Manipulation Of Statements Research Articles

Financial Distress Prediction with Stacking Ensemble Learning

Previous studies have used financial ratios extensively to build their predictive model of financial distress. The Altman ratio is the most often used to predict, especially in academic studies. However, the Altman ratio is highly dependent on the validity of the data in financial statements, so other variables are needed to assess the possibility of manipulation of financial statements. None of the previous studies combined the five Altman Ratios with the Beneish M-Score. We use Stacking Ensemble Learning to classify crisis companies and perform a comprehensive analysis. This insight helps the investment public make lending decisions by mixing all the financial indicator information and assessing it carefully based on long-term and short-term conditions and possible manipulation of financial statements.

The essence of creative accounting

The paper examines the concept of "creative accounting", considers its essence, as well as the conditions of its origin and implementation. It is established that a necessary condition for creative accounting is to help the company find ways to solve the problem of increasing costs by improving processes and organization of work. Negative and positive impact on the development of accounting principles. The reasons for using creative accounting and data manipulation in financial statements are summarized. ways of manifestation of creative accounting, its positive sides, the reasons of application of creative accounting are defined. It has been proven that the mechanisms of manipulating financial statements, even within the law, to some extent lead to account misuse. This affects the confidence of users of financial statements. To date, questions about the possibility of creative accounting, the procedure and functions of its application, its relationship with accounting at the enterprise level remain underdeveloped. Fully agreeing with the selected groups of methods, it should be noted that the creativity of accounting should be manifested in the definition of accounting policies of the enterprise, and not in fraud and manipulation. The choice and application of these methods has a fairly wide range, which is based on the professional judgment of the accountant, which proves the need for creativity in accounting. Considering fraud and manipulation, and their connection with creative accounting, it should be noted that one should not confuse creativity in fraud and creative accounting. Practice shows that any creativity can be used for various management needs (including fraud). Therefore, the development of a professional position on the development of creative accounting should be based on professionalism and professional ethics. Existence of alternative methods and ways of conducting accounting enables businesses to manipulate accounting data and financial reporting indicators within current legislation. In recent years, scientists often pay attention to the study of creative accounting.

Independence, Management Motives and Financial Statement Fraud: Role of Earnings Management

This study aimed to look at the direct impact of auditor independence and management motivation upon financial statement fraud, with earnings management acting as a moderator. This study relies on secondary data from manufacturing companies registered on the Indonesia Stock Exchange for the period 2013-2018. This study's data were analyzed using partial least squares and the WarpPLS 5.0 program. The outcomes showed that auditor independence and management motivation (financial target and rationalization) have a positive impact on financial statement fraud and earning management. Earnings management can help to mediate the effect of auditor independence and management motivation (financial target and rationalization) with partial mediation. Our research provides new empirical evidence in providing information about factors that are factors in financial statement fraud that are beneficial for companies and stakeholders as well as assessing activities carried out by organizations or companies. Company management can prevent and detect fraud or manipulation of financial statements early, find out the factors that allow fraud to occur, and control areas that may give rise to fraud. This research can be a reference in making various policies regarding the practice of financial statement fraud in an entity.

The use of Beneish M-scores to reveal creative accounting: evidence from Slovakia

Research background: In creative accounting, the primary goal of every enterprise is to increase and strengthen its market position. Over the years, manipulation of financial statements has also reached the territory of Central European countries, including the Slovak Republic. Therefore, an analysis was conducted to identify enterprises that handle accounting. This article focuses specifically on Sector A: agriculture, forestry, and fisheries. Purpose of the article: The aim of the article was to reveal the creative accounting practices of a sample of enterprises operating in the Slovak business environment in a sector using the Beneish model. Methods: The Beneish model was used to calculate the manipulation of enterprises? financial statements. Both variants, that is, the 5-parameter model and 8-parameter model, were used for the calculation. The results of these models were plotted using graphs and receiver operating characteristic (ROC) curves. Findings & value added: Based on the use of both variants of the Beneish model, it was proven that enterprises in the analyzed sector use the possibility of manipulating financial statements. The added value of the article is the detection of the use of creative accounting in a specific sector, which makes the study original in its application and space-time orientation.

