Detecting fraudulent financial reporting using financial ratio

2016 ◽  
Vol 14 (2) ◽  
pp. 266-278 ◽  
Author(s):  
Emie Famieza Zainudin ◽  
Hafiza Aishah Hashim
Keyword(s):  
Financial Reporting ◽  
Logit Model ◽  
Design Methodology ◽  
Fraudulent Financial Reporting ◽  
Financial Leverage ◽  
Content Type ◽  
Financial Ratio ◽  
Turnover Ratio ◽  
The Media ◽  
Practical Implications

Purpose The main aim of this study is to analyse the financial ratio (i.e. financial leverage, profitability, asset composition, liquidity and capital turnover ratio) in detecting fraudulent financial reporting (FFR). Design/methodology/approach The logit model was used to identify firms that are related to FFR. The sample firms that engage in fraudulent reporting were obtained from the media centre of Bursa Malaysia. The firms were selected based on their contravention of the Listing Requirements of Bursa Malaysia Securities Berhad. The data cover a period of seven years from 2007 to 2013. Findings The results suggest that financial leverage, asset composition, profitability and capital turnover were significant predictors of FFR. Practical implications The findings of this study may assist investors in making decision for their investments. Originality/value This study describes firms that breach the Listing Requirements of Bursa Malaysia Securities Berhad using the financial ratio.

scholarly journals Pengaruh Rasio Keuangan Terhadap Fraudulent Financial Reporting: Survei Perusahaan Barang Konsumsi Yang Terdaftar di Bursa Efek Indonesia Tahun 2014-2016

2018 ◽  
Vol 7 (1) ◽  
pp. 72
Author(s):  
Tyas Widyanti ◽  
Muhammad Nuryatno
Keyword(s):  
Financial Reporting ◽  
Consumer Goods ◽  
Logit Model ◽  
Stock Exchange ◽  
Total Asset ◽  
Fraudulent Financial Reporting ◽  
Financial Leverage ◽  
Financial Ratio ◽  
Turnover Ratio ◽  
Total Debt

<em>The main aim of this study is to </em>analyse<em> the financial ratio (i.e. financial leverage, profitability, asset composition, liquidity and capital turnover ratio) in detecting fraudulent financial reporting (FFR). The logit model was used to identify firms that are related to FFR. The sample firms that engage in fraudulent reporting were obtained from consumer goods companies survey listed on The Indonesian Stock Exchange. The data cover a period of three years from 2014 to 2016. The results suggest that financial leverage proxied by total debt to total equity was not significant while leverage proxied by total debt to total asset was significant. Asset composition and liquidity were not significant to FFR while profitability and capital turnover were significant predictors of FFR.</em>

Writing write-downs: the rhetoric of goodwill impairment

2017 ◽  
Vol 14 (1) ◽  
pp. 81-102
Author(s):  
Niklas Sandell ◽  
Peter Svensson
Keyword(s):  
Financial Reporting ◽  
Design Methodology ◽  
Annual Reports ◽  
Close Reading ◽  
Content Type ◽  
Goodwill Impairment ◽  
Financial Communication ◽  
Rhetorical Practice ◽  
Nasdaq Omx ◽  
Practical Implications

Purpose The aim of this paper is to study the rhetoric of goodwill impairment, more specifically rhetoric, as it is constructed in the form of accounts (i.e. statements that explain unanticipated or untoward behavior). The authors argue that goodwill impairment is not only a technical matter but also a rhetorical practice by means of which external scrutiny is responded to. Design/methodology/approach The data corpus consists of explanations provided by corporations regarding impairment of goodwill. Data were collected from annual reports from companies quoted on NASDAQ OMX Stockholm, Sweden. The impairment explanations were analyzed according to a taxonomy of account types. The explanations were subjected to close reading to discern the potential rhetorical functions of the different accounts. Findings Seven account types are identified and discussed, namely, excuse, justification, refocusing, concession, mystification, silence and wordification. Research limitations/implications There is a need for further research that explores the process of authorship (i.e. writing, editing, negotiating and revising) through which the texts of financial communication are produced. Practical implications The findings have implications for the future formulations of standards regarding qualitative explanations in financial reporting in general and explanations of goodwill impairment in particular. Originality/value The paper contributes to the knowledge about the use of natural language and rhetoric in financial communication.

