scholarly journals Detecting red flags of corporate financial statement frauds using Beneish m score model in Sri Lanka

2020 ◽  
Vol 6 (2) ◽  
pp. 71
Author(s):  
G. M. Mudith Sujeewa ◽  
M. D. Pubudu Kawshalya
Keyword(s):  
Sri Lanka ◽  
Financial Statement ◽  
Red Flags ◽  
Score Model

FRAUD TRIANGLE ANALYSES IN DETECTING FRAUDULENT FINANCIAL STATEMENT USING FRAUD SCORE MODEL

2020 ◽  
Vol 25 (1) ◽  
pp. 29-44
Author(s):  
Mariati ◽  
Emmy Indrayani
Keyword(s):  
Financial Stability ◽  
Linear Regression Analysis ◽  
Financial Statements ◽  
Multiple Linear Regression Analysis ◽  
External Pressure ◽  
Financial Statement ◽  
Fraud Triangle ◽  
Financial Statement Fraud ◽  
Financial Condition ◽  
Score Model

Company’s financial condition reflected in the financial statements. However, there are many loopholes in the financial statements which can become a chance for the management and certain parties to commit fraud on the financial statements. This study aims to detect financial statement fraud as measured using fraud score model that occurred in issuers entered into the LQ-45 index in 2014-2016 with the use of six independent variables are financial stability, external pressure, financial target, nature of industry, ineffective monitoring and rationalization. This study using 27 emiten of LQ-45 index during 2014-2016. However, there are some data outlier that shall be removed, thus sample results obtained 66 data from 25 companies. Multiple linear regression analysis were used in this study. The results showed that the financial stability variables (SATA), nature of industry (RECEIVBLE), ineffective monitoring (IND) and rationalization (ITRENDLB) proved to be influential or have the capability to detect financial statement fraud. While the external pressure variables (DER) and financial target (ROA) are not able to detect the existence of financial statement fraud. Simultaneously all variables in this study were able to detect significantly financial statement fraud.

Who’s the BOSS? Analysis of a Fraud

2021 ◽  
Author(s):  
Eileen Z. Taylor
Keyword(s):  
Student Engagement ◽  
Real World ◽  
Financial Statement ◽  
Accounting Students ◽  
Work Experiences ◽  
Red Flags ◽  
Financial Statement Fraud ◽  
Financial Statement Analysis ◽  
News Stories ◽  
Public Company

Based on a real world, public company, $30 million embezzlement and financial statement fraud, this case helps students recognize red flags, analyze a situation using the fraud diamond, perform research and reflect on their own work experiences to support a belief, and conduct financial statement analysis. Its variety of activities are suitable for both undergraduate and graduate accounting students, and in-class and out of class learning. Because it is based on an actual fraud, it includes an epilogue with links to news stories and court documents, which improves student engagement with the material.

scholarly journals Validity of Altman Z-Score Model to Predict Financial Failure: Evidence From Jordan

2018 ◽  
Vol 10 (8) ◽  
pp. 181 ◽  
Author(s):  
Sufian Al-Manaseer ◽  
Suleiman Al-Oshaibat
Keyword(s):  
Stock Exchange ◽  
Financial Statement ◽  
Insurance Companies ◽  
Z Score ◽  
Financial Reports ◽  
Financial Failure ◽  
Amman Stock Exchange ◽  
The Face ◽  
The Subject ◽  
Score Model

This paper aims to investigate the Validity of Altman z-score model to predict financial failure in insurance companies listed on Amman Stock Exchange (ASE) over the period 2011-2016. To achieve the goal of the study, the study depended on the different statistics analytical method and Multiple Linear Regression through doing the statistical analysis of the independent variables on the dependent variable related to the subject of the study through the (E-views) program in order to cover the analytical part of the study, in addition to the descriptive method through relying on books, periodicals, previous studies and financial reports of the insurance companies of the study’ sample, whether the direct or the indirect ones, to cover the theoretical part. The result of the study finds a high predictive power for Z-score model. Moreover, the findings reveal that Z-Score model could be valuable instrumental indicators for many users of financial statement such as financial managers, auditors, lenders, investors, to make right decisions in the face of financial failure.