FINANCIAL REPORTING MANIPULATION ON MINING COMPANIES IN INDONESIA: FRAUD DIAMOND THEORY APPROACH

Forensic accounting helps to discover fraud practices where the fraud diamond theory is one of the popular theories in this issue. It puts concerns on budget priorities, financial stability, inefficient monitoring, replacement of auditor and directors. As the dependent variable, financial statement manipulation funded by income control is used. The nine mining entities listed on the Indonesian Stock Exchange in 2017-2019 were chosen using the purposive sampling method, resulting in 27 observations. By using the multi-linear regression method, This study showed that financial targets and financial stability affect the occurrence of fraud in financial reports. Oppositely, insufficient monitoring, replacement of auditors and directors have no impact on the fraudulent reporting.

DETERMINATION OF THE COMPOSITION OF ANALYTICAL PROCEDURES FOR REVEALING MANIPULATION SIGNS IN THE FINANCIAL STATEMENTS OF CONSTRUCTION SECTOR ORGANIZATIONS

Introduction. In modern conditions, the study of the essence and prevention of economic crimes is becoming more and more relevant, since the damage from their consequences increases significantly every year. The growing volume of damage is associated both with the general trend of increasing crimes and with the growth of their detection, which becomes possible if the essence of the crime, its execution and motives are understood. Manipulation in financial statements, as one of the types of economic crimes, is the most difficult method of fraud to detect. In this regard, many researchers offer a different set of tools for detecting manipulations, however, since the methods of committing fraud are constantly being improved, detection methods require timely modernization. Objectives. Determination of a sufficient set of analytical procedures in order to identify signs of manipulation in the financial statements of a construction organization based on public information. Methods. In the course of the study, methods of logical and statistical analysis were used. Results. An assessment of the financial and non-financial information of the construction holding activity was carried out, important components of the analysis of the financial and economic activities of the organization were identified, a set of analytical procedures used to identify signs of manipulation in financial statements was proposed. Conclusions. Conclusions are drawn about the importance of a comprehensive study of not only financial information, but also non-financial information, the use of a benchmarking procedure and the calculation of analytical indicators that can indicate problem areas in financial statements, on the basis of which a set of analytical procedures is proposed, including five stages: data collection for analytical procedures , testing financial statements by analyzing financial information based on a decision tree, analyzing non-financial and financial information, and comparing the results of the analysis of financial and non-financial information.

Cash-based credit risk model based on Timothy Jury’s template: review and modification with application to manufacturing company (2016-2022)

Research Questions: 1) Can the newly developed by the author methodology based on Timothy Jury’s credit risk analysis provide sufficient visibility of the company’s financial situation and creditworthiness? 2) Can such methodology based on Timothy Jury’s credit risk analysis be a trustworthy indicator of production company bankruptcy and the likelihood of default? Motivation: nowadays financial institutions use an accrual-based credit risk model for the analysis of the creditworthiness of the companies, however, such models are not always trustworthy due to the data manipulations in the accrual financial statements. Since the cash flow financial statement is more reliable for the determination of the probability of default, the authors developed the cash-based credit risk model and applied it to the production company for the analysis of its likelihood of default. Idea: This paper looks at Timothy Jury’s little-known methodology of credit risk analysis and its underlying template, and proposes a version that the authors improved in accordance with the requirements of International Financial Reporting Standards (IFRSs). The authors used improved methodology for the analysis of a manufacturing company to find out the company’s pre-bankruptcy situation and reveal the likelihood of credit risk default. Data: the company analyzed is a publicly listed production company Linas Agro Group with its shared traded at Nasdaq Baltic. The data for the research was taken from the annual reports, managerial reports, and the auditor’s reports issued for seven years 2016–2022. Tools: Timothy Jury’s cash-based analysis template was modified by the authors into the credit risk model. Findings: the results show that the modified cash-based credit risk model provides sufficient visibility of the company’s likelihood of default and specifies the actual source used to cover the debt. The analysis has shown that the production company paid significant dividends with negative cash available to satisfy capital providers. Contribution: the present article contributes to the knowledge base about cash flow and credit risk. The article encourages an academic society to further research the topics related to cash flow and cash flow theory, which is currently less researched than accrual-based theory. The article is also beneficial for business owners, investors, and finance professionals to improve investment decision-making, for bank managers to diminish the number of bad loans and for the auditors to determine the pre-bankruptcy state of the company more precisely using the cash-based credit risk model presented in this article.