The IPSASB's recent strategies: opportunities for academics and standard-setters

2020 ◽  
Vol 32 (3) ◽  
pp. 315-319 ◽  
Author(s):  
Gwenda Jensen
Keyword(s):  
Public Sector ◽  
Financial Reporting ◽  
Design Methodology ◽  
Accounting Standards ◽  
Fitness For Purpose ◽  
Content Type ◽  
Financial Reporting Standards ◽  
Public Sector Accounting ◽  
Ongoing Dialogue ◽  
Practical Implications

PurposeThe purpose of this article is to contribute to an ongoing dialogue between practitioners and academics. This article describes the International Public Sector Accounting Standards Board (IPSASB) recent strategies and highlights the IPSASB's increasing outreach to academics.Design/methodology/approachThis is a practitioner's viewpoint which reflects the IPSASB's publicly available documents, and the opinions of a practitioner directly involved in the IPSASB's work and International Public Sector Accounting Standards (IPSAS) development.FindingsThe findings are that the IPSASB has increased its outreach to academics and now academics have more opportunities to engage with the IPSASB and IPSAS developments. The IPSASB's strategy has remained relatively constant over time, focusing on IPSAS to address public sector-specific issues, alignment with the International Financial Reporting Standards (IFRS) and reduction of differences between IPSAS and Government Finance Statistics (GFS) reporting guidelines.Research limitations/implicationsThe limitations of this article (which are also its strength in terms of fitness for purpose) are that as a practitioner's viewpoint it provides a brief overview and personal judgments, rather than an empirical analysis of developments applying a theoretical framework.Practical implicationsThe practical implications were IPSASB's increased outreach to the research community providing opportunities for academics to have increased input into IPSAS development, with likely benefits to researchers and the IPSASB.Social implicationsPractitioners’ engagement with academics supports increased understanding of the respective views leading to better outcomes for practitioners and academics working in the area of public sector financial reporting and its regulation.Originality/valueThis article is the first to (a) describe the IPSASB's increasing outreach to academics during 2019–2020 and (b) compare the IPSASB's strategies for the period of 2019–2023, with its strategies since the beginning of IPSAS developments in 1996–1997.

Determinants of mandatory disclosure compliance in Swedish municipalities

2020 ◽  
Vol 32 (2) ◽  
pp. 247-265
Author(s):  
Pierre Donatella
Keyword(s):  
Financial Reporting ◽  
Design Methodology ◽  
Mandatory Disclosure ◽  
Local Networks ◽  
Content Type ◽  
Government Accounting ◽  
Reporting Practice ◽  
Professional Environment ◽  
Prior Literature ◽  
Practical Implications

PurposeThe purpose of this article is to examine whether, and if so, to what extent, noncoercive isomorphism determines mandatory disclosure compliance at a later stage of an accounting reform.Design/methodology/approachThe analysis of compliance is based on data from 289 Swedish municipalities for 2016, which is nearly two decades after the initial legal reform in which mandatory requirements were imposed by the Swedish government in an effort to harmonize financial reporting practice. Following the standard approach in the literature, an unweighted compliance index was used as dependent variable. Proxies for municipal accounting networks and involvement in professional government accounting associations were used to explain individual municipalities' levels of compliance.FindingsDifferences in individual municipalities' levels of compliance were strongly related to the financial reporting practice of other municipalities in their accounting network. These results suggest that normative and mimetic isomorphic pressure stemming from these local networks, where accounting departments continually meet and share experiences, is a very potent force. In contrast, isomorphic pressure stemming from involvement in activities offered by professional government accounting associations is generally not a potent force at this stage.Practical implicationsIn settings where municipal accounting networks exist, it may be effective to stimulate de facto harmonization by directing information, education and other efforts toward the professional environment in which these networks operate.Originality/valueUnlike prior literature, the data in this study are from a later stage of a public sector accounting reform.

scholarly journals Is online fraud just fraud? Examining the efficacy of the digital divide

2019 ◽  
Vol 5 (2) ◽  
pp. 120-131 ◽  
Author(s):  
Cassandra Cross
Keyword(s):  
Digital Divide ◽  
Virtual Environments ◽  
Design Methodology ◽  
Government Funding ◽  
Content Type ◽  
Online Fraud ◽  
Perceived Benefit ◽  
Potential Benefits ◽  
The Media ◽  
Practical Implications

