Improving the methodology for identifying information distortions in financial statements

Abstract

Object: The purpose of the article is to consider the use of financial indicators to identify information distortions in financial statements. Based on the example of one of the Kazakhstan companies the possibility of using the “map of regulatory deviations of financial indicators” by Professor Messod D. Benish in order to identify signs of financial statements distortion has been provided.
Methods: Data comparison, methods horizontal analysis, coefficient analysis, absolute values were applied.
Results: The results of the conducted research demonstrated that the Benisha model is able to identify distortions of information in financial statements. Important ones for identifying distortions are indicators of depreciation, revenue, return on sales on total profit and general administrative expenses, as well as indices of the coefficient of financial dependence.
Conclusions: Presence of a weakness of internal and external control leads to the distortions in financial statements. The internal level of protection against distortions is carried out by clarifying the internal regulations for the preparation of financial statements, and the external level of prevention of distortions is an external audit