Search results

The purpose of the financial statements is to present the situations of the enterprises, such as the financial situation, results of operations, etc., in the decision-making processes to the related parties in a suitable, comparable, and realistic manner. In recent years, professional frauds in enterprises have been seriously reflected in financial statements and this has resulted in the manipulation of financial information.

In this study, we aim to determine financial firms, which might manipulate the financial information, by applying the Beneish model and then determine the financial indicators of possible financial statement manipulation, using logistic regression. For this purpose, companies included constantly in Borsa İstanbul-50 (BIST-50) 2015, 2016, and 2017 were examined. After the enterprises which have the possibility of financial manipulation are determined by the Beneish model, it is understood that there is a positive relationship between the probability of manipulating financial information and the Asset Quality Index and Sales, general and administrative expenses index.

The purpose of this study is threefold: first, to detect trends in financial statement manipulation; second, to measure the level of manipulation and to measure the variation in manipulation between countries; and, third, to identify widely used techniques in financial statements manipulation.

This study uses financial data of listed companies from Asia, namely, Japan, Singapore, Malaysia, Indonesia, Thailand, Hong Kong and China. The study adopts financial ratios, financial forensic tool, dichotomous approach and statistical tools to analyze the data (84,000 observations) over a period of four years from 2010 to 2013.

The results show that 34 per cent of sample companies in selected Asian countries are involved in the manipulation of financial statements; the average level of manipulation (overall manipulation index) is 72 per cent; and there is a significant difference between countries at 5 per cent level. The study also identifies four most commonly used techniques, namely: days’ sales in receivable (DSRI), depreciation (DEPI), assets quality (AQI) and total accruals to total assets (TATA).

Although this study found a significant national difference between countries in terms of practicing manipulation in financial statements, it did not address the issue of why some countries have higher level of manipulation and greater fluctuations in manipulation than others. Further study could be conducted to look for the reasons on these issues.

Investors and other stakeholders are advised to judge the manipulation in financial statements before fixing up for investment. At least they should examine Sales, Accounts Receivable, Depreciation, Value of Fixed Assets and Accruals data before accepting the financial statement in good faith.

The trend of manipulation in financial statements is increasing day by day and that is why it needs to prevent to protect our society from white collar crime. The cost of white collar crime is much higher and key executives are making money at the expense of investors and other stakeholders. This kind of study creates awareness among stakeholders about the manipulation as well as provides techniques to examine the faithfulness of financial statements. Then, managers will not overstate or understate either revenues or expenses easily, as it can damage the goodwill.

This is the first study of its kind addressing measurement of manipulation score, overall manipulation index (OMI) and identification of widely used variables of manipulation in financial statements are new contributions towards existing literature of earnings manipulation.

Financial manipulation means the modification made knowingly and willfully by businesses in accounting records and transactions, in financial statements, through addition and subtraction, for the purpose of misleading financial information users. Financial manipulations are expected to have an effect on the decisions of financial information users. The present study was established on the basis of two main objectives. The first objective is to determine whether banks, which are Public Interest Entities (PIE), manipulate their financial statements. As for the second objective, it is to reveal whether the detected financial manipulations have an effect on investor decisions. The research conducted to achieve the first objective is based on the examination of independent audit reports for the periods between 2009 and 2017, pertaining to 45 banks registered to the Banks Association of Turkey, in terms of presented opinions. Data acquired from examined reports were subjected to content analysis via the Microsoft Excel program. In line with the second objective of the study, investor numbers for the periods between 2010 and 2017, of 13 banks, which are within the scope of BIST BANK, were included in the analysis, according to data acquired from the Central Registry Agency. Financial statements of banks, with audit reports in which a qualified opinion is expressed, were considered to have been manipulated. SPSS 22.0 statistics pack software was used to analyze whether investment demands toward these banks had an effect on decisions of domestic and foreign investors. In the analysis, frequency and One-Way ANOVA tests were used. In consequence of the analyses conducted, it was determined that, around one fifth of financial statements of PIE banks, pertaining to the periods between 2009 and 2017, were manipulated; it was mostly committed by private banks, and majority of the manipulations were committed due to free provisions made. It was also observed that manipulations did not have an effect on decisions of neither domestic nor foreign investors. The reason behind the latter is the fact that while the level of manipulations in financial statements is significant, it is not a widespread occurrence.

This paper aims to examine the frequency and the nature of International Financial Reporting Standards/International Accounting Standards (IFRS/IAS) violations that resulted in modified audit opinions (MAOs); determinants of MAO decision; and underlying motives, targets and techniques of accounting manipulations.

Descriptive statistics and in-depth investigation on archival data collected from the published audit reports are used to analyse the frequency and the nature of IFRS violations that resulted in MAOs, while the logistic regression is applied to identify the possible determinants of MAO decisions. A survey instrument is used to identify the relative importance of different manipulation motives, targets and techniques from the perspective of an external auditor.

Results from the archival research show that MAOs are expressed in 29% of audit reports of listed companies in Croatia. A majority of the qualifications refer to noncompliance with provisions of IAS 39, IAS 16, IAS 1, IAS 2 and IAS 36. The survey results show that manipulations are principally oriented towards creditors, tax authorities and suppliers with the intention to hide bad performance, get better terms of crediting and minimize fiscal and political costs. Results from the field study complement and confirm the archival research results in respect to the accounting areas and techniques used for manipulation purposes.