scholarly journals FRAUD PENTAGON THEORY DALAM FINANCIAL STATEMENT FRAUD PADA PERUSAHAAN TERDAFTAR di JAKARTA ISLAMIC INDEX (JII) PERIODE 2014-2017 (Perspektif F-Score Model)

2019 ◽  
Vol 4 (2) ◽  
pp. 128-138
Author(s):  
Faiz Rahman Siddiq ◽  
Agus Endrianto Suseno
Keyword(s):  
Financial Stability ◽  
External Pressure ◽  
Financial Statement ◽  
Fraud Triangle ◽  
Financial Statement Fraud ◽  
Purposive Sampling ◽  
Auditing Standards ◽  
Score Model ◽  
Financial Need

Financial statement fraud biasa disebut dengan kecurangan laporan keuangan yang merupakan kesengajaan dalam melakukan kelalaian dan kesalahan ketika  membuat laporan keuangan dengan penyajian yang tidak sesuai pada prinsip akuntansi berterima umum. Statement on Auditing Standards (SAS) No.99 menjelaskan tentang salah saji yang berhubungan dengan auditor dalam mengaudit laporan keuangan terhadap fraud diantaranya adalah (1) salah saji dari kesalahan suatu laporan keuangan merupakan suatu  pengungkapan yang direncanakan guna menipu pengguna laporan keuangan, (2) penyalahgunaan aset atau istilah lain pencurian dan penggelapan sering dijadikan sebagai salah saji dalam laporan keuangan. Fraud pentagon theory merupakan pengembangan dari teori fraud sebelumnya yaitu fraud triangle (Cressey, 1953) dan fraud diamond (Wolf and Hermanson,2004). Populasi penelitian ini adalah perusahaan yang tergabung dalam Indeks JII (Jakarta Islamic Index) pada tahun 2014-2017. Teknik pengambilan sampel dengan menggunakan metode purposive sampling. Metode analisis data yang digunakan dalam penelitian ini adalah analisis regresi linear berganda. Financial statement fraud dalam penelitian menggunakan perspektif F-Score Model. Hasil penelitian ini adalah pressure (Financial Stability, dan Financial Target), dan Opportunity (Nature of Industry) berpengaruh terhadap financial statement fraud. Sedangkan Pressure (External Pressure dan Personal Financial  Need), Rationalization (Change in Auditor), Competence (Change of Director) dan Arrogance (Frequent Number of CEO’s Picture dan Dualism Position) tidak berpengaruh terhadap financial statemnt fraud.

Fraud Detection and Investigation: Microcomputer Consulting Services

1999 ◽  
Vol 14 (1) ◽  
pp. 99-115 ◽  
Author(s):  
Bonita K. Peterson ◽  
Thomas H. Gibson
Keyword(s):  
Fraud Detection ◽  
Internal Controls ◽  
Financial Statement ◽  
Sufficient Evidence ◽  
Red Flags ◽  
Fine Line ◽  
Consulting Services ◽  
Financial Statement Audit ◽  
Audit Team ◽  
University Setting

This nonfictional case of inventory fraud in a university setting exposes students to fraud detection and investigation. These skills are becoming increasingly important for auditors, as evidenced by the alarming rate of fraud. The accounting profession has acknowledged the seriousness of this issue with the issuance of SAS No. 82, Consideration of Fraud in a Financial Statement Audit, developed in part to improve detection of frauds by auditors. The case raises many of the fraud-related issues faced by accountants: recognizing red flags indicative of fraud; the importance of a good system of internal controls; the profile of the typical fraud perpetrator; the fine line auditors walk when investigating a fraud; the need to develop an audit team with the appropriate level of expertise which may require members from a variety of disciplines (e.g., investigative, legal and forensic areas); and the difficulty of obtaining sufficient evidence to prosecute and convict perpetrators.

scholarly journals Does Model Reflect on Reality? Exploring Beneish M Score on Selected Private Commercial Banks in Nepal

