COSO issues report on "Fraudulent Financial Reporting, 1998 - 2007: Analysis of U.S. Public Companies".

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) recently issued a new report 

entitled, 

"Fraudulent Financial Reporting, 1998 - 2007: Analysis of U.S. Public Companies". The COSO study examined 

financial statement 

fraud allegations investigated by the U.S. Securities and Exchange Commission over a ten-year period.

The study's Executive Summary includes the following critical findings:

- There were 347 alleged cases of public company fraudulent financial reporting (FFR) from 1998 to 2007 as 

compared to 294 cases 

from 1987 to 1997.

- The dollar magnitude of FFR increased substantially in the last decade, with total cumulative misstatement or 

misappropriation of nearly $120 billion across 300 cases fraud cases (mean of nearly $400 million per case) as 

compared to a mean of $25 million per sample fraud in COSO's 1999 study. 

- The SEC named the CEO and/or CFO for involvement in 89 percent of the fraud cases. Within two years of the 

completion of the SEC investigation, about 20 percent of CEOs/CFOs had been indicted. Over 60 percent of those 

indicted were convicted. 

- Revenue frauds accounted for over 60 percent of the cases.

- 26% percent of the firms engaged in fraud changed auditors during the period examined compared to a 12 

percent rate for no-fraud firms. 

- Companies engaged in fraud often experienced bankruptcy, delisting from a stock exchange, or material asset 

sales at rates much higher than those experienced by no-fraud firms. 

- Long-term negative consequences of fraud were apparent. Companies engaged in fraud often experienced 

bankruptcy, delisting from a stock exchange, or material asset sales following discovery of fraud – at rates much 

higher than those experienced by no-fraud firms. 

To download a pdf version of the complete report, click on the link

http://www.coso.org/documents/COSOFRAUDSTUDY2010.pdf