What is it about?
The article explores the characteristics found in the financials and behavior of companies involved in accounting irregularities. It analyzes the financial statements and narrative reports of five companies accused of such irregularities, comparing them to a control sample. The study finds that nine characteristics initially identified are not reliable indicators, but nine others are positively linked to detecting accounting irregularities. Additionally, eight new potential indicators of accounting irregularities are identified. In simpler terms, the research investigates signs in financial statements and reports that can help identify companies with accounting irregularities, providing insights into their characteristics.
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Why is it important?
This research is important because it delves into the characteristics of companies engaging in accounting irregularities, providing insights that can aid in their detection. By analyzing both quantitative and qualitative aspects of financial statements and narrative reports, the study identifies certain characteristics that serve as reliable indicators for spotting accounting irregularities. This information is crucial for investors, auditors, and regulators who seek effective ways to identify potential financial misconduct. The findings contribute to the field of financial analysis and forensic accounting, enhancing our understanding of red flags associated with accounting irregularities and helping stakeholders make more informed decisions in the financial domain.
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This page is a summary of: Characteristics of companies with a higher risk of financial statement fraud: Five case studies, Risk Governance and Control Financial Markets & Institutions, January 2015, Virtus Interpress,
DOI: 10.22495/rgcv5i1c1art1.
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