Fraud Findings: Deloitte & Touche's Top Ten

Deloitte & Touche has established the “Deloitte Forensic Center,” a think tank whose purpose is to explore “new approaches to mitigating the costs, risks and effects of fraud, corruption, and other issues facing the global business community.” A mission that’s perhaps a wordier version of the adage “an ounce of prevention is worth a pound of cure.”

They’ve put together a neat little report called “Ten Things About Financial Statement Fraud.” It’s a distillation of themes running through 344 Accounting and Auditing Enforcement Releases (AAERs) of the SEC for the period 2000 through 2006. There were a total of 1,300 AAERs issued through that era; the 344 that were the subject of their study were the ones related to fraud.

It’s an interesting, quick read. Some highlights:

• Frauds relating to revenue were the most common for the period - 41% of all fraud schemes had to do with revenue recognition. (Surprise, surprise.)

• The technology, media and telecommunications sector accounted for 39% of all 1,240 fraud schemes.

• Most companies (82%) had one to five fraud schemes going on - 22 companies had over ten, and four of those had over 20 fraud schemes.

• The number of fraud-related AAERs peaked in 2003 at 77; it’s declined since then to 50 in 2005 and 44 in 2006.

That last one is no surprise. 2003 would have been long enough after the bubble burst for the SEC to have investigated many of the more egregious capers being perpetrated in the late 1990s and early 2000s. Pessimists might attribute the decline since then to a softer SEC; optimists might attribute the decline to a stiffer internal control environment fostered by Sarbanes-Oxley and a reinvigorated audit profession.

Comments

[darkmink]

Great, do you suppose the Deloitte Froensic Center can tell us
why the SEC continues to let DELL go, now for more than a year,
without submitting a balance statement of any kind you know with
information about receivables, inventory, cash etc or a cetified earnings report.

[orange2tango]

Not too long ago Deloitte paid a fine of $ 50M for a failure to detect the fraud. I think it happened more than once.


retheauditors.blogspot...
www.recyclingtoday.com...

what credibility do they have to publish such a report ?

[Zelvinn]

Given the resources available at the SEC and Atty's General both federal and state rest assured that many go unnoticed and /or un prosecuted. Size and politics certainly is a factor. Congress should set up a Help line like the one for automobile problems since many people do not know where to direct complaints and to handle crank complaints

[Zelvinn]

Given the resources available at the SEC and Atty's General both federal and state rest assured that many go unnoticed and /or un prosecuted. Size and politics certainly is a factor. Congress should set up a Help line like the one for automobile problems since many people do not know where to direct complaints and to handle crank complaints

[orange2tango]

Not too long ago Deloitte paid a fine of $ 50M for a failure to detect the fraud. I think it happened more than once.

retheauditors.blogspot...
www.recyclingtoday.com...

what credibility do they have to publish such a report ?