Financial Reporting Fraud: Public and Private Companies

2016 ◽  
Vol 1 (1) ◽  
pp. A27-A41 ◽  
Author(s):  
A. Scott Fleming ◽  
Dana R. Hermanson ◽  
Mary-Jo Kranacher ◽  
Richard A. Riley
Keyword(s):  
Financial Reporting ◽  
Primary Objective ◽  
Private Company ◽  
Private Companies ◽  
Public And Private ◽  
Public Companies ◽  
Multivariate Tests ◽  
Public Company ◽  
Public Versus Private ◽  
Financial Reporting Fraud

ABSTRACT This study uses survey data gathered by the Association of Certified Fraud Examiners (ACFE) and provided to the Institute for Fraud Prevention (IFP) to examine differences in the profile of financial reporting fraud (FRF) between private companies and public companies. Although private companies represent a significant portion of the economy, largely due to lack of data on these companies, most research on FRF examines only public companies. The primary objective of this study is to determine how private company FRF is different from FRF in public companies. Our multivariate tests reveal that public companies have stronger anti-fraud environments, are more likely to have frauds that involve timing differences, tend to experience larger frauds, have frauds that involve a larger number of perpetrators, and are less likely to have frauds that are discovered by accident. Overall, it appears that the stronger anti-fraud environment in public companies leads public company FRF perpetrators to use less obvious fraud methods (i.e., timing differences) and to involve larger fraud teams to circumvent the controls. These public company frauds are larger than in private companies, and their larger size may make them more likely to be detected through formal means, rather than by accident. Based on the results, we encourage auditors and others to be particularly attuned to the unique risks of the public versus private setting.

scholarly journals Analysis of the Safety Resilience Implementation in the Maritime Industry at Public and Private Companies (A Case Study in Indonesia)

Safety ◽  
2021 ◽  
Vol 7 (3) ◽  
pp. 56
Author(s):  
Zulkifli Djunaidi ◽  
Annisa Ayu Tantia ◽  
Mufti Wirawan
Keyword(s):  
Quantitative Methods ◽  
Sampling Technique ◽  
Learning Ability ◽  
Maritime Industry ◽  
Private Company ◽  
Private Companies ◽  
Public And Private ◽  
The Public ◽  
Public Company ◽  
Anticipatory Action

(1) Background: The resilience concept shows performance improvement in four potential aspects consisting of the ability to respond, provide anticipatory action, control things that occur internally and externally, as well as the learning process of what is going right and what is going wrong. This study aims to analyze the safety resilience implementation in the Indonesian maritime sector. (2) Method: This is a descriptive study using semi-quantitative methods, using interview guides based on the Resilience Assessment Grid (RAG). The sampling technique is purposive sampling. (3) Results: The level of implementation of safety resilience at the public company was 75.1%, while the private company was 70.2%. The score for each safety resilience element in the public and private companies are as follows: the ability to respond (80%), learning ability (74.62%), monitoring ability (70.77%), and the ability to anticipate (66.92%). (4) Conclusion: The safety resilience implementation in Indonesian sea transportation shipping has not been optimal in implementing the safety resilience concept. The focus of implementing safety is still on preventing and controlling accidents. The other orientation of ability improvement in the safety resilience concept has not been implemented.

scholarly journals Public versus Private: New Insights into the Private Company Discount

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Sabrina Goetz
Keyword(s):  
Lower Risk ◽  
Firm Characteristics ◽  
Publicly Traded ◽  
Private Company ◽  
Private Companies ◽  
Public Companies ◽  
Publicly Traded Companies ◽  
Percentage Difference ◽  
Industry Membership ◽  
Public Versus Private

Abstract We examine whether private companies are valued with a discount compared to publicly traded companies. The analysis is based on a comparison of private company transactions with those of public companies. Whereas prior studies build pairs based on industry membership, we match private companies with public counterparts that are comparable in value relevant firm characteristics, i.e. profitability, risk, and growth, to calculate the percentage difference in valuation multiples. We find that private companies are valued on average with a discount on the EBITDA-multiple of 13% compared to their public counterparts. Private companies sell at lower discounts, if the acquirer firm is publicly listed. As size is associated with lower risk, we show that larger private companies sell at lower discounts.

scholarly journals PUBLIC AND NON-PUBLIC COMPANIES IN THE LAW OF RUSSIA AND SOME FOREIGN COUNTRIES

2016 ◽  
pp. 0-0
Author(s):  
Михаил Красильников ◽  
Mikhail Krasilnikov ◽  
Андрей Габов ◽  
Andrey Gabov ◽  
Татьяна Бойко ◽  
...  
Keyword(s):  
Private Companies ◽  
Public And Private ◽  
Public Companies ◽  
Regulatory Pathways ◽  
Public Company ◽  
The Status ◽  
The Usa ◽  
The Difference ◽  
Business Entities ◽  
The Uk

