1. bookVolume 13 (2019): Edition 1 (December 2019)
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eISSN
2668-3989
Première parution
30 Sep 2019
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Anglais
access type Accès libre

Testing the Beneish Model Relevance in Case of Entities with Confirmed Reputational Risk

Publié en ligne: 07 Feb 2020
Volume & Edition: Volume 13 (2019) - Edition 1 (December 2019)
Pages: 43 - 48
Détails du magazine
License
Format
Magazine
eISSN
2668-3989
Première parution
30 Sep 2019
Périodicité
1 fois par an
Langues
Anglais
Abstract

The Beneish model is a useful tool for assessing the potentially fraudulent behaviour of an entity that could resort to misstated financial reporting by manipulating earnings. Tarjo ---amp--- Herawati (2015) concluded that “the M-score of the Beneish model was generally able to detect financial fraud”, following a study on 35 listed companies that were confronted with allegations of fraud in the period 2001-2014, by accessing the sanctions database applied to companies of public interest (issuers) published by the Financial Supervisory Authority. Also, Ahmet Ozcan (2018) stated that the Beneish model “brings effective value in the analysis of the quantitative characteristics of falsified financial statements”, a conclusion based on a concentrated research on a sample of 174 firms over the period 2005-2017. However, the construction of this model was not oriented for the financial services industry, therefore the studies referred to above do not include any investment firms. Our research aims to assess the relevance of the use of the Beneish model to entities involved in scandals on fraudulent or suspected distorted financial reporting operations (Romcab, 2017 and Harinvest, 2013) in order to Test the Beneish model’s validation capability. On the basis of the conclusions obtained, it can be accepted that the applicability of the model is validated for the entities examined.

Keywords

JEL Classification

Ahmet O. (2018). The Use of Beneish Model in Forensic Accounting: Evidence from Turkey, Journal of Applied Economics and Business Research, 2018, ISSN 1927-033X;Search in Google Scholar

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Stephen A., Arnie W., Zimbelman M. (2015). Challenges Facing Auditors in Detecting Financial Statement Fraud: Insights from Fraud Investigations, Journal of Forensic ---amp--- Investigative Accounting, vol. 7, Issue 2.Search in Google Scholar

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