Abstract
The great corporate frauds reported over the past twenty years have damaged and undermined the confidence of stakeholders, shareholders, investors, savers, and regulators. These facts have increased the focus on prevention and detection activities and tools. Fraud is costly, therefore it is very important to prevent and detect the fraudulent event to avoid high losses and damages to corporate financial health. Fraud detection is a dynamic discipline where traditional auditing activity is strengthened with new tools like Benford's Law and Beneish Model. This paper aims to focus on the analysis of the usage and application of these instruments in detecting accounting fraud.
Highlights
Fraud detection has become one of the highest priorities for capital market participants and other stakeholders in the financial reporting process [4,5], and it is a continuously evolving discipline that nowadays it can take advantage of new technologies and techniques
This paper aims to analyze two of the most powerful methods to detect financial statement anomalies: the Beneish model and the Benford’s Law
Dalnial et al [1] said that fraudulent financial reporting usually occurs in the form of falsification of financial statements in order to obtain some benefits, and primarily consists of manipulating elements by overstating assets, sales and profits or by understating liabilities, expenses or losses [2]
Summary
Fraud detection has become one of the highest priorities for capital market participants and other stakeholders in the financial reporting process [4,5], and it is a continuously evolving discipline that nowadays it can take advantage of new technologies and techniques. Beneish model is a mathematical method which is based on financial ratios and their analysis, Benford’s Law is an observation about the actual frequency of the digits in the data
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