It’s been more than a decade since a series of scandals involving companies like WorldCom and Enron made headlines, exposing levels of financial fraud that startled most Americans and put federal regulators into a state of high alert. In the years since those scandals, the Securities and Exchange Commission (SEC) has put a tighter focus on financial disclosure statements in an attempt to root out “soft information” and uncover true financial fraud.
The fact of the matter is, financial disclosure documents have always represented a bit of a minefield for public companies, but nowadays, SEC scrutiny is even greater. The Commission looks closely at financial statements, down to the smallest footnote, putting more pressure on true financial metrics, but also on the explanations for matters ranging from revenue to risk.
