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

A group of America’s largest firms has joined forces to found the Center for Audit Quality (CAQ) in a bid to restore corporate confidence in the profession.

The move comes as auditors and companies prepare to adjust to significant changes to the implementation of the Sarbanes-Oxley compliance and audit law, which have been unveiled by the Securities and Exchange Commission and the Public Company Accounting Oversight Board in recent weeks.

Accounting professionals will dominate the new organisation’s 12-member board. Seven seats will be held by the head of the American Institute of Certified Public Accountants and the chief executives of the six largest audit firms, with two seats rotating among smaller and mid-tier firms. Three public board members will be named shortly, the Dow Jones reported.

AccountancyAge: Audit lobby group formed to combat Sarbox beef-up