Prevare i manipulacije u finansijskim izveštajima i mogućnosti za njihovu relativizaciju

Financial reports represent the most efficient way to periodically present information on the company's operations to interested parties. The greatest responsibility for the quality of financial statements lies with the company's management and the persons in charge of compiling them. Presenting business results better than they are, the so-called make-up, by owners and managers, has led to many frauds and manipulations in the business of the company which found their expression in false financial reports. The loss of user confidence in the information presented in the financial statements has unforeseeable consequences for financial markets and the economy as a whole. A large number of examples of fraud and manipulation in financial statements indicate the importance of recognizing them and distinguishing them from technical and unintentional errors. In this paper, we strive to present the motives and goals of fraud and manipulation in financial statements, responsibility for the occurrence and shortcomings that led to embezzlement and abuse, and identify opportunities for their prevention and relativization.

Earnings management and fraudulent financial reporting: Distinctive criteria of suspicious accounting practices

The financial reports, as the final product of the accounting information system, need to be accurate in order to maintain the main purpose of financial reporting. Applied methods and techniques of recognition and measurement of financial positions should be in the purpose of realistic and transparent presentation of the financial performances of the entity. However, creative accounting techniques are often used in the process of preparing and presenting financial statements in order to manage earnings and manipulate financial values. Manipulation of financial statements seems to be a generally present phenomenon, and the paper aims to identify the criteria used by members of the accounting profession in the Federation of Bosnia and Hercegovina (FBiH) to distinguish earnings management techniques from fraudulent financial reporting. The research reflects the perception of accountants and auditors in the FBiH regarding the possibility of recognizing suspicious accounting practices in business entities. The research is based on distinctive criteria used in developed economies of the world: measurement subjectivity, the materiality of financial item and compliance of financial reporting with generally accepted accounting principles, but identifies specific distinctive measures used by respondents, too. The results of the research reveal that the accounting professionals in the FBiH rely on distinctive criteria: materiality and compliance of reporting with International Financial Reporting Standards, including two additional measures: compliance of financial reporting with generally accepted practices and confidence of financial information. Respondents did not recognize subjectivity in assessment as a relevant measure of the distinction between earnings management and fraudulent financial reporting.

Relationship between Google search and the Vietcombank stock

The overall objective of this research is to analyze the financial condition of failing companies prior to bankruptcy, in comparison with non-failing companies, which are matched on the industry, size, and time-period. The sample consists of 168 SMEs from the wholesale and retail industry, whose financial statements were analyzed for the 2011-2015 period. The analysis is primarily based on the ratio analysis and the models developed for bankruptcy prediction and financial statement manipulation. Mann-Whitney U test is used to compare differences between failing and non-failing SMEs for a set of twenty variables. Research findings indicate that there is a significant difference between failing and non-failing SMEs, especially in accruals, asset quality, leverage, profitability, and liquidity. For the very first time in the transition economy of CEE Bosnia and Herzegovina, the pre-bankruptcy behavior of failing SMEs is analyzed, providing insights into potentially manipulated areas, which represent the main contribution of the research.

Financial statement manipulation in failing Small and Medium-Sized Enterprises in Bosnia and Herzegovina

The overall objective of this research is to analyze the financial condition of failing companies prior to bankruptcy, in comparison with non-failing companies, which are matched on the industry, size, and time-period. The sample consists of 168 SMEs from the wholesale and retail industry, whose financial statements were analyzed for the 2011-2015 period. The analysis is primarily based on the ratio analysis and the models developed for bankruptcy prediction and financial statement manipulation. Mann-Whitney U test is used to compare differences between failing and non-failing SMEs for a set of twenty variables. Research findings indicate that there is a significant difference between failing and non-failing SMEs, especially in accruals, asset quality, leverage, profitability, and liquidity. For the very first time in the transition economy of CEE Bosnia and Herzegovina, the pre-bankruptcy behavior of failing SMEs is analyzed, providing insights into potentially manipulated areas, which represent the main contribution of the research.

Perkembangan Akuntansi Thailand dan Analisis Shenanigans pada Perusahaan Group Lease

Thailand is ASEAN country that managed to escape colonialism. However, like Anglo American countries, the country's accounting system emphasizes the transparency and information needs of investors. After the 1997 financial crisis, Thailand reformed to improve government cooperation and investment competition. Thailand's economy is recovering rapidly and is showing good growth. Due to economic growth, the poverty rate also fell. There are types of Thai state accounting standards namely International Financial reporting standards (IFRS) and Thai accounting standards (IFAC). The current development of accounting has to do with manipulation in the company's financial statements. A financial shenanigan is a false statement about the status and financial performance in a financial statement. Financial fraud can be a minor violation, such as through the free interpretation of accounting principles where it has 7 categories of shenanigans. In this discussion, the author presented an analysis of accounting progress in Indonesia with Thailand and analyzed 7 shenanigans to manipulate financial statements in Thai state companies. In this article take the company that makes the selected object that is the Group Lease company. This Group Lease is one of the companies originating from Thailand which is engaged in financing services. This method of research shows that group lease companies manipulate shenanigans 2.

