Considering the history of accounting irregularities, it is hard to imagine that these current problems were overlooked. In an interview with Dr. Smith, an accounting professor at Southwest Texas State University, he stated, "the current situation has been there the whole time, because one big case was brought up everyone is now coming clean." Dr. Smith also said, "For now just the big corporations are being targeted. There are still some medium to small size firms that need to be looked at" (Smith Interview). It may be sometime before the entirety of this ominous issue is discovered.
Auditing/Business Relationship.
"Accounting irregularities are cited directly in the cases of Tyco, Dynergy, WorldCom, Enron and Qwest Communications. The general idea is to tighten up on accountancy and auditing practices" (Banyard 1). One of the main problems is that the massaging of accounts became a large incentive when stock options became the financial instrument of choice for executive's reward. "However badly a company is doing, the illusion of success for a few years enables the ruthless executive to rip off unimaginable riches before the old business goes down the tubes. As for those who wonder just how much use a company audit is, the threat of 45 years in an Alabama prison would do more than any regulations to keep the accounts straight" (Banyard 1). The problem was easy to overlook, just a few months ago, when more than 800 of the companies audited found to have no accounting irregularities in their records. .
Problem Prevalence.
If you asked someone three years ago if they could name two companies involved in accounting fraud, the chances are they would have a difficult time naming one. Today if you asked the same question, one could name a handful. This displays the growing number of accounting irregularities seen today.
Cases and Losses.
According to CNN Money, the number of fraud cases investigated by the Securities and Exchange Commission (SEC) has jumped 41 percent in the last three years.
