Abstract

This paper investigates the circumstances where M-score and F-score are predicted to find out company fraud from financial statement. The first part goes over the background information for company fraud by answering three questions. The second part introduces the important parameters cited in the research and calculation. The third part shows the result by providing charts and analysis. The last part summarizes this paper. The importance of these two scores is hypothesized to increase the public ability to be conscious of company fraud from hidden data and false statements. However, under specific circumstances, M-score and F-score are not reliable reflections of other parameters like net income and accruals. The results of the data analysis are consistent with our prediction. This work shows the importance of individual thinking as a result does not agree with the accuracy of the model. One of the most significant creative thoughts in this work is about how to break through the traditional blind faith in established model when the result does not follow the standards.

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