Purpose Fraud is not a new offence. However, the recent evolution and proliferation of technologies (predominantly the internet) has seen offenders increasingly use virtual environments to target and defraud victims worldwide. Several studies have examined the ways that fraud is perpetrated with a clear demarcation between terrestrial and cyber offences. However, with moves towards the notion of a “digital society” and recognition that technology is increasingly embedded across all aspects of our lives, it is important to consider if there is any advantage in categorising fraud against the type of environment it is perpetrated in. This paper aims to discuss these issues. Design/methodology/approach This paper examines the perceived utility of differentiating online and offline fraud offences. It is based upon the insights of thirty-one professionals who work within the “fraud justice network” across London, UK and Toronto, Canada. Findings It highlights both the realities faced by professionals in seeking to ether maintain or collapse such a differentiation in their everyday jobs and the potential benefits and challenges that result. Practical implications Overall, the paper argues that the majority of professionals did not feel a distinction was necessary and instead felt that an arbitrary divide was instead a hindrance to their activities. However, while not useful on a practical front, there was perceived benefit regarding government, funding and the media. The implications of this moving forward are considered. Originality/value This paper provides new insights into how fraud justice network professionals understand the distinction between fraud offences perpetrated across both online and offline environments.

Profit-sharing investment accounts in islamic banks or mutualization, accounting perspective

2016 ◽  
Vol 14 (1) ◽  
pp. 30-48 ◽  
Author(s):  
Wasim K. AlShattarat ◽  
Muhannad A. Atmeh
Keyword(s):  
Financial Reporting ◽  
Mutual Fund ◽  
Design Methodology ◽  
Profit Sharing ◽  
Islamic Banks ◽  
Content Type ◽  
Implementation Challenges ◽  
Total Profit ◽  
Practical Implications

Purpose Islamic banks use Mudarabah contract to replace the interest-bearing deposits with profit-sharing investment accounts. The purpose of this paper is to explore the challenges and problems associated with the employment of Mudarabah contract by Islamic banks. Design/methodology/approach The study critically analyzes the Mudarabah contract used by Islamic banks. It reviews the evolution of the contract from its traditional type to more complicated types such as compound, unrestricted, commingled and continuous Mudarabah. The paper investigates the problems that have emerged from implementing such types in current business settings. Findings The paper proves that implementing the Mudarabah contract by banks imposes several problems among which are the following: difficulty in the determination of total profit resulting from Mudarabah and in allocating this profit to the multiple parties involved in Mudarabah; usage of reserves to cater against future losses may undermine the concept of Mudarabah profit-loss sharing and lead to earnings management; corporate governance is also a major problem in Mudarabah contract, as the depositors are exposed to risks but have no governance rights; and Mudarabah may also lessen the fair presentation of financial reporting. Research limitations/implications The paper examines the evolving Mudarabah contract and its implementation challenges, based on available literature (no empirical analysis was conducted). Practical implications The implications are significant for the future development of Islamic contracts and Islamic accounting treatments. Originality/value Many studies explored the Mudarabah contract from a Shariah or law perspective. However, this paper investigates the Mudarabah contract with a focus on the implication on accounting and financial reporting because of the lack of studies in this area. Furthermore, it demonstrates the persistent flaws in the Mudarabah contract, and it proposes a new model for mobilizing funds, i.e. mutual fund.

Homeownership in urban China: an empirical study of borrower characteristics and the Housing Provident Fund program in Kunming

2018 ◽  
Vol 12 (3) ◽  
pp. 318-339
Author(s):  
Weizhuo Wang ◽  
Christopher Gan ◽  
Zhiyou Chang ◽  
David A. Cohen ◽  
Zhaohua Li
Keyword(s):  
Logit Model ◽  
Design Methodology ◽  
Demographic Variables ◽  
Urban China ◽  
Research Approach ◽  
Content Type ◽  
Research Findings ◽  
Practical Implications ◽  
Provident Fund ◽  
Housing Provident Fund

Purpose This paper aims to develop and estimate a logit model of whether homeownership could be promoted by participation in and use of the Housing Provident Fund (HPF) program, with a focus on factors that influence the use of HPF loans. Design/methodology/approach This paper develops and estimates a logit model of whether homeownership could be promoted by participation in and use of the HPF program, with a focus on factors that influence the use of HPF loans. Findings The results show that coefficients of marital status, educational level, age, duration of employment and employer are significantly related to the use of HPF loan for homeownership. Research limitations/implications Because of the chosen research approach, the research results may lack generalizability. Practical implications The research findings provide a better understanding of homeowners’ characteristics. Originality/value To manage the HPF program effectively, it is important for government to have a better understanding of the underlying demand for homeownership, especially with respect to the different demographic variables and accessibility to HPF loans and the HPF.

