Financial Reporting and Audit Task Force Struggles in First Year
With July marking its first anniversary, the U.S. Securities and Exchange Commission’s (“SEC”) Financial Reporting and Audit Task Force is reflecting on the past year’s accomplishments. Unfortunately, the group has little to celebrate. To this point, task force investigations have not led SEC lawyers to charge anyone for fraud.
Despite the slow start, SEC officials have discovered companies with faulty financial reporting controls and fragile application of accounting standards in areas that are usually sources of fraud like revenue recognition and expense recording. At a June 11th question-and-answer session in Washington, D.C., SEC Enforcement Division head Andrew Ceresney also acknowledged new investigations that were the result of the task force’s efforts. However, he noted that fraud cases can be complicated and time consuming, which is why the task force should focus on such cases instead of obvious ones. Further, Ceresney remains confident in the task force and sees enforcement actions taking place in the near future.