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Just Released – COSO’s Analysis of Fraudulent Financial Reporting 1998-2007

Just Released – COSO’s Analysis of Fraudulent Financial Reporting 1998-2007

by Toby Lucich on May 25, 2010

COSO has released a new research study, Fraudulent Financial Reporting: 1998-2007,that examines 347 alleged accounting fraud cases investigated by the U.S. Securities and Exchange Commission (SEC) over a ten-year period ending December 31, 2007. It provides an in-depth analysis of the nature, extent and characteristics of accounting frauds occurring throughout the ten years, and provides helpful insights regarding new and ongoing issues needing to be addressed.

  • There were 347 alleged cases of public company fraudulent financial reporting from 1998 to 2007, versus 294 cases from 1987 to 1997. Consistent with the high-profile frauds at Enron, WorldCom, etc., the dollar magnitude of fraudulent financial reporting soared in the last decade, with total cumulative misstatement or misappropriation of nearly $120 billion across 300 fraud cases with available information (mean of nearly $400 million per case).
  • The most common fraud technique involved improper revenue recognition, followed by the overstatement of existing assets or capitalization of expenses.
  • The SEC named the CEO and/or CFO for some level of involvement in 89 percent of the fraud cases, up from 83 percent of cases in 1987-1997.

COSO’s Analysis of Fraudulent Financial Reporting 1998-2007

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