Home – Home – Jornals – Scientific journal “Vestnik NSUEM” 2016 number 4

Misstatements due to fraudulent financial reporting, as a special type of opportunistic behavior, may inflict serious damage on firms, as well as disturb the stability of the national financial system as a whole. From this point of view, it is extremely important to explore methods, which allow us to detect the financial statements manipulation with the minimum of the analytical efforts. According to economic literature, Benford’s law can be used as the statistical tool for testing the reliability of financial reporting. It seems that methods, based on Benford’s distribution, give simple and effective technique for the realization of the necessary analytical procedures. At the same time, questions of practical applicability of Benford’s law for determination of reliability of financial statements remain open. This article aims to contribute to the solution of this problem. We hypothesized the existence of positive relationships between accruals ratio and mean absolute deviation. The last measure shows the degree of conformity of the actual proportion of occurrence a particular digit within the dataset to Benford’s law. Statistical testing states that the hypothesis is not true. Therefore, it becomes very important the further development of methods aimed at the identifying of false financial statements through the coefficients of financial analysis.