Can Financial Ratios Detect Fraudulent Financial Reporting?
” by K. A. Kaminski, T. S. Wetzel, and G. Liming, Managerial Auditing Journal (Vol. 19, 2004): 1528. This exploratory study involved comparing the financial ratios of 79 companies known to have committed fraud with 79 matched nonfraudulent companies during a period surrounding the fraud year. Out of the 21 ratios examined, 5 were significant during the period prior the fraud year. The results, however, suggest that ratios are of limited use in predicting fraudulent financial reporting. A discriminant prediction model misclassified fraud firms from 58 percent to 98 percent of the time. “Dimensions of Pressures Faced by Auditors and Its Impact on Auditors Independence: A Comparative Study of the USA and Australia,” by A. Umar and A. Anandarajan, Managerial Auditing Journal (Vol. 19, 2004): 99116. Case studies involving an auditor/client conflict situation were mailed to auditors in both the USA and Australia. Participants responses suggest that auditors independence of judgment is affect
