At-A-Glance

Responding to the ongoing and increasing challenges presented by fraudulent financial activities, three major organizations have taken actions, including the release of a new standard, a status report, and a newly established operating unit to address the need for stronger measures and accountability. This issue of the A & A Alert provides highlights. Also, our Worldwide Update covers news from organizations across the globe.

The Ongoing Challenge of Fraud

New pronouncements and efforts address the concerns

The AICPA’s Accounting Standards Board (ASB), the Association of Certified Fraud Examiners (ACFE), and the USA’s Securities and Exchange Commission (SEC) have recently focused on the current status of financial fraud. In August, the ASB issued Statement on Auditing Standards (SAS) No. 151, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements, while the SEC set up a “new specialized unit within the Division of Enforcement to provide the dedicated expertise, focus, and capacity to pursue accounting and financial reporting fraud cases as well as general misconduct in the accounting and auditing areas.” These follow the ACFE’s release in May of Occupational Fraud 2026: A Report to the Nations, the 14th biennial edition of this undertaking.

Since its establishment in 1988, the ACFE has been surveying members for details on their experiences with fraud. Ten years ago, the A & A Report described the 2016 survey which covered over two thousand cases from 114 countries. By the time of the 2026 survey, which included 143 countries, the number of accumulated cases had grown to over 20,000, leading the report to state that “occupational fraud is likely the largest and most costly form of financial crime in the world.”

The ongoing consistency of the extent and nature of fraud in business is evidenced by the current survey’s statistic of 5% of annual revenue lost by the average organization, the same as in 2016. However, today that equates to $5.5 trillion in lost revenue, as opposed to $3.7 trillion back then. In comparison, the Gross Domestic Product (GDP) of Germany in 2026 is projected at $5.45 trillion, the third highest in the World after the USA and China.  

Men still dominate the fraud perpetrators at 71%, just slightly less than the 75% in 1996, though the difference in the median loss was much lower with male losses averaging $125,000 versus $90,000 for females. Also, the higher the level of authority of the perpetrators involved, the greater the loss that occurred. Executive losses in 2026 were almost ten times greater than employee losses, though the gap was eleven times in 2016.

The median loss for all cases in the 2026 study of $104,000 was down from $150,000 in 2016, while the average 2026 loss was $1,457,000. The forms of fraud were generally comparable between these two recent studies, with the 2026 frauds consisting of 90% asset misappropriation, 45% corruption, and 6% financial statement fraud. (These total more than 100% since some frauds encompassed multiple forms).

The ASB’s SAS 151 supersedes the fraud sections of SAS 122, which was issued in 2023. Fraud is defined as “an intentional act by one or more individuals among management, those charged with governance, employees, or third parties, involving the use of deception that results in a misstatement in financial statements that are the subject of an audit.” While the new standard does not change the definition, and “does not change the objectives of the auditor as it relates to fraud or suspected fraud, nor does it change the auditor’s responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error. Rather, the proposed SAS includes requirements for the auditor in fulfilling that responsibility as it relates to fraud, including establishing required procedures for when the auditor has identified fraud or suspected fraud.”

The SEC’s new Financial Reporting and Accounting Unit within its Division of Enforcement places new emphasis and priority on misconduct by those responsible for assuring credibility and accuracy of reporting, especially of significant and complex issues. Announced on August 5, 2026, the new unit “will be staffed by both attorneys and accountants with specialized skills related to financial reporting, accounting, and auditing in securities regulation.”

Further details can be found at  New Auditing Standard Clarifies and Enhances CPAs’ Responsibilities Relating to Fraud in a Financial Statement Audit,  Occupational Fraud 2026: A Report to the Nations, and SEC Launches New Enforcement Unit for Accounting Fraud.

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