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Original scientific paper
https://doi.org/10.15179/ces.23.1.2

Benford’s Law in Forensic Analysis of Income Statements of Economic Entities in Bosnia and Herzegovina

Ševala Isaković-Kaplan   ORCID icon orcid.org/0000-0001-7754-0353 ; School of Economics and Business, University of Sarajevo, Bosnia and Herzegovina
Lejla Demirović ; School of Economics and Business, University of Sarajevo, Bosnia and Herzegovina
Mahir Proho ; AS Holding, Sarajevo, Bosnia and Herzegovina

Fulltext: english, pdf (779 KB) pages 31-61 downloads: 106* cite
APA 6th Edition
Isaković-Kaplan, Š., Demirović, L. & Proho, M. (2021). Benford’s Law in Forensic Analysis of Income Statements of Economic Entities in Bosnia and Herzegovina. Croatian Economic Survey, 23 (1), 31-61. https://doi.org/10.15179/ces.23.1.2
MLA 8th Edition
Isaković-Kaplan, Ševala, et al. "Benford’s Law in Forensic Analysis of Income Statements of Economic Entities in Bosnia and Herzegovina." Croatian Economic Survey, vol. 23, no. 1, 2021, pp. 31-61. https://doi.org/10.15179/ces.23.1.2. Accessed 18 Oct. 2021.
Chicago 17th Edition
Isaković-Kaplan, Ševala, Lejla Demirović and Mahir Proho. "Benford’s Law in Forensic Analysis of Income Statements of Economic Entities in Bosnia and Herzegovina." Croatian Economic Survey 23, no. 1 (2021): 31-61. https://doi.org/10.15179/ces.23.1.2
Harvard
Isaković-Kaplan, Š., Demirović, L., and Proho, M. (2021). 'Benford’s Law in Forensic Analysis of Income Statements of Economic Entities in Bosnia and Herzegovina', Croatian Economic Survey, 23(1), pp. 31-61. https://doi.org/10.15179/ces.23.1.2
Vancouver
Isaković-Kaplan Š, Demirović L, Proho M. Benford’s Law in Forensic Analysis of Income Statements of Economic Entities in Bosnia and Herzegovina. Croatian Economic Survey [Internet]. 2021 [cited 2021 October 18];23(1):31-61. https://doi.org/10.15179/ces.23.1.2
IEEE
Š. Isaković-Kaplan, L. Demirović and M. Proho, "Benford’s Law in Forensic Analysis of Income Statements of Economic Entities in Bosnia and Herzegovina", Croatian Economic Survey, vol.23, no. 1, pp. 31-61, 2021. [Online]. https://doi.org/10.15179/ces.23.1.2

Abstracts
The objective of preparing and presenting financial statements is to provide information about the financial position and performance of an entity, which is useful to a wide range of users of financial statements for business decisions. If information presented in the financial statements is not full disclosure and/or is incorrect, the presented image of the business entity will be wrong, as well as business decisions made on the basis of such financial statements. Unfortunately, many entities knowingly manipulate revenues and expenses to manage earnings in a way that suits the entity management. Detecting frauds in financial statements is the primary task of forensic accountants. This paper analyzes the possibilities of applying Benford’s law in the forensic analysis of income statements of economic entities in Bosnia and Herzegovina, to detect possible earnings manipulation. The results of the research confirm that the positions of revenues and expenses in the income statements of economic entities in Bosnia and Herzegovina generally follow Benford’s law, but also stress the need to increase attention and conduct additional forensic investigations for certain items as indicators of financial statement manipulation.

Keywords
Benford’s law; the first digit phenomenon; financial statement fraud; fraud indicator; forensic accounting

Hrčak ID: 258357

URI
https://hrcak.srce.hr/258357

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