Analisis Kode Etik Akuntan Dalam Penyajian Laporan Keuangan PT XYZ

As one of the important pillars of the business sector is profession must have a high moral commitment and usually all of this is stated in the form of special rules that serve as guidelines for everyone who develops the profession concerned. The object of this research is the ethics of the accountant profession in the presentation of financial statements at PT XYZ which is company engaged in the construction sector. There are several problems faced by construction entrepreneurs during the current pandemic, such as intense business competition between entrepreneurs, presentation of financial statements that must be in accordance with the target of shareholders both internal and external to the company, to unstable sales results that sometimes go up and down. , and besides that there are many internal and external factors that can affect the company's profit. From these problems, this construction company also involved manipulation of financial statements by PT XYZ. Therefore, it is necessary to have ethics and strategies in the accounting profession that will be the right solution to overcome these problems that arise. This study uses descriptive qualitative research methods. The method used is descriptive qualitative approach with data analysis techniques, then this research results in the formulation of an effective and efficient professional ethics strategy to develop business in this construction sector. The alternative strategy formulated is the ethics of accountants in the presentation of financial statements that are appropriate and in accordance with the regulations currently in force.

Kualitas Laba dan Tingkat Manipulasi Laporan Keuangan dimata Investor Pasar Modal Sektor Pertambangan. Pentingkah?

This study aims to prove empirically whether the earnings quality and the level of financial statement manipulation have an effect on the company market value. The study used sample of 3 years from 2017 to 2019. Using the multiple linear regression method, it was found that the quality of earnings has a negative effect on the market value of the company and is contrary to previous theory and research. Meanwhile, the level of financial statement manipulation has no effect on the company's market value. These results indicate that the quality of earnings and the degree of manipulation of financial statements are not the main information used by capital market players in determining their investment choices. Capital market players prefer other methods of analysis in determining their investment options.

ANALISIS BENEISH M-SCORE UNTUK MENDETEKSI FINANCIAL STATEMENT FRAUD PADA PT. GARUDA INDONESIA Tbk PERIODE 2017-2019

This study aims to detect financial statement fraud at PT. Garuda Indonesia in 2017-2019 used the Beneish M Score model and testing whether the Beneish M Score model can detect the occurrence of financial statement fraud at PT. Garuda Indonesia in 2018. The results of this study indicate that PT Garuda Indonesia was classified in the Gray criteria, that can be interpreted as manipulate or not manipule financial statements in 2017 and 2018 and classified in the criteria not manipulate financial statements in 2019. The results of this study also found that the Beneish M Score model could not accurately to detect the manipulation of financial statements at PT. Garuda Indonesia in 2018, because only two ratios are Gross Margin Index (GMI) and Days Sales in Receivable Index (DSRI) which detect manipulation of financial statements, so they are only classified in the gray area criteria

Bibliometric Analysis of the Literature on Measuring Techniques for Manipulating Financial Statements

Creative accounting has its background since early studies in 1975, until the present time. It continues to be a subject of great interest for the companies and interested parties. Thus, the current paper will aim to answer the following proposed research questions: 1. Which are the most used methods for detecting the manipulation of financial statements in the literature? 2. Which are the terms that are most frequently encountered in the literature associated with “creative accounting? 3. Which are the journals that have the highest frequency of articles written on the topic “creative accounting”? 4. Over time, how did research evolve in the field of creative accounting? 5. Which countries are most preoccupied in publishing regarding this topic? To answer the research question 1, the models published in the literature for measuring manipulation techniques through creative accounting were reviewed and analyzed. For the remaining research questions, a bibliometric analysis for the publications in this area was performed. For collecting the sample, articles on this topic were selected from the international Web of Science database. Following this, a bibliometric analysis of the articles was performed, using the VOSviewer program. A total of 4045 publications on creative accounting were identified. Through the bibliometric analysis we have answered research question 2, by identifying the key words that have the closest proximity to creative accounting. To answer the remaining research questions, we identified the journals with the highest frequency of publication and the countries with the highest interest on the topic. It is especially important to evaluate the quality of this many research papers and to obtain valuable information.

