The use of the coefficient analysis method in identifying fraudulent financial statements

The article deals with the use of the coefficient method of analysis of financial statements in establishing the facts leading to the compilation of fraudulent financial statements. The purpose of the article is to find out whether there are any significant differences between the financial ratios of fraudulent and non-fraudulent companies, and to determine which financial ratio is essential for identifying fraudulent financial statements.

The research is carried out on the basis of theoretical methods of study, generalization and analysis. The basis of the work is the works of domestic and foreign authors on the issues of falsification of financial statements, its audit and analysis.

Market economic conditions determine the attraction of investments as an important condition for the successful development of the activities of any economic entity. The quality of the information reflected in the financial (accounting) statements of an economic entity largely determines the result of the decision taken by interested users in relation to the reporting organization.

Financial distress is one of the criteria that must be monitored when assessing the likelihood of submitting fraudulent financial statements, because it is the inefficiency of activities that motivates an economic entity to compile fraudulent financial statements.

The study showed that there are significant differences between companies engaged in fraud and companies not engaged in fraud in such ratios as the ratio of total debt to total capital, accounts receivable to sales. In addition, the Z- score, which measures the probability of bankruptcy, is also important for identifying fraudulent financial statements.

Based on relevant research, this article examines the significant differences between the financial indicators of fraudulent and non-fraudulent companies, suggests and proves two hypotheses: there is a significant difference in financial indicators between fraudulent and non-fraudulent companies; financial coefficients are important predictors (predictive parameters) of unfair financial (accounting) reporting.

In conclusion, the article expresses the opinion about the relevance of conducting such studies in the future, using other forms of data, changing sample sizes, investigating various elements of fraud (for example, opportunities and rationalization) with appropriate measurements, which will make it possible to obtain more meaningful conclusions, and therefore will enable earlier diagnosis of fraudulent actions.

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