The classification of business entities into public and non-public in the Russian law provides a reason to seek from the world experience in order to highlight the similarities and further development of regulatory pathways of the above-noted institute. The goal set is achieved by comparing the attributes of a public company in the legislation of some countries. In particular, on the example of the UK and the USA it is established the difference between public and private companies. There is marked a combination of two trends: imperative regulation of public companies, along with the freedom of the creation and operation of private companies. The article describes the approach to the definition of the status of a public company, adopted in Eastern Europe, which is different from that in the UK, studies law in certain countries strongly influenced by English law. Along with the detailed characteristics of the Russian model of public (non-public) companies its difference from the typical Anglo-Saxon model is revealed. The presence (absence) of division into public (private) companies does not evidence the proper and (or) inadequate level of a legal system in this aspect, but simply reflects the model of regulation of the market in a particular country. The authors criticize different interpretation of the term “publicity” by legislators in the case of public (non-public) companies.

scholarly journals Public companies’ transparency in Ukraine: key regulatory requirements

2017 ◽  
Vol 6 (1) ◽  
pp. 8-14 ◽  
Author(s):  
Inna Makarenko ◽  
Yulia Serpeninova
Keyword(s):  
Financial Reporting ◽  
Public Interest ◽  
Financial Information ◽  
Regulatory Requirements ◽  
Financial Efficiency ◽  
Private Companies ◽  
Public And Private ◽  
Public Companies ◽  
European Experience ◽  
The Relationship

Public companies as strategically important and economically powerful Ukrainian companies should be classified as public interest entities in the context of European integration. Based on the research methodology of the Index of public companies’ transparency of the Center for CSR Development and research of largest public and private companies’ transparency in Ukraine, conducted by TI, the authors concluded about critically low level of transparency of public companies in the disclosure of audited financial reporting, as well as non-financial reporting. This research may contribute to the existing literature in regard to identifying key areas of improving transparency of public companies in Ukraine on the basis of amendments to the existing order of reporting and additional disclosure of non-financial information and carrying out the statutory audit, taking into account European experience. Among the issues that require further study, the authors should name the relationship between the level of transparency of public companies, their financial efficiency and investment attractiveness. Among the promising areas of research, the extension of the study on transparency of public interest entities after the publication by the European companies of the first statements prepared in accordance with Directive 2014/95/EU is worth noting. Limitations of the research carried out concerned the size of the sample Ukrainian public companies analyzed.

14. Meetings and investor engagement

Company Law ◽  
2019 ◽  
pp. 339-374
Author(s):  
Lee Roach
Keyword(s):  
Financial Reporting ◽  
Institutional Investors ◽  
Majority Vote ◽  
General Meeting ◽  
Annual General ◽  
Annual General Meeting ◽  
Private Companies ◽  
Class Meeting ◽  
Public Companies ◽  
The Uk

This chapter examines the role and importance of general meetings, the significant body of procedural rules by which general meetings are run, and the extent to which a company's members actually engage with general meetings. Members make decisions in one of two ways: through a resolution or by unanimous assent. A resolution is simply a vote that requires a specified majority vote in its favour in order to be passed. The resolutions of public companies must be passed at meetings, whereas resolutions of private companies can be passed at meetings or via a written resolution. Two forms of general meeting existed: the annual general meeting and extraordinary general meetings. In some cases, however, companies are required to hold a class meeting in which only one class of member is entitled to attend. To encourage institutional investors to engage more, the Financial Reporting Council (FRC) has published the UK Stewardship Code.

5. Raising capital: equity and its consequences

2016 ◽  
Author(s):  
Alan Dignam ◽  
John Lowry
Keyword(s):  
Stock Exchange ◽  
Listed Companies ◽  
Private Companies ◽  
Public And Private ◽  
Public Companies ◽  
The Public ◽  
Insider Dealing ◽  
The Uk ◽  
Takeover Bids

Titles in the Core Text series take the reader straight to the heart of the subject, providing focused, concise, and reliable guides for students at all levels. This chapter focuses on raising equity from the general public and its consequences for the operation of the company. It begins by outlining the basics of raising equity before turning to the consequences of operating in a public market, with emphasis on areas such as takeovers and insider dealing. It then considers the distinction between public and private companies in terms of capital raising, how such companies are regulated, and how public companies differ from listed companies. It also discusses various methods of raising money from the public, the role of the Financial Conduct Authority and the London Stock Exchange in ensuring the proper functioning of the listed market in the UK, and the regulation of listed companies as well as takeovers and other public offers. The chapter concludes by examining the Takeovers Directive (Directive 2004/25/EC of the European Parliament and of the Council of April 21, 2004 on Takeover Bids).

