Abstract
The paper considers the modern methods for detecting financial statement errors and fraud with respect to their application to Russian corporate companies. The study methods evaluating the financial statements of companies allow getting a comprehensive and quick assessment of the financial condition of the company based on open sources. An assessment of the financial statements of enterprises according to the Roxas model showed that the composite index of the model is applicable to Russian companies.
Highlights
When studying the financial condition of the counterparty, there is no access to the organization’s management accounting
Analysis of the financial statements of enterprises by the Roxas model showed that the composite index of the indicator of companies is below the boundary value
Due to the peculiarities of accounting, the Roxas model with the boundaries of indicators applicable to Russian companies is more preferable, since it excludes indexes that do not affect the final result, which simplifies the calculation and reduces probable errors. These methods of evaluating companies’ financial statements allow obtaining a comprehensive and rapid assessment of the financial condition of an enterprise based on public sources, but the results of calculations should be used as an additional factor confirming either the probability of misstatements or their absence, and being a prerequisite for additional verification if necessary
Summary
When studying the financial condition of the counterparty, there is no access to the organization’s management accounting. Due to the major changes in the financial condition of a considerable number of corporate companies, it is necessary to strengthen control over the financial indicators changes of the counterparties for economic security purposes. Financial condition assessment helps obtaining data on the actual size of the company’s reserves and its ability to service the obligations assumed. It can serve as a source of information on errors made in accounting and keeping records as well as indicate the possible cases of fraud. The organization’s security services need operational information to evaluate a large number of contractual counterparties. Top managers of the company or other officials may misrepresent the financial statements to demonstrate to the company’s owners or shareholders the state of affairs in a more favorable light in order to enrich themselves, conduct unauthorized transactions, or unwittingly make errors in accounting due to insufficient competence of responsible persons
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