2021 ◽  
Vol 14 (1) ◽  
pp. 18-28
Author(s):  
Santosh Gyawali
Keyword(s):  
Commercial Banks ◽  
Balance Sheet ◽  
Threshold Value ◽  
Financial Statement ◽  
Secondary Source ◽  
Manufacturing Companies ◽  
Stock Market Return ◽  
Income Statement ◽  
Score Model ◽  
The Given

This research explores if possible fraudulent financial statement is present in private commercial banks in Nepal. This study examines the viability of Beneish M-score model in detecting probable earning manipulation considering the sample of 16 private commercial banks including the joint ventures. The published annual report (income statement and balance sheet) of the year 2018 and 2019 of respective banks are used as a secondary source of information. This research employs Beneish M-score equation and threshold value -2.22 as keys to analysis. The result shows even four banks are engaging in income manipulation, the Beneish model cannot identify the deception on the financial statement. Though the given model is suggested for manufacturing companies, the researcher has used it to explore the Banks—this is the limitation of this research. Further investigation of these tools combined with other fraud detection models is suggested to discover financial manipulation and relationship with the stock market return.

scholarly journals The Application of Altman’s Z-Score Model in Predicting Bankruptcy: Evidence from the Trading Sector in Sri Lanka

2015 ◽  
Vol 10 (12) ◽  
pp. 269 ◽  
Author(s):  
Aloy Niresh J. ◽  
Pratheepan T.
Keyword(s):  
Sri Lanka ◽  
Early Warning ◽  
Financial Distress ◽  
Safe Zone ◽  
Grey Zone ◽  
Z Score ◽  
Financial Reports ◽  
Financial Position ◽  
Score Model

Prediction of bankruptcy is crucial as the early warning may change entire complications and may avoid the high cost that is associated with distress. The main purpose of this study is to examine the likelihood of bankruptcy of the firms belonging to the Trading Sector in Sri Lanka. The research used data from the financial reports of seven trading companies for a period of the last five years from 2010 to 2014. Altman’s original (1968) bankruptcy model has been applied in order to classify the companies in various levels of financial position namely safe, grey and distress. Findings reveal that 71% of the companies belonging to the Trading Sector were in financial distress and the rest of whole 29% were in the grey zone. The fact that none of the companies lie under the safe zone highlights that as a whole the sector is in a menace.

scholarly journals Using the Beneish M-score model: Evidence from non-financial companies listed on the Warsaw Stock Exchange

2020 ◽  
Vol 17 (4) ◽  
pp. 389-401
Author(s):  
Artur Hołda
Keyword(s):  
Factor Model ◽  
Stock Exchange ◽  
Financial Statements ◽  
Small Sample ◽  
Financial Information ◽  
Financial Statement ◽  
Control Group ◽  
Warsaw Stock Exchange ◽  
History Of ◽  
Score Model

The risk of distortion of financial statements has been growing. Following the 2008 crisis, recipients of financial information are increasingly focusing on the likelihood of financial statements being distorted through fraudulent presentation of financial information. Therefore, scientific research pays more attention to models capable of detecting financial statement manipulation.The paper aims to present the principles of functioning and the possibility of using the Beneish M-score model in Polish realities. It analyzes the history of more than 30 companies listed on the Warsaw Stock Exchange to select those whose history indicates that they can be classified as manipulators, and to select the same number of companies from the control group that are considered as non-manipulators.The research method involves the analysis of empirical data on companies listed on the Warsaw Stock Exchange. The analysis showed the 8-factor Beneish model identified manipulators with 100% accuracy and succeeded in identifying non-manipulators. The effectiveness of the 5-factor model was much lower. To serve the purpose of the study, the effectiveness of the Beneish model was tested on a small sample of Polish listed companies as an introduction to a planned larger scale research. The results obtained are consistent with the results of numerous studies by authors from various countries and confirm the effectiveness of the Beneish model in detecting financial statement manipulation. AcknowledgmentThe publication is sponsored by funds from the Cracow University of Economics for the maintenance and development of research potential.

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