SOX Center

Teamwork counts, especially when it comes to committing crimes at a corporation.

In a new examination of 374 companies accused of securities fraud between 1997 and 2002, an average of seven people were implicated in each case, including CEOs, chief financial officers, chief operating officers, general counsels, board directors and auditors.

“Far from being a solitary act, securities fraud necessarily requires complicity,” said William Black of the Kansas City, Mo.-based Institute for Fraud Prevention, which sponsored the study.

The institute is a coalition of universities funded by the Association of Certified Fraud Examiners, the American Institute of Certified Public Accountants, accounting firm Grant Thornton LLP and D-Quest Inc., a risk-management firm.

The study examined companies accused of fraud in lawsuits or regulatory actions.

CEOs were implicated in nearly 90 percent of the cases examined. Next came CFOs, 78 percent. Then board directors, 40 percent; vice presidents, 36 percent; COOs, 20 percent; controllers, 19 percent; and general counsels, 7 percent.

Big accounting firms - including Arthur Andersen, KPMG, Deloitte & Touche, Ernst & Young and Price Waterhouse - were implicated in 18 percent of the cases, the study said. (Grant Thornton, which sponsored the study, is not mentioned, but it has had similar issues.)

The study said that in many cases, management ran the board instead of the other way around. Often, the board chairman and the CEO were one and the same.

Denver Post: Fraud too pervasive to roll back SarbOx

The Public Company Accounting Oversight Board on Friday concluded its first International Auditor Regulatory Institute.

Representatives from auditor regulators and government agencies from more than 40 countries convened on Wed., May 2, in Washington, D.C., to learn more about the PCAOB’s programs and how it carries out its mandate under the Sarbanes-Oxley Act of 2002.

The institute took place over two and a half days, with one full day devoted to discussions about the PCAOB’s inspections program. The institute also covered other activities of the PCAOB, including standard-setting, the enforcement process and international cooperation.

The Sarbanes Oxley Act directs the PCAOB to oversee and periodically inspect all accounting firms that regularly audit U.S. public companies. More than 780 audit firms currently registered with the PCAOB are located outside of the United States, spanning 80 countries.

SmartPros: PCAOB Concludes First International Auditor Regulatory Institute

South Korea’s Financial Supervisory Commission, or FSC, said Tuesday it has signed a pact with a U.S. accounting body for joint inspection and investigation of Korean accounting firms that audit local companies listed on the U.S. bourses.

The agreement with the Public Company Accounting Oversight Board, or PCAOB, was spurred by the Sarbanes-Oxley Act in the U.S., which requires all accounting firms auditing corporations publicly traded in U.S. markets to register with the board and to undergo its inspections regularly, according to a statement by the FSC.

Morningstar.com: S Korea FSC, US Accounting Body Agree On Joint Watch On Accounting Cos

The push by business interests to ease the laws and rules laid down in response to the 2002 corporate scandals is getting a serious hearing in Washington that is giving the idea heightened visibility.

An array of companies and business leaders have been making the case that the requirements born of the crisis of corporate malfeasance are overly onerous and costly.

A high-profile committee of business, legal and academic figures put forward proposals in November to clip back corporate governance rules, class-action lawsuits against companies and auditors, and criminal prosecution of companies by the government.

A second group, formed by the U.S. Chamber of Commerce, is releasing its report and recommendations Wednesday.

It calls for “quick and decisive adjustments in the U.S. legal and regulatory framework … to ensure that U.S. investor and business interests are best served in the global marketplace.” Among its key recommendations: Public companies should stop issuing quarterly earnings guidance and policymakers should seriously consider proposals to reduce the liability of accounting firms in litigation over company audits.

Montgomeryadvertiser: Sarbanes-Oxley under attack