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Thursday, December 15, 2005
SOX Effective in Identifying Financial Statement Fraud
From the conviction of former WorldCom CEO Bernie Ebbers to the acquittal of HealthSouth's Richard Scrushy, corporate fraud continues to make headlines. Four years after Enron's collapse, financial integrity remains a key issue for corporate America.
The 2005 Oversight Systems Report on Corporate Fraud surveys certified fraud examiners to report the trends, risks and major concerns that businesses face today. While most fraud examiners view Sarbanes-Oxley (SOX) as an effective tool in fraud identification, few think it will change the culture of business leaders.
Nearly two-thirds of respondents (65 percent) indicate that SOX has been somewhat or very effective in identifying incidences of financial-statement fraud. Only 19 percent of those surveyed found SOX to be ineffective or serve to prevent fraud identification.
Although respondents agree that SOX serves to identify fraudulent activity, they do not feel the recent cultural change among U.S. business leaders toward institutional integrity and fraud prevention in the wake of account scandals will stick. Only 17 percent feel there will be a shift among business leaders to institutional integrity and fraud prevention for the foreseeable future.
The remainder of respondents possess a more stark outlook, reporting that interest in such actions will fade in the next five years (39 percent); that vigilance has already begun to fade (32 percent); or that there has been no change among business leaders (12 percent).
"The findings of this survey foreshadow a real need for continued vigilance among executives toward institutional fraud," said Patrick Taylor, CEO of Oversight Systems. "SOX legislation and the intense focus on corporate scandals have helped battle this type of white-collar crime, but professionals seem to be worried that the C-suite might quickly lose interest in policing corporate fraud."
posted by Anonymous @ 10:54 AM
 
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