I think that one example of this which is incorporated in regulations is that of material misstatements in financial audit. To my understanding, misstatements, being single instances of faulty financial reporting either by intention or mistake, can be individually material if they exceed some small but significant % of what’s been recorded in the books (for the specified period etc.). However, auditors are also obliged to make a judgment whether misstatements in aggregate can constitute materiality, even though each individual misstatement is not material in itself.
I guess a difference to some of the examples above is that it’s easy to discover even small perturbations in financial reporting—but in general, it seems to me that an attempt of a “sum-threshold attack” in financial reporting would not go under the radar, at least not as easily.
Epistemic note: I work in the auditing business, but I am not a financial auditor myself.
I think that one example of this which is incorporated in regulations is that of material misstatements in financial audit. To my understanding, misstatements, being single instances of faulty financial reporting either by intention or mistake, can be individually material if they exceed some small but significant % of what’s been recorded in the books (for the specified period etc.). However, auditors are also obliged to make a judgment whether misstatements in aggregate can constitute materiality, even though each individual misstatement is not material in itself.
I guess a difference to some of the examples above is that it’s easy to discover even small perturbations in financial reporting—but in general, it seems to me that an attempt of a “sum-threshold attack” in financial reporting would not go under the radar, at least not as easily.
Epistemic note: I work in the auditing business, but I am not a financial auditor myself.
Nice, yeah. This seems like centrally salami slicing.