NASBA National Association of State Boards of Accountancy

Arizona Closes the Case Handout 2

July 2003

Over a period of several years, the management of the Baptist Foundation of Arizona (BFA) engaged in one of the most audacious fraud schemes on record. BFA ultimately filed for bankruptcy, and thousands of elderly investors lost their life savings. How did such a massive fraud develop? What clues did the auditors overlook? BFA’s failure and the subsequent penalties provide a sobering reminder to auditors that it is important to understand the causes of fraud and even more critical to engage in effective audit procedures to detect fraud. Improving and strengthening fraud detection is at the heart of the accounting profession’s new antifraud initiatives, such as the recently issued SAS 99, Consideration of Fraud in a Financial Statement Audit.

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