PREDICTING FINANCIAL STATEMENTS CORPORATE FRAUD: BENEISH M-SCORE MODEL

Hariri Hariri,Ayub Wijayati Sapta Pradana,Sri Luki Widjajanti

doi:10.31106/jema.v14i02.506

Hariri Hariri, Ayub Wijayati Sapta Pradana + Show 1 more

Open Access

https://doi.org/10.31106/jema.v14i02.506

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Abstract

This research aims to detect fraudulent financial statements the financial statements of XYZ, PT in the period 2010-2013. This research is a qualitative descriptive research. Data collection techniques used are observation and documentation. Data analysis techniques used are data reduction, data presentation and conclusion with Beniesh M-Score Model. The results showed that the financial statements in the period 2010-2013 as a whole that Beniesh M-Score XYZ, PT reached -3.94 in 2010, 0.70 in 2011, -3.32 in 2012 and -2.38 in 2013, the overall Beniesh M-Score reached above -2.22 except in 2011. Beniesh M-Score Model indicates that the management has performed the practice of manipulating numbers on the financial statements conducted continuously in the period of 2010, 2012 and 2013. The authors suggest the regulation (tax office) and public accounting firms, namely that the regulators do a review/inspection directly on the company's assets that has been recorded in the financial statements and the external auditor who has been appointed to conduct an examination of the financial statements to be more independent and do detection of financial statements using ratio analysis.Keywords: Detection, Fraudulent Financial Statements, Beneish M-Score Model, Practice of Manipulation Number

Highlights

1.1 Research BackgroundPSAK No 1 (2009) that the purpose of presentation of financial statements is to provide useful information in the determination of economic decisions
The financial statements will lose their reliability if they are materially misstated. This is due to a significant difference in the condition of the company recorded in the financial statements that have been presented with the actual conditions
The Beneish M-Score Model formula is as follows: M-Score = -4.840 + 0.920 (DSRI) + 0.528 (GMI) + 0.404 (AQI) + 0.892 (SGI) + 0.115 (DEPI) 0.172 (SGAI) – 0.327 (LVGI) + 4.697 (TATA) If M> -2.22, this indicates an indication of the company's manipulation

Summary

Research Background

PSAK No 1 (2009) that the purpose of presentation of financial statements is to provide useful information in the determination of economic decisions. "The company cheated by making double financial statements, such as providing different financial statements for banks, BAPEPAM (Capital Market Supervisory Agency), and tax office," said Sri Mulyani in his presentation in front of participants Indonesia Investor Forum 1 in Jakarta today (Supriyanto, 2006). Fraud in the financial statements can be classified as: (1) The deliberate misapplication of assets embezzlement of money received, theft of company assets, or payments for fictitious purchases; And (2) The deliberate misstatement by fraudulent financial reporting, which generally involves the manipulation, forgery, or alteration of the accounting records and supporting documents on which the financial statements are based; Omission or misrepresentation of events, transactions, or other important information presented in the financial statements; And incorrect application of deliberate accounting principles related to balances, classifications, forms of presentation, or disclosures. This can be done to shift the revenue or expense between one period to the increasing or decreasing the desired profit

Incorrect Asset Valuation

Incorrect Disclosure

Findings

RESEARCH RESULT AND ANALYSIS