Fraudulent financial reporting motivations in emerging markets

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Farqad Sallal ◽  
Mohammad Ali Bagherpour Velashani ◽  
Mohammad Javad Saei
Keyword(s):  
Emerging Markets ◽  
Financial Reporting ◽  
Design Methodology ◽  
Field Survey ◽  
Financial Statements ◽  
Fraudulent Financial Reporting ◽  
Statistical Population ◽  
Content Type ◽  
Management Fraud ◽  
Descriptive Survey

Purpose The purpose of this paper is to study comparatively motivations for committing fraud in financial statements in two emerging markets including Iran and Iraq. Design/methodology/approach The research is a descriptive survey and statistical population consists of independent auditors. The field survey and questionnaire were used for data collection. Findings Findings can raise auditors’ awareness of management fraud motivations. It can help regulators and authorities in both countries as well as other emerging markets for establishing suitable rules and regulation. Originality/value This paper’s contribution was in identifying and comparing management’s motivations to commit financial reporting fraud in two emerging markets including Iraq and Iran.

scholarly journals Making sense of government budgeting: an internal transparency perspective

2015 ◽  
Vol 12 (4) ◽  
pp. 377-394 ◽  
Author(s):  
Irvine Lapsley ◽  
Ana-María Ríos
Keyword(s):  
Design Methodology ◽  
Content Type ◽  
Making Sense ◽  
Documentary Analysis ◽  
Scottish Parliament ◽  
The Media ◽  
Elite Interviews ◽  
Government Body ◽  
Practical Implications

Purpose – The purpose of this paper is an investigation of internal transparency in government budgeting. Design/methodology/approach – A case study which uses mixed methods – documentary analysis, some observation and elite interviews. Findings – Politicians do not want transparency. Despite the way in which the idea of transparency in government is beyond open challenge, this study reveals the manner in which politicians can inhibit and limit transparency through political will and action. Research limitations/implications – These findings raise serious challenges for policymakers who design government budgeting systems. They should raise concerns among other interested parties, including the media, the electorate and oversight bodies. Practical implications – Are government budgets rigorously scrutinised? This evidence suggests not. This has major implications for accountants in government and for those who seek to use this information. Social implications – This research needs to be extended beyond the case of a government body – the Scottish Parliament – which was designed for and committed to transparency in its activities. For those public service organisations which have no such commitment, is public accountability achievable? Originality/value – This study uses a novel lens of three levels of transparency as devised by Biondi and Lapsley (2014). It focuses on an emergent field of internal transparency in government budgeting.

Guidance on internal audit's interface with regulators

2014 ◽  
Vol 29 (3) ◽  
pp. 268-283 ◽  
Author(s):  
Andrew D. Chambers
Keyword(s):  
Financial Reporting ◽  
Design Methodology ◽  
Internal Audit ◽  
Internal Auditing ◽  
Content Type ◽  
Auditing Standards ◽  
Supervisory Process ◽  
The Relationship ◽  
Audit Standards ◽  
Practical Implications

Purpose – The purpose of this paper is to identify and interpret expectations of regulators about the interface between regulators and internal audit. Design/methodology/approach – Contemporary pronouncements are subjected to a content analysis about the relationship demands that regulators place upon internal audit. Comparison is made with internal auditing standards. The paper identifies the significant challenges and considers the future. Findings – Regulators are increasingly prescriptive about what they expect from internal audit. The scope of internal audit work must cover all matters of interest to the regulator. Internal audit is now regarded as part of the supervisory process. Unlike financial reporting and external auditing, there is no attempt to regulate the setting of internal audit standards, but regulators themselves are enunciating internal audit requirements that go beyond the standards. Research limitations/implications – The paper draws mainly upon developments in the financial sector, which is leading the way in prescribing the interface between regulator and internal audit. Practical implications – The enhanced requirements of regulators impact upon internal audit's other relationships on the internal audit universe and scope, and on staffing internal audit. Originality/value – This is the first attempt to synthesise what regulators currently require from their relationship with internal audit, which needs to be reflected in internal audit charters and in future releases of global internal auditing standards.

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