SEC and DOJ Actions May Lead to Reduction in Fraud and Improvements in Auditing Practices
IMGCAP(1)][IMGCAP(2)]It is widely acknowledged that fraud, including fraudulent financial reporting and other improprieties targeted against businesses, has become epidemic.
Indeed, the Association of Certified Fraud Examiners’ bi-annual Report to the Nations on Occupational Fraud and Abuse recounts that these acts consume some 5 percent of revenue for the average business enterprise, or some $3.5 trillion annually, if extrapolated to the entire world’s gross product. It is also known that many instances of fraud go undetected and, of those that are identified, a significant fraction (about one-third) are not referred to the authorities for criminal prosecution, in large part because companies wish to avoid the negative publicity that might result from being the acknowledged victim of such crimes. It is furthermore generally conceded that failure to prosecute serves to encourage yet other acts of fraud.
