The financial basis of any company depends on the strength of its accounting department and financial advisory committee. This, over time, has brought companies into difficult times, causing them to adopt incorrect measures and insert false information into accounting documents. This is a major problem that drives shareholders to make investments based on inaccurate accounting records. Fraud occurs when there are intentional misstatements in the financial statements. Fraud is unlawful and a deception for personal gain. Recent history shows that major accounting firms commit fraud on their financial statements. This causes companies to pay millions in damages and file for bankruptcy. Companies are not solely responsible for ensuring that financial statements are accurate. Responsibility also falls into the hands of the audit firms that audit the companies. The accounting world was not prepared for the amount of fraud that occurred in the early 2000s that changed the accounting world forever. Accounting firms that audit companies have a responsibility to maintain independence and to spot any fraud or errors that occur internally. accounting departments. Independence means that the auditor must have no direct connection with the company or with the company's principal officers. The auditor will not have independence if he or she owns shares in the company or has a family member, such as the father, as the company's CEO. Most large company audits have audit teams. The audit team breaks down the company's financial statements to document and analyze data while ensuring that correct accounting standards are followed and comply with regulations. Tests are performed on samples of transactions in...... half the paper ......if accounting fraud. Even those who have been involved in any type of accounting fraud are still suffering consequences, such as fines, as well as losing reputation in their name, such as Waste Management Inc. The passage of the Sarbanes Oxley Act of 2002 has decreased the amount of fraud that are occurring today and has put their primary interest in protecting investors. A company that is honest and shows integrity in its financial statements has helped investors by providing them with the correct information before investing and by understanding the amount of risk they are taking on by investing in each particular company. The laws have evolved with accounting fraud, but can they keep pace with the revolution of the criminal mind? In the past the laws were a step backwards, but for now they are holding their ground to protect people from fraud.