SEC Accounting And Auditing Enforcement Actions In The Banking Industry

Abstract

This paper provides insight into several descriptive issues that help clarify the nature of management fraud in the banking and financial services industry. The SECs Accounting and Auditing Enforcement Releases (AAER) Nos. 1 to 400, published between 1984 and 1992, were surveyed to identify a sample of banks and other related entities that were the subject of SEC enforcement action for fraudulent financial reporting. Those cases are analyzed and results are reported in this study. Detailed cases are also presented to illustrate the nature of financial statement fraud relating to valuation problems in investment accounts, misstatement of loan reserves, and non-disclosure of material financial information. Implications for research, practice, and teaching and presented.