Detecting Fraudulent Financial Reporting through Financial Statement Analysis

Abstract

Fraudulent financial reporting is a major concern for two primary regulators of Malaysia's capital market -the Securities Commission (SC) and Bursa Malaysia. Both authorities continue to refine the parameters that will ensure rigorous surveillance over public listed firms. The objective of current study is to examine the association between financial statement analysis and fraudulent financial reporting. Many researchers found indication of financial ratios to detect fraudulent financial reporting but others also have concluded otherwise. Most of these studies were conducted outside of Malaysia. The sample comprises of the Malaysian Public Listed firms and data used ranged between year 2000 to 2011. The result indicated that several financial ratios such as total debt to total asset, and receivables to revenue were found to be significant predictors to detect fraudulent financial reporting. This reflects that, financial ratios maybe helpful in the detection of fraudulent financial reporting. These findings add to the extant literature on the ability of financial ratios to detecting fraud.  Index Terms-financial statement analysis, fraudulent financial reporting, public listed companies, Malaysia

Analisis Rasio Keuangan Sebagai Deteksi Kecurangan Laporan Laporan Keuangan Perusahaan Barang Konsumsi yang Terdaftar di Bursa Efek Indonesia

“…Meningkatnya kecurangan mengindikasikan terdapatnya kebutuhan yang tinggi dalam penelitian untuk menemukan metode yang efektif dalam mendeteksi potensi kecurangan pada perusahaan (Dalnial et al, 2014). Salah satu cara yang digunakan untuk mendeteksi kecurangan pada laporan keuangan adalah dengan menggunakan rasio keuangan.…”

“…Dalnial et al, (2014) menemukan bahwa asset composition 2 dan asset composition 3 memiliki pengaruh terhadap fraudulent financial reporting.…”

“…Penelitian yang dilakukan oleh Nia (2015) dan Dalnial et al, (2014) menemukan adanya pengaruh capital turnover terhadap fraudulent financial reporting. Beasley et al, (1999) juga menghasilkan penelitian yang menemukan pengaruh capital turnover terhadap fraudulent financial reporting.…”

Detecting Financial Statement Frauds in Malaysia: Comparing the Abilities of Beneish and Dechow Models

“…Several researchers suggest that financial ratios are effective in fraud detection (Bai et al 2008;Subramanyam & Wild 2009;Dalnial et al 2014). In contrast, Kaminski et al (2004) concluded differently in which they argued on the limitations of financial ratios.…”

Earnings Fraud and Financial Stability

“…Manipulation through the distortion of earnings is a pattern that becomes their focus (Ahmed and Naima, 2016;Anh and Linh, 2016;Dalnial at al., 2014;Kaur at al., 2014;Mahama, 2015;Omar at al., 2014;Paolone and Magazzino, 2014). Their findings appear to be more useful as a medium of knowledge.…”