Benford’s Law in Forensic Analysis of Income Statements of Economic Entities in Bosnia and Herzegovina

The objective of preparing and presenting financial statements is to provide information about the financial position and performance of an entity, which is useful to a wide range of users of financial statements for business decisions. If information presented in the financial statements is not full disclosure and/or is incorrect, the presented image of the business entity will be wrong, as well as business decisions made on the basis of such financial statements. Unfortunately, many entities knowingly manipulate revenues and expenses to manage earnings in a way that suits the entity management. Detecting frauds in financial statements is the primary task of forensic accountants. This paper analyzes the possibilities of applying Benford’s law in the forensic analysis of income statements of economic entities in Bosnia and Herzegovina, to detect possible earnings manipulation. The results of the research confirm that the positions of revenues and expenses in the income statements of economic entities in Bosnia and Herzegovina generally follow Benford’s law, but also stress the need to increase attention and conduct additional forensic investigations for certain items as indicators of financial statement manipulation.

The Effect of Auditor Rotation on the Relationship between Financial Manipulation and Auditor’s Opinion

Abstract Background: Since external auditors possess the expertise necessary for detecting manipulations in financial statements, they should also take into account earnings management that could lead to it. In that context, auditor’s independence, which can be affected by auditor’s rotation, is of utmost importance. Objectives: This paper aims to examine the moderating effect of auditor rotation on the relationship between the extent of financial manipulation and the type of auditor’s opinion for companies listed on the Zagreb Stock Exchange in the Republic of Croatia. Methods/Approach: A panel analysis with logistic regression is conducted to test the research hypothesis. The sample consists of 210 observations during the three years from 2015 to 2017. Results: Results show a significant positive relationship between auditor rotation in a current financial year and auditor’s opinion. Furthermore, there is a negative, but the statistically insignificant moderating effect of auditor rotation in a current financial year on the relationship between financial manipulation and auditor’s opinion, as well as the statistically insignificant moderating effect of auditor rotation frequency over five years on the relationship between financial manipulation and auditor’s opinion. Conclusions: It is not likely that auditors take earnings management into account when generating their opinion on financial statements, and auditor rotation is not proven to be an adequate stimulus in that context.

Fraud Diamond Theory in Detecting Financial Reporting Manipulation: A Case of Mining Companies Listed on the Indonesia Stock Exchange

Forensic accounting helps auditor in collecting information while conducting necessary assessment to discover fraud practice. One popular theory in the field is the fraud diamond theory. This study implements the theory to detect the existence of financial statement fraud on mining sector in Indonesia. The diamond fraud model as the enhancement of the triangle theory of fraud concerns budget priorities, financial stability, inefficient monitoring, adjustments to the auditor and changes to the manager. As a dependent variable, financial statement manipulation funded by income control is used. The sampling of 9 companies listed on the Indonesian Stock Exchange in the mining sector in 2017-2019 was chosen using purposeful sampling methods, resulting in 27 data observations. The data testing was performed by a multi-linear regression method. This study showed that financial targets and financial stability affect the occurrence of fraud in financial reports. Simultaneously, insufficient monitoring, auditing and change of the director have no impact on the financial statements.

Financial statement users’ institutional logic

In this paper, we investigate what we call “financial statement users’ institutional logic,” defined as users’ expressed fundamental views and beliefs about accounting information. We analyze users’ comment letters to standard setters in response to the proposed standards on lease accounting to identify the dimensions of the institutional logic that underlie their views on accounting information. Our qualitative analysis identified and validated ten principal dimensions, namely economics and substance, due process issues, measurement, readiness and relevance for use, conceptual foundations, clarity, presentation and disclosure, cost-benefit issues, comparability and consistency, and financial statement manipulation. Quantitative analyses revealed that four of these dimensions, i.e. due process issues, readiness and relevance for use, comparability and consistency, and cost-benefit issues, occupy a medium or large amount of space in users’ comments and are referred to in strong terms, while economics and substance and measurement, although also widely discussed, are addressed in weaker terms. Overall, our study begins to fill a gap in the literature by providing insights into users’ views on accounting information. These insights challenge the “homo economicus user” currently constructed in standard-setting debates.