All Aboard the D & O as the "Twelve Blogs" Roll on

Fraud Detection and Expectations

Ohio Attorney Kevin Lecroix keeps the accounting and financial world up-to-date on legal developments in the financial arena with "The Directors and Officers Diary." Kevin's most recent post (see link in title) noted that while subprime was getting the media attention, legal action on unconsumated buyouts was a important legal trend during the second half of 2007. More important and very sobering, at least to auditors, was his Fraud Detection (link above) post. A stunning five of eight chief executive officers surveyed (221 in total) by Grant Thornton felt that they COULD successfully mislead their auditors with INTENTIONALLY falsified statements. Moreover, 83% (five of six) CFOs felt that it was not possible to catch all corporate fraud. While this is no surprise to accountants, user expectations (reasonable, at least to a point) are much greater leading to the question--will the future bring GREATER legal liability for accountants in regard to fraud or alternately diminish the demand for independent audits?

Congratulations to Kevin on keeping the financial community up to date on legal developments. The final accounting blog in the "Twelve Blogs" will be coming soon.