MHUG 2023 ConferenceHigh visibility and legal concerns are driving financial executives into the spotlight like never before. Ethics and integrity are topics that you hear in every boardroom. Financial Statements are being examined, accounting practices are in question, and the CFOs and controllers behind the numbers are staking their careers on the results. This heightened awareness is not just having an effect on public companies with compliance issues, but also private companies. Pressures include compliance with the Sarbanes-Oxley Act, stakeholder demands for financial transparency, and concern with the ongoing financial health of the organization. Executives must focus on mitigating risks and improving the efficiency of information management.
In their 2003 Fraud Survey, KPMG reported seventy-five percent of the more than 450 medium- and large-sized organizations they surveyed experienced fraud during the previous twelve-month period. This is up thirteen percentage points from their prior survey in 1998. The incidence of fraud involving financial reporting, while the lowest of all types of fraud reported, more than doubled from the 1998 to the 2003 survey and was the most costly area of fraud for an organization. In organizations where financial reporting fraud occurred, the cost averaged $250 million. With the magnitude of losses, it is easy to justify the costs of prevention and detection, such as enhanced internal controls and establishing or strengthening internal audit teams.