The Treadway Commission (NCFFR
1987, 159) noted that financial reporting problems have "traditionally been associated with companies experiencing financial difficulties." As noted earlier, financial condition is a control variable in our analysis.
The National Commission on Fraudulent Financial Reporting (NCFFR), the Treadway Report, describes market pressures that include increased competition for services, reduced market fees, and a dynamic product service mix offered by the industry (NCFFR 1987).
The NCFFR (1987, 1), commenting on management fraud, state that "infrequent though its occurrence arguably may be, its consequences can be widespread and significant." Still, research on fraud prediction is limited.
The auditor should also consider the "widespread and significant" (NCFFR 1987) consequences of an undetected fraud, and their obligation to protect the public trust.