Call me strange, but one of the things I do in the dog days of summer each year is review recent Accounting and Auditing Enforcement Releases (AAERs) issued by the Securities and Exchange Commission.

For more than 30 years, the SEC has issued AAERs at the conclusion of an investigation against a company, a corporate executive, or an auditor for alleged accounting, financial reporting, or audit misconduct. Each AAER describes in detail the issues addressed in the investigation, the nature of the asserted misconduct by the individuals targeted by the investigation, and the terms of any settlement of the charges and sanctions imposed by the SEC.

I review the AAERs partly for my own personal edification, but also because as a public company director and audit committee member, and as a lecturer at Columbia Business School and other universities on financial reporting topics, I try to stay current on these matters.

I had a lot to review this summer. The SEC issued more than 100 AAERs in the 12 months ended June 30, 2015. While many of these relate to enforcement actions against CPAs for unprofessional conduct involving deficient audits and auditor independence violations, a steady stream of actions against (and settlements with) companies and their CEOs, CFOs, and other senior officials relate to perpetrating accounting and financial reporting fraud, intentionally issuing misleading disclosures, and failing to maintain adequate books and records and proper internal accounting controls.

Frauds and reporting misstatements involving revenue recognition continue to be a prime area for SEC enforcement activity. For example, in its enforcement action against Saba Software Inc., the SEC charged the company, its former CEO, and other senior executives of directing consultants in India to falsify time sheets so Saba could hit quarterly revenue and margin targets. That resulted in a material overstatement of the company’s reported results over a period extending from 2007 to 2012. In September 2014 the company agreed to pay $1.75 million to settle the charges. Furthermore, under the clawback provisions of the Sarbanes-Oxley Act, the former CEO and two former CFOs of Saba repaid several million in bonuses, incentive pay, and profits from sales of stock to the company.

In recent months the SEC also settled an enforcement action against AirTouch Communications and its former CEO and former CFO, for misstating all of its reported revenue for the third quarter of 2012 by improperly recording as revenue shipments to a customer who had only agreed to warehouse the inventory for a fee. The arrangement was concealed from the company’s controller, independent auditor, and outside directors; it also led to offering fraud, by inducing a loan from an investor to the company based on the misreported results.

While each enforcement action has its own specific facts, some common themes emerge. Not surprisingly, revenue recognition continues to be a fertile area for accounting fraudsters and target of SEC enforcement actions.

The SEC also settled an enforcement action against JDA Software Group in September 2014 involving material misstatements of some of the company’s financial statements for 2008, 2009, 2010, and 2011. The misstatements resulted from inadequate internal accounting controls over determining “vendor-specific objective evidence” (“VSOE”) relating to certain software license agreements with customers. As a result, the company improperly immediately recognized the revenues from those agreements, instead of recognizing them over the term of the arrangements. The company agreed to pay a penalty of $750,000 to settle the charges.

During the past year the SEC continued to pursue, and in some cases settle, enforcement actions relating to accounting and reporting issues stemming from the financial crisis. These included settlement of actions against Fist Community Bancorp and its former principal financial officer for material understatements of its provision for “other-than-temporary impairment “losses (“OTTI”) on investment securities for 2009 and the first two quarters of 2010. The company subsequently restated its financial statements and concluded that its disclosure controls and internal accounting controls over OTTI had been materially deficient.

In December 2014 the SEC also charged and settled an enforcement action against Hampton Roads Bankshares and its former CFO for not recording a valuation allowance against its deferred tax asset, which materially understated the company’s losses for 2009 and the first quarter of 2010. According to the SEC, in deciding that no valuation allowance was required, the company and the former CFO unreasonably relied on financial projections that were inconsistent with internal company reports that indicated that losses from its loan portfolio would likely continue.

Also of note, in August 2014, the SEC reached a $245 million settlement with Bank of America as part of a much larger global settlement with the Justice Department relating to various investigations by federal agencies involving financial crisis-related matters. The SEC had charged Bank of America with failing to disclose in the Management’s Discussion & Analysis section of its financial reports for the second and third quarters of 2009 known uncertainties related to the future costs of mortgage loan repurchase claims on residential mortgages that it had sold to Fannie Mae and various mortgage insurers in the years leading up to the financial crisis.        

Another noteworthy area of SEC enforcement activity over the past year relates to actions against U.S. companies for violations of the Foreign Corrupt Practices Acts. While the violations stem from payments to foreign officials to obtain or facilitate contracts and sales in the foreign country, in such cases the SEC inevitably seems to charge the company with failing to maintain proper books and records and internal controls.

For example, in December 2014 Avon Products agreed to pay $135 million to settle SEC and criminal cases for failing to record the purpose and details accurately and to put controls in place to prevent and detect $8 million of payments in cash, travel, and luxury goods by Avon employees and consultants to Chinese government officials.

Similarly, in February of this year Goodyear Tire and Rubber Co. agreed to pay $16 million to settle books and records and internal controls violations of the FCPA relating to payment of bribes to Kenyan and Angolan government officials and other parties. In the release announcing the settlement, the SEC noted that the settlement terms reflected the company’s self-reporting of the matter, prompt remedial actions, and cooperation in the investigation.

SEC enforcement releases often tell an interesting but sobering tale of human weakness and deception. For example, an AAER issued in March 2015 relating to Polycom Inc. and its former CEO describes how the former CFO created hundreds of false expense reports with bogus descriptions to pay for personal meals, entertainment, and travel with friends and a girlfriend. The SEC charged the former CFO with misuse of corporate funds and the company with failing to have adequate internal controls surrounding these perks and with understating the former CFO’s compensation in its proxy statements.

While each enforcement action has its own specific facts, some common themes emerge. Not surprisingly, revenue recognition continues to be a fertile area for accounting fraudsters and target of SEC enforcement actions. Financial crises and economic recessions inevitably seem to spawn cases of overly optimistic and improper accounting. As they have been in recent years, internal control deficiencies remain an important focus in SEC enforcement actions. And finally, it seems clear that the SEC is continuing to charge not only companies, but also individuals: CEOs, CFOs, and senior employees.

All are good reminders to each of us involved in the financial reporting system of the importance of proper accounting and reporting—and of the potential consequences of failing to do so.