Abstract:
PURPOSE – According to the Association of Certified Fraud Examiners, financial statement fraud represents
the smallest amount of fraud cases but results in the greatest monetary loss. The researcher previously
investigated the characteristics of financial statement fraud and determined the presence of 16 fraud
indicators. The purpose of this study is to establish whether investors and other stakeholders can detect and
identify financial statement fraud using these characteristics in an analysis of a company’s annual report.
DESIGN/METHODOLOGY/APPROACH – This study analyses a financial statement fraud case, using the same
techniques that were previously applied, including horizontal, vertical and ratio analysis. These are preferred
because stakeholders have relatively easy access to them.
FINDINGS – The findings show several fraud characteristics, with a few additional ones not previously
found prevalent. Financial statement fraud thus tends to differ between cases. It is also easier to detect and
identify fraud indicators ex post facto.
ORIGINALITY/VALUE – This study is a practical case showing that financial statement fraud can be detected
and identified in the financial statements of companies that commit fraud.
