could anyone please help me with the case study below:

Bernard Madoff was operating a simple Ponzi scheme, Harry Markopolos explains. 'He was

robbing Peter to pay Paul, so he needed a continual new stream of incoming cash to pay off the

old investors', he says. 'Investors who got in early would tell their friends and family how great a

money manager Madoff was, so they'd want to invest as well.' The problem is, in a Ponzi scheme

there is no underlying investment activity or service provided. It is all, as Markopolos notes, a

charade. On the surface, Ponzi schemes offer alluring, steady returns. But the cold, hard truth,

as he puts it, is 'those investment returns exist only on the monthly investment statements

because they are fiction'. The returns generated by most Ponzi schemes on paper are so good

that if you are not a professional investor you would definitely be tempted to invest 100% of your

retirement money in them. It takes tremendous discipline and financial knowledge to successfully

avoid them.

Madoff enabled his US$65 billion scam by enlisting the apparent complicity of close to 350 'feeder

funds' companies that marketed his Ponzi scheme for him in more than 40 countries and, in

effect, fed him with new investors. Those funds all pretended to conduct exhaustive due diligence,

such as checking into each manager's background, inspecting his or her operations, verifying the

assets, and vetting the strategies. But in reality Madoff paid them handsomely so that they would

look the other way. They were accomplices that enabled the scheme to get as large as it did.

Madoff alone could not have been able to reach a US$65 billion without their help.

Required:

Evaluate the case from an audit point of view, highlighting possible risks for an investor

and a fund manager who might be attracted to such a scheme