Detecting Financial Statements Fraud: the Evidence from Russia
Russian stakeholders of joint stock companies, which shares are not traded on a stock exchange, and limited liability companies need the effective instruments which enable them to detect the facts of financial statement fraud quickly because the financial statement remains the main source of information about the companies’ performance for them. Although Institute of Auditors is one of the most reliable tools which identify financial statement manipulations, the costs, connected with audit, are too high and, and as a result, stakeholders have to look for other instruments to distinguish fraudsters, which make an attempt to overestimate or underestimate net assets and financial results, from non-fraudsters. Mathematical model of the American researcher Messod Beneish can be considered as an example of such tools. The general purpose of this paper is to identify whether it is possible, basing on the Beneish model, to create a new one, which enables to distinguish fraudulent from non-fraudulent financial statements reporting in Russia, and determine the accuracy level of fraud status forecasts made by using this model. In our research we are going to concentrate on identification of companies, which overestimate net assets and financial results. Tо obtain the information on the financial ratios included in the model we use financial reports of Russian both non-traded joint stock companies and limited liability firms. The conclusion can also be drawn that it is possible to develop the fraud detection probit model and linear model (integrated M-score index), which enabled stakeholders to identify fraud status correctly in 83% and 60 % respectively. Developing the model we include extra parameters, connected with growth rate of other income to sales ratio and an accounting policy of the company. It was found that fraud risk increases if the company chooses accounting policy according to which administrative costs are charged to core product expenses.
This article is devoted to the results of the author dissertation research for the study of the motives referring to the concept of «Lean Production» in Russian companies by operating in the design operational (production) systems. The article presents the data of the statistical analysis of hypotheses on the example of one of the objects of study - structural unit of a subsidiary of JSC «Russian Railways» - the motor-car depot GZD (logistics services).
Researchers of the Russian economy have unanimously identified the most important features of stock ownership and control (NССG 2008: 12-16). First, the concentration of capital in the corporate sector resulting from its aggressive redistribution for more than 15 years tends to be high. Secondly, the high concentration of ownership affected the development of corporate control and evolution of the mechanisms of corporate governance. This high concentration provides the basis for control by the majority shareholder or a consolidated group of such shareholders exercised by various formal and informal means. Majority shareholders are constrained only by the need to comply with the formal legal provisions and often imitate the activities of intra-corporate tools.
Capital structure is one of key company value factor, so it is important to identify its determinants. Existing studies of Russian companies dedicated to capital structure puzzle use only publicly available data therefore ignore a number of important factors, including behavioral ones. Therefore, the current paper uses survey of people responsible for financial decision-making. In addition to choose statistically significant determinants the paper discusses the possibility of using factor analysis to identify groups of factors influencing the choice of funding.
The article highlights the main tools that are used in practice by the Russian and international companies in the management of young promising employees, which the companies name the young talents. Article is based on empirical studies of 12 large companies from the different sectors of the economy (metallurgy, energy, food and household goods, banking, information technology sector, professional services). It total 45 in-depth interviews were conducted, including 16 interviews with HR managers and 29 - with young talents. As a result of analyzing the content of the young talent management programs have been identified many common characteristics in attracting, selection, development and retention of young talent.
The paper examines the structure, governance, and balance sheets of state-controlled banks in Russia, which accounted for over 55 percent of the total assets in the country's banking system in early 2012. The author offers a credible estimate of the size of the country's state banking sector by including banks that are indirectly owned by public organizations. Contrary to some predictions based on the theoretical literature on economic transition, he explains the relatively high profitability and efficiency of Russian state-controlled banks by pointing to their competitive position in such functions as acquisition and disposal of assets on behalf of the government. Also suggested in the paper is a different way of looking at market concentration in Russia (by consolidating the market shares of core state-controlled banks), which produces a picture of a more concentrated market than officially reported. Lastly, one of the author's interesting conclusions is that China provides a better benchmark than the formerly centrally planned economies of Central and Eastern Europe by which to assess the viability of state ownership of banks in Russia and to evaluate the country's banking sector.
The paper examines the principles for the supervision of financial conglomerates proposed by BCBS in the consultative document published in December 2011. Moreover, the article proposes a number of suggestions worked out by the authors within the HSE research team.