Red flag alert – SEC cracks down on financial statement fraud

Description

Abstract: As the economy continues on the road to recovery and stock prices rise, the SEC is showing renewed interest in financial statement fraud. Among the tools the task force is using to uncover fraud is the new Accounting Quality Model — a quantitative analysis tool that sifts through the numbers and language in financial statements filed on EDGAR for warning signs that earnings have been manipulated or results misstated. This article discusses five warning signs that are most likely to attract the SEC’s attention.