Financial & Managerial Accounting MBA-560-MBOL4.

Accounting refers to the process of identifying various organizational transactions, recording and analyzing them in order to determine the performance of an organization within a specified period. There exist three forms of accounting which includes financial, cost and management accounting. However, most organizational managers engage in numerous unethical accounting activities, which, in the long run, results to the downfall of an organization. Nevertheless, in order to prevent the exploitation of the general public, legal measures are employed to such managers when found guilty of committing accounting frauds (Pearson, 2013). This paper pays high attention to analysis of Madoff Investment scandal, the manner in which it was detected, legal measures that were taken, and measures that could have been initially taken in order to prevent the occurrence of this unethical act.
Summary of Madoff Investment Scandal
This accounting scandal emerged at an Investment firm (Bernard L. Madoff Investment Securities), which was founded in 1960 by Bernard Madoff. In this firm, Bernard Madoff used to favor selected clients by offering them modest and steady investment returns in order to attract more investors, he closely guarded the firm`s financial statements, and could not directly meet his investors. However, he used the most of the firm`s investment funds for personal activities, to such an extent that the firm was declared bankrupt in 2008 (Lenzner, 2008).
Detection of Madoff`s Accounting Scandal and Legal Measures Taken.

Madoff`s accounting scandal was detected in December 2008, when he discloses to his two sons that his operations in the investment firm were “a giant Ponzi scheme” (Lenzner, 2008). However, his sons tried to seek advice from one of their friends, Martin Flumenbaum, who later informed both federal prosecutors and the United States Security and Exchange Commission (SEC). Madoff was arrested and sentenced to 150 years in jail, and authorized to pay a restitution of $ 17 billion.
Prevention Measures
Nevertheless, Madoff`s unethical acts could have been detected early if the Security Exchange Commission responded to suspicions that had been earlier raised by various external financial analysts, such as Harry Markopolos and Charles Gradante. In addition, the SEC should recruit financial auditors who should be mandated to regularly conduct financial audits in various firms (Badawi, 2008).

References
Badawi, I., M., (2008). Preventive Measures of Corporate Accounting Frauds. San Francisco Press, U.S.A.
Lenzner, R., (2008). Bernie Madoff’s $50 Billion Ponzi Scheme. Rtrieved from, http://www.forbes.com/2008/12/12/madoff-ponzi-hedge-pf-ii-in_rl_1212croesus_inl.html
Pearson Library, (2013). Financial and Management Accounting. Retrieved from, https://view.ebookplus.pearsoncmg.com/ebook/launcheText.do?values=bookID::46853::platform::1030::bookPageNumber::i::fromloginpage::N::invokeType::lms::launchState::goToEBook::platform::1030::userID::13863689::scenario::11::scenarioid::scenario11::courseid::11227597_eCollege_stleo::plus::y::pageid::i::sessionID::21977297002314572292015::smsUserID::68338321::isSecuredPlatform::true::hsid::40c80af844a8859c60585b2f146b74bf