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State Board Report

August 2013

Three initiatives to build on the Securities and Exchange Commission’s Division of Enforcement’s efforts to concentrate resources on areas of high risk were announced early in July: the Financial Reporting and Audit Task Force, the Microcap Fraud Task Force and the Center for Risk and Quantitative Analytics.

The Financial Reporting and Audit Task Force will be expanding the Enforcement Division’s efforts to identify securities law violations related to the preparation of financial statements, issuer reporting and disclosure, and audit failures. Its goals will be fraud detection and increased prosecution of violations involving false or misleading financial statements and disclosures. The Task Force’s Chairman is David Woodcock, Director of the SEC’s Fort Worth Regional Office and its Vice Chair is Margaret McGuire, Senior Counsel to the Directors. Enforcement attorneys and accountants from across the country will be participating in the Task Force.

In announcing the new group, the SEC explained: “The Task Force will focus on identifying and exploring areas susceptible to fraudulent financial reporting, including on-going review of financial statement restatements and revisions, analysis of performance trends by industry, and use of technology-based tools such as the Accounting Quality Model.”

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