Conventions of Audit Quality: The Perspective of Public and Private Company Audit Partners

2018 ◽  
Vol 37 (2) ◽  
pp. 51-71 ◽  
Author(s):  
Marion Brivot ◽  
Mélanie Roussy ◽  
Maryse Mayer
Keyword(s):  
Audit Quality ◽  
Value Added ◽  
Professional Judgment ◽  
Private Company ◽  
Public And Private ◽  
Financial Situation ◽  
Big 4 ◽  
Audit Firms ◽  
Public Company ◽  
Depth Analysis

SUMMARY This research is based on an in-depth analysis of 34 interviews with partners in Big 4, medium-sized, and small audit firms that specialize in private and/or public company audits, to explore how they understand the concept of audit quality. Two contrasting conventions—i.e., shared judgment norms—of audit quality emerge from the analysis. Public company audit partners in Big 4 firms espouse what we call the “model” audit quality convention, which considers that audit quality results from a technically flawless audit, where professional judgment is highly formalized, and quality is attested by a perfectly documented audit file that passes Canadian Public Accountability Board (CPAB) and PCAOB inspections. In contrast, partners working primarily on private company audits, regardless of their firm's size, endorse what we call the “value-added” audit quality convention, which considers that audit quality results from tailoring the audit to meet the client's unique needs, where professional judgment is unconstrained, and where quality is attested by the client's perception that the audit has given a better understanding of their financial situation and the associated risks and opportunities. Our analysis also reveals significant tensions within each of these two conventions, and a fear that the current regulatory framework for quality control might end up severely hurting audit quality.

The Dodd-Frank Act and the Private Company Discount: An Empirical Investigation

2020 ◽  
Author(s):  
Peter L. Lohrey
Keyword(s):  
Empirical Investigation ◽  
Negative Impact ◽  
Purchase Price ◽  
Private Company ◽  
Private Companies ◽  
Public Companies ◽  
Significant Evidence ◽  
Public Firms ◽  
Academic Literature ◽  
Tax Court

There has been a great deal of criticism about the Dodd-Frank Act of 2010 (DFA) which focuses on the negative impact it had on small public companies. This study uses acquisition data to perform an empirical investigation into whether the DFA impacted the value of private companies. The results present statistically significant evidence that the purchase price discount for non-public firms was greater post-DFA. The evidence presents support for the opinion that the DFA was more harmful to private companies than it was to public companies. It also supports the existent academic literature, tax court, federal regulator and valuation practitioner views that private company acquisitions should include a discount for lack of marketability due to the illiquid nature of private companies.

Auditors' Response to Auditor Business Risk: An Analysis Using Public and Private Companies

2021 ◽  
Author(s):  
Gil S. Bae ◽  
Seung Uk Choi ◽  
Jae Eun Lee
Keyword(s):  
Initial Public Offering ◽  
Risk Premium ◽  
Audit Fees ◽  
Business Risk ◽  
Difference In Differences ◽  
Private Companies ◽  
Public And Private ◽  
Public Companies ◽  
Public Offering ◽  
Time Series Comparison

Using audit hours and hourly audit fees for a large sample of public and private companies, we examine how auditors respond to auditor business risk. We find that auditors work more hours and charge higher hourly fees when auditing public companies than when auditing private companies. A difference-in-differences time-series comparison of the pre- and post-initial public offering (IPO) periods also indicates that both audit hours and hourly audit fees are higher for the post-IPO period than for the pre-IPO period of the company. This suggests that auditors respond to an increase in auditor business risk by increasing audit effort and charging a risk premium for the residual risk that additional effort alone does not fully address.

ANALISIS PREDIKSI KEBANGKRUTAN DENGAN MENGGUNAKAN MODEL ALTMAN Z SCORE PADA PERUSAHAAN BUMN YANG TERDAFTAR DI BURSA EFEK INDONESIA

2018 ◽  
Vol 2 (1) ◽  
pp. 117
Author(s):  
Umi Sartika
Keyword(s):  
Financial Reporting ◽  
Stock Exchange ◽  
Sample Selection ◽  
Z Score ◽  
Analysis Model ◽  
Public Companies ◽  
The Public ◽  
Healthy State ◽  
Public Company ◽  
Probability Of Bankruptcy

ABSTRACTThe aim of this research is to test whether the altman model (z score) could be used to predict bankruptcy in the public companies in Indonesia Stock Exchange. Altman  z score is one of the multivariate analysis-model which is useful to predict the company bankruptcy with the trusted accuracy level. This sample selection was done by purposive judgement sampling method. The sample used was 16 companies from all public company listed in the Indonesia Stock Exchange (IDX) periode 2012-2016. While the source of this research data was collected from the company financial reporting in Indonesia Stock Exchange (IDX). The data was processed by the method of the z score formula Z = 1,2X1 + 2,4X2 + 3,3X3 + 0,64X4 + 1,0X5. With the description of Z <1,81 the company categorized into companies that will be bankrupt, the value Z 1,81< 2,99 then the company is considered to be in the grey area of bankrupt enterprises the possibility area and some are not, and the value  of Z  > 2,99 the the company is is a very healthy state so that the probability of bankruptcy is very little going on. The result of this research shows that almost of the public companies are in the bankrupt position with the different bankruptcy level

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