Upfront: Signs of Battle Fatigue in the Fraud Wars

When the U.S. Congress declared war on corporate fraud after the accounting scandals, many business leaders were eager to sign up. But will that cultural change stick? To gauge morale on the fraud front, audit-software provider Oversight Systems Inc. surveyed advance troops: more than 200 certified fraud examiners, including internal auditors, independent auditors, law enforcement officials and investigators.

Overall, participants' response to Sarbanes-Oxley is positive: 65 percent feel the legislation has been somewhat or very effective in helping companies identify fraud in financial statements.

However, nearly one-third of respondents say that interest in institutional integrity and fraud protection has already begun to fade, and 39 percent expect it to do so within five years. What's more, 12 percent believe there has been no change in business leaders' attitude to integrity and fraud.

"This report is full of positive news but foreshadows a real need for continued vigilance among executives toward institutional fraud," says Patrick Taylor, CEO of Oversight Systems, headquartered in Atlanta. "SOX legislation and the intense focus on corporate scandals have helped battle this type of white-collar crime, but professionals seem to be worried that the C-suite might quickly lose interest in policing corporate fraud."

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