It's difficult for outsiders to know if a company is lying about its earnings numbers. That was true for Enron Corp. five years ago, and it remains true today.
But Gavin Anderson, chief executive of GovernanceMetrics International, a corporate governance ratings agency, said if you look closely at any company, you can determine whether an environment exists that might engender fraud.
"There's still a lot of accounting wiggle room available to companies," Anderson said. "But even when you look at how a company reports its numbers, to not look at the governance issues is to ignore one risk tool that can really hit you in the teeth."
Despite government efforts and the renewed pledges of corporate executives, experts say eliminating corporate fraud is unrealistic when there are so many incentives and opportunities for companies to manipulate their numbers.
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