Final answer:
The most common method of financial statement fraud highlighted by the 1999 COSO study was overstating revenues and assets, and not liabilities as the question suggests. The Sarbanes-Oxley Act of 2002 was implemented in response to major accounting scandals to increase the reliability of financial reporting by corporations.
Step-by-step explanation:
According to a 1999 COSO study, the most common method used to perpetrate financial statement fraud was not overstating liabilities but rather overstating revenues and assets. The increased scrutiny of financial reporting following major accounting scandals, such as those involving Enron, Tyco International, and WorldCom, led to the enactment of the Sarbanes-Oxley Act in 2002. This act was designed by the government to increase confidence in the financial information provided by public corporations and to protect investors from the potential devastation of accounting fraud.