The analysis provides a rather robust estimation of the extent of accounting manipulations, compared to commonly used earnings management metrics. Application of multi-method research that integrates archival research and field study offers significant contribution to the existing earnings management literature in methodological approach. The results directly address particular provisions of the IFRS that are frequently violated and provide better understanding of the features of accounting manipulations in a specific institutional setting.

The purpose of this study is to examine investors’ awareness in Amman Stock Exchange of the effects of earnings manipulation incentives on the earnings manipulation practices of managements through the usage of the available level of flexibility in the accounting standards, and to examine whether those investors are able to detect these practices. A self‐administered questionnaire of three sections was developed and used to achieve the purposes of this study. A sample of 144 respondents from four industries was selected using a stratified sampling method. The study found that investors in Amman Stock Exchange have enough awareness to the effects of earnings manipulation incentives on the practices of managements toward the manipulation of earnings. Moreover, this study concluded that investors in Amman Stock Exchange have the ability to detect those practices.

This study aims to investigate what are the capabilities and limits of external audit in detecting frauds in companies operating in the territory of the Republics: Serbia, Croatia, Macedonia and Bosnia and Herzegovina.

In total, 51 certified auditors from Serbia, Croatia, Macedonia and Bosnia and Herzegovina were surveyed to analyze what are the most frequent warning signals of the existence of the frauds auditors encounter during the verification of company’s financial statements.

The study indicated that the auditors of the Republic of Serbia more often encountered groundless overstatement of revenues compared with other countries, while regarding manipulative representation of inventories, the largest mean value and median are still among the auditors of the Republic of Serbia.

Based on the research results, it can be concluded that it is necessary to expand the legal obligation and power of external auditors when, in financial statement auditing, they come to clear findings that indicate fraud. Expansion of external auditors’ powers would reduce their current limitations and expand the domain of action.

Limitations in external auditors’ work prevent the processing of frauds. However, auditors’ analysis of financial statements and pointing to potential irregularities can be a good manner for the early detection and prevention of frauds in company’s operations.

This study aims to determine the number of companies involved in earnings manipulation. Additionally, this study has empirically investigated the common manipulation items among the companies.

Bangladesh's listed commercial banks are selected as a sample for this study, and financial data from 2009 to 2018 were collected. The likely and nonlikely manipulator Beneish model (1999) divides the sample into two groups. Based on the M-score of the model, the banks are put into two groups. To identify the most influential variables, an independent sample t-test was done with the help of Statistical Package for Social Sciences (SPSS).

The findings show that banks in Bangladesh have an unstable trend in making manipulated financial reports. Results of the t-test reveal that overstating revenues, increasing intangible assets, lessening cost and accruals are the most appealing items for preparing a fraudulent financial report. The findings of this research work will help the investors take the right decision having the idea of manipulation in the banking sector of Bangladesh.

In the presence of many irregularities in the banking sector Bangladesh, very few studies have been carried out in forensic accounting and fraudulent financial reporting practices. Much research has focused on earnings management techniques. This research specifically focuses on identifying earnings manipulation in financial statements for micro-level variables like accounting accruals, intangible assets, etc. This will help policy-makers and financial statement readers to be proactive while reading financial statements and taking any investment decision.

The study explores accountants' views of the likelihood of widespread accounting manipulation in the emerging economy, Vietnam. Applying the fraud triangle framework, we examine accountants' responses to management pressure, manipulation opportunities and perceptions of how they rationalize their decisions.

The study uses an experimental methodology involving 592 Vietnamese accountants as participants. Post-experiment field interviews were conducted with eight highly experienced accountants.

Our findings indicate that accounting manipulation is perceived to be common in Vietnam. The findings reveal that there is no differentiation between manipulation of accounting transactions with or without management pressure and no differentiation between collective gain or individual gain.

While the study focused on accountants' perceptions of accounting manipulation, these views may change over time. The impact of law reforms and the potential for prosecution under the force of law provisions could alter these perceptions.

The study findings alert regulators, government authorities and auditors of the perceptions and views in relation to accounting manipulation and the potential for fraud in Vietnam. Auditors could use help from forensic specialists to uncover unethical behaviors identified in this study.

The fraud triangle framework is used to shed light on fraud through the examination of accounting manipulation in Vietnam. We contribute to the relevant accounting literature with insights into accountants' motivations toward conducting questionable accounting transactions. The contributions we make draw attention to preconceptions of Asian societies; in particular, accounting actions to motivate collectivist gains. While we shed further light on fraudulent accounting, we conclude that the fraud triangle framework does not necessarily articulate fraud well in relation to accounting manipulation in emerging economies.

This paper is intended as a brief introduction to the topic of financial market manipulation. Although market manipulation is as old as markets themselves, the subject is presently generating a great of interest and discussion. While initially any efforts to prevent and control market manipulation were nationally focused, the advent of global and interconnected financial markets has required a reappraisal of such parochial approaches. In addition, the task has been made all the more difficult as the opportunities for market manipulation (and for disguising it) have increased exponentially with the development of new technologies for communication and trading and of ever more ingenious and sophisticated market practices, often using novel and esoteric financial instruments.

This study contributes to the limited literature dealing with ethical perceptions of earnings management in developing capital markets by investigating the perceptions of managers, accountants, and investment analysts in Malaysia, Singapore, Hong Kong and Thailand, to ethical issues concerning the management of earnings. The results are compared to similar studies undertaken in the US and UK. The results show that East Asian managers, accountants, and analysts tended to be less willing to condemn situations as clearly unethical and use a narrower range of ethical responses than their US/U K counterparts. However, there was a remarkable overall consistency of perceptions between East Asian and US/UK managers, accountants, and analysts in relation to many issues.