Few Firms Have a Regulatory Response Team Despite Anti-fraud Programs

In the heightened regulatory environment of the post-Enron business world, a majority of companies have instituted formal anti-fraud programs and controls, according to an online poll released earlier this month by Deloitte Financial Advisory Services LLP (Deloitte FAS). Yet while approximately 75 percent of respondents indicated their companies have anti-fraud programs and controls designed to deter, detect and prevent fraud, only 13 percent indicated their companies have a regulatory response team in place to handle regulatory investigations.

Other key results include:

  • Almost 60 percent of respondents indicated that, over the next two years, they believe the number of internal and external investigations related to financial accounting issues will increase.

  • 46 percent of participants note their companies had responded to an inquiry from the Securities and Exchange Commission (SEC) or the Department of Justice (DOJ).

  • Almost 36 percent of respondents indicated that, to the extent their companies had conducted an internal investigation on financial statement issues, such investigation did not result in any findings of accounting irregularities.

“The responses to our polling questions were not surprising,” Howard Scheck, a partner in Deloitte FAS’ Forensic & Dispute Services practice, said in a prepared statement announcing the results of the poll. “Increasingly, companies are recognizing and beginning to tackle this very important issue. That’s the good news.”

“The challenge for most companies, however, becomes one of execution,” David Bloch, a principal in Deloitte FAS’ Forensic & Dispute Services practice, continued. “While positive steps are being taken within corporations, we believe it will be some time before formal response plans become universal.”

Deloitte FAS surveyed approximately 500 participants online, including senior-level financial executives such as chief financial officers and controllers. The executives primarily represented the energy and resources, financial services and manufacturing services.

You may like these other stories...

Tesco accounting probe finds “inappropriate behavior” by staff – reportsClare Hutchison of Reuters wrote on Sunday that an investigation into a 250 million-pound ($402 million) profit overstatement at...
The split over convergenceDavid M. Katz of CFO wrote an interesting article on Thursday about the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) backing away from their...
Read more from Larry Perry here and in the Today's World of Audits archive.Because of the importance of revenue recognition auditing procedures, and because of the breadth of the principles for the FRF for SMEs, this...

Already a member? log in here.

Upcoming CPE Webinars

Oct 21Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience’s communication style.
Oct 22This webinar will include discussions of important issues in AU-C 800, Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks.
Oct 23Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.
Oct 30Many Excel users have a love-hate relationship with workbook links.