Subject The article deals with the issues of accounting reporting of organizations. Objectives The article aims to assess the quality of accounting reporting of organizations and develop a report manipulation detection algorithm. Methods For the study, I used the Beneish model obtained from the correlation and regression analysis of company's reporting data. Results The article presents an algorithm for detecting manipulation of reporting. A set of procedures and analytical tools have been introduced into analyst practice. It is technological, economical in time and work, and easily algorithmized and embedded in mass computing. As well, the article exposes the limitations of validation of the model and outlines the prospects for future use in Russia. Conclusions and Relevance In the Russian context, practice shows that the proposed model is fully applicable and provides some guidance based on the organizations' reporting. The prospects for launching it in the database of thousands of enterprises are open. This can have a huge effect in the massive monitoring of organizations.
Keywords: manipulation, statements, financial and economic analysis, accounting, verification
Beneish M.D. Detecting GAAP Violation: Implications for Assessing Earnings Management Among Firms with Extreme Financial Performance. Journal of Accounting and Public Policy, 1997, vol. 16, iss. 3, pp. 271–309. URL: https://doi.org/10.1016/S0278-4254(97)00023-9
Bryukhanov M. [Financial reporting fraud in developing markets]. Rynok tsennykh bumag = Securities Market, 2006, no. 15, pp. 48–52. (In Russ.)
Borisova E.N. [Financial statements fraud]. Fundamental'nye issledovaniya = Fundamental Research, 2015, no. 2-19, pp. 4235–4238. (In Russ.)
Feruleva N.V., Shtefan M.A. [Detection of Financial Statements Fraud in Russian Companies: Analysis of the Beneish and Roxas Models Applicability]. Rossiiskii zhurnal menedzhmenta = Russian Management Journal, 2016, vol. 14, no. 3, pp. 49–70. URL: https://dspace.spbu.ru/bitstream/11701/5683/1/03-Feruleva.pdf (In Russ.)
Kavianpour N., Mahmoudian A. Studying the Relation Between Ownership Structure and the Profit Reporting Quality in the Corporations Listed on Tehran Stock Exchange. Journal of Advanced Biotechnology and Research, 2016, vol. 7, pp. 222–239.
Ahmadpour A., Shahsavari M. Earnings Management and the Effect of Earnings Quality in Relation to Bankruptcy Level (Firms Listed at the Tehran Stock Exchange). Iranian Journal of Management Studies, January 2016, vol. 9, iss. 1, pp. 77–99.
Clout V.J., Willett R.J. Earnings in Firm Valuation and Their Value Relevance. Journal of Contemporary Accounting and Economics, December 2016, vol. 12, iss. 3, pp. 223–240. URL: https://doi.org/10.1016/j.jcae.2016.09.005
Persakis A., Iatridis G.E. The Joint Effect of Investor Protection, IFRS and Earnings Quality on Cost of Capital: An International Study. Journal of International Financial Markets, Institutions & Money, January 2017, vol. 46, iss. C, pp. 1–29. URL: https://doi.org/10.1016/j.intfin.2016.10.001
Deng L., Sifei L., Mingqing L. Dividends and Earnings Quality. Evidence from China. International Review of Economics and Finance,March 2017, vol. 48, iss. C, pp. 255–268. URL: https://doi.org/10.1016/j.iref.2016.12.011
Teplova T., Mikova E., Nazarov N. Stop Losses Momentum Strategy: From Profit Maximization to Risk Control under White's Bootstrap Reality Check. The Quarterly Review of Economics and Finance,December 2015, pp. 1234–1243. URL: https://doi.org/10.1016/j.qref.2017.03.003
Fama E.F., French K.R. Common Risk Factors in the Returns on Stocks and Bonds. Journal of Financial Economics,1993, vol. 33, iss. 1, рp. 3–56. URL: https://doi.org/10.1016/0304-405X(93)90023-5
Hampton C. Estimating and Reporting Structural Equation Models with Behavioral Accounting Data. Behavioral Research in Accounting, 2015, vol. 27, iss. 2, pp. 1–34. URL: https://doi.org/10.2308/bria-51226
Fedotova M., Pleskachevskii V. et al. [Behavioral valuation: the behavioral finance concept and its implication in business valuation]. Voprosy Ekonomiki, 2009, no. 5, pp. 104–117. (In Russ.)
Cameron R., Gallery N. Were Regulatory Changes in Reporting “Abnormal Items” Justified?: Evidence of Intra-period Classificatory Earnings Management Practices in Australia. Journal of Accounting & Organizational Change, 2012, vol. 8, iss. 2, pp. 160–185. URL: https://doi.org/10.1108/18325911211230353