June. In his place, his successor, James C. Cox. Although many would agree that Mr. Cox would be a qualified replacement, he would be heavily restricted by the new governor's legislation. Sheehans successor must now answer to Cuomo legislation and try to come to a reasonable conclusion that both parties agree on when auditing. He will not be allowed the freedoms Mr Sheehan was given.
Although it is not expected that Mr. Cox will achieve the goals that Mr. Sheehan accomplished, it should be noted how quickly and effectively the medical industry shut down the government opposition. It shows that government agencies are not controlled by the people who fund them, but rather the ones who take it. As Mr. Sheehan stated: "Medicaid is to New York what corn is to Iowa."
Sources : http://www.nytimes.com/2012/03/19/nyregion/new-medicaid-inspector-general-supports-less-adversarial-audits.html
New York State has the nations largest Medicaid Program, which reaches $53 billion. However, according to a 2005 investigate, thousands of fraudulent cases were missed, that cost New York State billions of dollars. For example, Health Department regulators missed dentists who billed for 991 procedures daily, and nursing-home operators with $1.5 million salaries. In retaliation to this investigation, the federal government gave New York State a deadline; recoup $1.5 billion dollars of Medicare fraud in 5 years or pay for the mistakes. A large task to take on, but one in which Gov. Eliot Spitzer assigned James G. Sheehan to accomplish. With this strict deadline, Sheehan took extra measures to gain back the stolen money. He exceeded these targets placed on by the federal government and reclaimed 1.2 percent of its total Medicaid spending - the highest in the nation.
This accomplishment came with some unhappy customers. Mr. Sheehan was accused to "gangster-like" tactics, and was supposedly "making up his own rules". The medical industry reached into their pockets, and Mr. Sheehan was fired last June. In his place, his successor, James C. Cox. Although many would agree that Mr. Cox would be a qualified replacement, he would be heavily restricted by the new governor's legislation. Sheehans successor must now answer to Cuomo legislation and try to come to a reasonable conclusion that both parties agree on when auditing. He will not be allowed the freedoms Mr Sheehan was given.
Although it is not expected that Mr. Cox will achieve the goals that Mr. Sheehan accomplished, it should be noted how quickly and effectively the medical industry shut down the government opposition. It shows that government agencies are not controlled by the people who fund them, but rather the ones who take it. As Mr. Sheehan stated: "Medicaid is to New York what corn is to Iowa."
Sources : http://www.nytimes.com/2012/03/19/nyregion/new-medicaid-inspector-general-supports-less-adversarial-audits.html
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