Recently, the US economy has seen many companies go under because of "cooking their books" by hiding liabilities. This is a clear view that accounting fraud has been done. Fannie Mae is one of the largest financial institutions in the United States and the OFHEO has found Fannie Mae's earnings misleading. The company did not hide its liability, instead they hide their earnings. Is this still accounting fraud by making the company look worse off financially? I believe that not disclosing all information is a criminal act and should be accounted for. The reason for this fraud is to keep earnings constant and not have large fluctuation. They wanted to be able to help themselves in times of need when they aren't make the large income. This has an effect on the small and large investor because there are still scandals going on even after Sarbanes-Oxley Act of 2002. The investor may not invest because they don't know if they can trust the financials of a company.