The auditor of Bernard Madoff enterprise was from accounting firm Friehling & Horowitz

which had small offices in a shopping center in New York and had only three employees,
including a secretary, an accountant and a partner in his seventies. Industry experts say that the
size of Madoff's accounting firm should have been a giant auditing firm.
Madoff bought Friehlings license for more than 17 years while its Ponzi scheme went
undetected. For all those years, Friehling deceived investors and regulators by declaring that
Madoff's enterprise had a clean audit record. Friehling falsely stated in annual audit reports that
Friehling Company audited Madoffs financial statements in according with Generally Accepted
Auditing Standards (GAAS), including the requirements to maintain auditor independence and
perform audit procedures relating to custody of securities. It reported that financial statements
were presented in conformity with GAAP and it already reviewed internal controls, including
controls over the custody of assets, and found no material misstatement. However, all of these
statements were materially false because Friehling did not perform a meaningful audit of Madoff
and did not perform procedures to confirm that the securities, which were claimed to hold on
behalf of its customers, even existed. Moreover, it also had no criteria or evidence to represent
that Madoff had no material misstatement. Instead, Friehling pretended to conduct minimal audit
procedures of accounts to make it seem like he was conducting an audit, and then failed to
document his fictitious findings and conclusions as required under GAAS. If properly stated,
those financial statements, along with related disclosures regarding reserve requirements, would
have shown that Madoff owed around tens of billions dollars in additional liabilities to the
customers and was therefore bankrupt. Friehling was afraid that his work for Madoff would be
subject to review, as required of accountants who conduct audits, he lied to the American
Institute of Certified Public Accountants for many years and denied that he conducted any audit
work.
Friehling was charged on March 18, 2009, with securities fraud, aiding and abetting
investment adviser fraud, and four counts of filing false audit reports with the Securities and
Exchange Commission. First, Friehling faces a maximum sentence of 114 years in prison, but
unlike Madoff, he agreed to cooperate with the government. The guilty plea effectively ended his
career as an accountant; the SEC is not allowed to accept audits from convicted criminal. He lost
his CPA license on July 19, 2010. After that, in May 2015, U.S. District Judge sentenced
Friehling to one year of home detention and one year of supervised release. Friehling avoided
prison because he cooperated extensively with federal prosecutors and he had been unaware of
the extent of Madoff's crimes.
Not only case that Madoff using the small company to audit the financial statement. The
worlds largest accounting firms are in the list of regulators that didn't find the multibillion-dollar
Madoff investment fraud. KPMG, PricewaterhouseCoopers, BDO Seidman and McGladrey &
Pullen all took an examination and stated that many of funds that invested with Bernard Madoff
and his asset-management firm were legal and in the good condition. Clients say the large
accounting firms concluded on statements that said the Madoff investment company had billions

of dollars in assets as well as a doubtful track record showing many years of return that always in
positive figure. The billions have disappeared, and these positive returns now seem to have been
made up. In fact, it now appears that KPMG, and the other auditors of the Madoff feeder funds,
didnt do much things to ensure that investors not being deceived. Some people say it's likely
that what the accounting firms did is only checking the statements that Madoff himself produced.

https://en.wikipedia.org/wiki/David_G._Friehling
http://www.lohud.com/story/news/crime/2014/12/15/david-friehling-bernard-madoffponzi/20438631
https://www.sec.gov/news/press/2009/2009-60.htm