Analysis of Financial Reporting as a Method of Detection of the Facts of Falsification

Abstract

Financial Reporting shows the status of assets, financial results, structure of capital and cash flow of the economic entity. The opinions and decisions of vested interests depend on how reliable is the data depicted in reporting. Often firm managers use a variety of measures to «sugarcoat» Financial Reporting and affect decisions of vested interests. Falsification of Financial Reporting misleads investors, creditors and other entities. That is why the detection of falsification of Financial Reports is the main task not only of administration but also of internal controlling branches. The goal of this research is to develop a procedure based on the analysis of rate variation of financial ratios for the detection of Financial Reporting falsifications. From the set goal, the next tasks were found -a sample of financial rations traditionally used in Russia are observed carefully on variations of rates where proof of falsification can be stated; make a calculation of coefficients using the Financial Reports on a given sample of firms during the specified period; analyze the rates of calculated ratios and detect the availability of falsifications in given reports. A novelty of the research is based on the development of a method using financial indexes applied in the Russian reporting practice.

Strategies for Sustainable Development of Socio-Economic Systems

“…The tasks of this stage should be implemented in the government's measures to overcome the socio-economic crisis and create conditions for the country's transition to a stable, socially oriented market economy. The market economy should be based mainly on the use of its internal resources: rent for natural resources, intellectual potential and high-tech industries (Domingues et al, 2017;Sigidov et al, 2020;Novoselova et al, 2020;Vasylishyn and Yarova, 2021). At this stage, the foundation of a new Russian economy should be laid, which will ensure effective reproduction and have the potential for long-term dynamic growth and allow solving the problems of increasing the quality of life and modernising production apparatus for maintaining the integrity and security of the country.…”