Application of Forensic Tools to Detect Fraud: The Case of Toshiba
Year: 2017
Type: preprint
Abstract: The primary goal of this study is to detect fraud in the financial statements of Toshiba Corporation using the Beneish Model, the Altman Z-Score, and Benford’s Law. For eight years, Toshiba’s financial statement included unchecked fraud, raising the question of auditor competency. In addition to the auditors, other Toshiba stakeholders could have detected the fraud with the help of forensic accounting fraud-detection tools. This case study tests the efficacy of three selected forensic tools to detect Toshiba’s fraudulent financial statements (FFS). The results show that the Beneish Model was not able to detect the fraud, but the Altman Z-Score and Benford’s Law clearly indicated that the company’s financial statements contained misstatements. Although the Beneish Model is very popular for predicting FFS, the results of the present study do not indicate its efficacy. In addition, the present study’s investigation of forensic tools highlights the importance of selecting the best tool(s) to detect financial misstatements. The study’s discussion of and suggestions regarding the efficacy and applicability of the tested tools provides useful direction to investors, financial auditors and forensic auditors when making policy decisions.
Source: SSRN Electronic Journal
Authors: Ganga Bhavani, Anupam Mehta
Language: English
Subfield: Statistics and Probability
Field: Mathematics
Domain: Physical Sciences
Open Access status: green
OpenAlex ID: W7214413401