Detection of Fraudulent Financial Reporting using Ratio Analysis

Authors

  • Nur Fadlizawati Isa Kolej Poly-Tech MARA Alor Setar
  • Noor Rohin Awalludin Kolej Poly-Tech MARA Alor Setar

DOI:

https://doi.org/10.61688/ajpbs.v1i1.12

Abstract

The main objective of this analysis was to examine the uses of financial ratios as a tool for detecting fraud in financial reporting. This study examines the annual reports of companies that have been reprimanded by the Securities Commission from 2000 to 2009 for submitting false or misleading information. Ratio analysis was performed to see if fraudulent financial reporting were predictable or not. The ratios of leverage, profitability, efficiency, and liquidity with have been tested. This study uses trend analysis to figure out changes of more than 10% which may indicate the possibility of financial mismanagement as a change in the ratio of more than 10% annually can be seen as a sign of financial mismanagement. In conclusion, the findings show that signs of fraudulent financial reporting can be detected much earlier.

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Published

2020-06-30

How to Cite

Isa, N. F. ., & Awalludin, N. R. (2020). Detection of Fraudulent Financial Reporting using Ratio Analysis. The Asian Journal of Professional & Business Studies, 1(1). https://doi.org/10.61688/ajpbs.v1i1.12

Issue

Vol. 1 No. 1 (2020): [June] Economic Sustainability

Section

Full Paper Article

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