As the investing public labors over its lost investment and nervously contemplates its next move, one question inevitably comes to mind: Who is watching over the financial statements of corporate America? More precisely, where are the auditors? The investing public has long expected and relied upon the independent audit to uncover and disclose employee embezzlement and fraudulent reporting by management. Unfortunately for investors and depositors a troublesome number of these financial disasters have followed a "clean bill of health" from the company auditors, thus leaving investors, depositors, and creditors looking on in despair. Amidst these financial ruins we find the chronic element of management fraud. These disturbing results are underscored by the financial miseries still brewing in the savings and loan industry, as well as by other corporate and banking financial debacles of the past decade, including Lincoln Savings & Loan, Wedtech, and the Delorean sports car venture scandal. More than half were willing to overstate assets, forty-eight percent were willing to understate loss reserves and thirty-eight percent would "pad" a government contract.
Eighty-seven percent of managers recently surveyed were willing to commit financial statement fraud.
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