With accounting failures on the rise, earnings management is still the division's top target, Charles D. Niemeier told members of Financial Executives International (formerly the Financial Executives Institute), at the group's annual conference on Current Financial reporting Issues. Niemeier serves as chief accountant of the SEC's enforcement division and chief counsel to the Financial Fraud Task Force.

In 1999, the enforcement division saw a 15 percent increase in the number of fraud cases. So far this year, there's been a 10 percent increase in fraud cases, Niemeier said.

"There have been a large number of (earnings) restatements," he said Tuesday morning during a panel discussion on SEC developments. "What is troubling is that it's the larger companies having the problems."

The SEC promised in 1998 to crack down on financial fraud amid increasing concerns that pressure to meet Wall Street earnings expectations was driving many firms to use creative accounting methods, including big bath restructuring charges and cookie jar reserves, to manage earnings.

The 12-member Financial Fraud Task Force, created back in May to supplement the SEC's fraud enforcement efforts and step up the pace of investigations, consists of a team of accountants and lawyers who focus exclusively on financial reporting and accounting investigations.

-- By Melissa Klein

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