Conceptual Framework for Financial Reporting: 1989, 2010, 2018

Shkulipa, Lyudmyla

doi:10.2139/ssrn.3797624

Cited by 1 publication

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“…The major function of financial statements is to provide information about an entity's assets, liabilities, equity, income, and expenses that is useful to financial statement users in assessing the prospects of future cash inflows to the entity and in assessing management's stewardship of the entity's resources [1]. However, the financial statements are not always presented fairly and This research is funded by University of Economics Ho Chi Minh City, Vietnam.…”

Section: Introductionmentioning

confidence: 99%

A Model for Detecting Accounting Frauds by using Machine Learning

Nguyen¹,

To²,

Viet³

2022

Proceedings of the Annual Hawaii International Conference on System Sciences

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This paper aims to develop a machine learning model that enables to predict signs of financial statement frauds by combining the domain knowledge of machine learning and accounting. Inputs of this model is a published dataset of financial statements, and outputs involve the conclusions whether the predicted financial statements indicate the signs of financial statement frauds or not. Currently, XGBoost is recognized as one of the most popular classification methods with fast performance, flexibility, and scalability. However, its default properties are not suitable for fraudulent detecting of imbalanced datasets. To overcome this drawback, this research introduces a new machine learning model based on XGBoost technique, called f(raud)-XGBoost. The proposed model not only inherits XGBoost advantages but also enables it to detect financial statement frauds. We apply the Area Under the Receiver Operating Characteristics Curve and NDCG@k to perform the evaluation process. The experimental results show that the new model performs slightly better than three existing models including logistic regression model that is based on financial ratios, Support-vector-machine model, and RUSBoost model.

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Section: Introductionmentioning

confidence: 99%