IDEAS home Printed from https://ideas.repec.org/a/ipf/finteo/v38y2014i1p81-96.html
   My bibliography  Save this article

Statistical detection of fraud in the reporting of Croatian public companies

Author

Listed:
  • Sinisa Slijepcevic

    (University of Zagreb, Department of Mathematics, Zagreb, Croatia)

  • Branimir Blaskovic

    (University of Zagreb, Department of Mathematics, Zagreb, Croatia)

Abstract

Statistical methods based on Benford’s distribution, Z- and I‡2-statistics are being successfully applied to detect likely accounting and reporting fraud, for example in the daily usage of the Internal Revenue Service in the USA, and in historical analysis of Greek macroeconomic reporting. We adapt and apply the methodology to the analysis of the reporting of some leading Croatian public companies. We find indications of reporting fraud in several of the companies analyzed. In particular we find correlation between the likelihood of reporting fraud, measured as a deviation from Benford’s law, and reported net income losses, for companies large enough (with a revenue of at least 1 billion kuna). Finally, we suggest application of the methodology to improve the internal processes, efficiency and effectiveness of the State Auditing Office.Data availability: The data used in the study are corporate data in the public domain. For legal reasons, however, the identities of the companies are disguised. Contact the first author for the sanitized data sets that can be used to verify and replicate the analysis.

Suggested Citation

  • Sinisa Slijepcevic & Branimir Blaskovic, 2014. "Statistical detection of fraud in the reporting of Croatian public companies," Financial Theory and Practice, Institute of Public Finance, vol. 38(1), pages 81-96.
    • Handle: RePEc:ipf:finteo:v:38:y:2014:i:1:p:81-96
    as

    Download full text from publisher

    File URL: http://fintp.ijf.hr/upload/files/ftp/2014/1/slijepcevic_blaskovic.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kishore Singh & Peter Best, 2020. "Implementing Benford’s Law in Continuous Monitoring Applications," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 19(2), pages 379-404, June.

    More about this item

    Keywords

    Benford's law; public companies; reporting; fraud detection; auditing;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • M38 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Government Policy and Regulation
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ipf:finteo:v:38:y:2014:i:1:p:81-96. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Martina Fabris (email available below). General contact details of provider: https://edirc.repec.org/data/ijfffhr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.