Fraud


FRAUD
Financial-statement fraud is typically a collaborative effort involving an average of seven people, according to a study conducted by the Institute for Fraud Prevention.

Study authors Robert Tillman and Michael Indergaard of St. John’s University based their analysis on a sample collected by the Government Accountability Office of 834 companies that issued restatements between Jan. 1, 1997, and June 30, 2002. The study, Control Overrides in Financial Statement Fraud, found that 374 companies, or 45%, were accused of securities fraud and subject to shareholder suits, SEC enforcement action or both. In those cases, an average of seven individuals were implicated, including CEOs, CFOs, COOs, general counsel, directors and internal and external auditors.

The study can be found at www.TheIFP.org, under the “Research Grants” heading.

The White House Office of Management and Budget issued a memo requiring federal agencies to take new precautions to prevent breaches of personally identifiable information. The memo stresses the government should not unnecessarily collect or maintain personally identifiable information. Use of Social Security numbers should be strictly limited.

Federal employees will also be required to receive job-specific training on their responsibilities for safeguarding personally identifiable information and the consequences and accountability for violating these responsibilities.

The full memo issued by OMB Deputy Director for Management Clay Johnson is available at www.whitehouse.gov/omb/memoranda/fy2007/m07-16.pdf.

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