Hardman & Co’s analysts have direct experience of uncovering accounting frauds. In this article, Steve Clapham outlines why we might see a surge in them over the next few years. He is engaged by institutions to teach their fund managers and analysts how to identify risks brought about by such frauds. Hardman & Co is pleased to offer this service to private investors.
A huge amount has been written about Carillion and its ineffectual audit but, unfortunately, Carillion could be the tip of the iceberg, and the next few years are likely to see an explosion in the discovery of frauds. After the last long bull market in the 1990s, a series of massive frauds was uncovered – Enron in 2000, WorldCom, Qwest and Global Crossing the following year, Tyco in 2002 and HealthSouth in 2003. In the space of just four years, nearly $0.5tr of market cap evaporated (probably equivalent to $1.5tr today).