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Ph.D.
(Computer Applications)
DESIGN OF COMPUTATIONAL MODEL FOR DETECTION OF
FRAUDULENT FINANCIAL STATEMENT IN INDIA

Ph.D. Scholar : Hiral Amitkumar Patel
Research Supervisor : Dr. S. M. Parikh

Regi. No.: 12146041002
Abstract :
Undoubtedly, fraud is a global phenomenon and no continent or sector of the economy
left apart from the effect of fraud and scandals. The recent fraud cases i.e Satyam,
Worldcom, Enron, Wipro-World bank etc indicates that the companies have failed to
supply lawful information and disclosures of transactions that would impacts the
financial position and operating results to their investors. These financial frauds and
scandals have decreased the confidence on financial reporting practice and effectiveness
as well as reliance on corporate governance mechanisms. And hence, discussion on the
significance of predicting Financial Statement Fraud has emerged in recent years.

Financial statement frauds have been catching attention from the press, financial
community, investor, regulators and public as numerous high profile frauds reported by
mammoth corporates such as Satyam computers, Lucent, Enron, and WorldCom over the
last few years. Falsifying financial statements predominantly comprise of elements
manipulation in terms of understating liabilities, expenses or losses and overstating
assets, sales and profit. Any country’s Auditing Standards entails that the auditing firms
to detect financial fraud.

Financial fraud is a severe issue worldwide and a big concern in fast growing emerging
economies like India. Market participants such as investors, creditors are making
decision of investing in any company based on financial information in the form of
financial statements published/available. The reliability, uniformity and transparency of
the published information is critical for investor to take a wise decision of investing.
Therefore, it is the pious job and responsibility of the auditors, society, business fraternity
and different regulators to thwart financial statement fraud. Undoubtedly, its occurrences
create a confidence crisis in the corporate world and ultimately affecting the economy of
a country.

This increases the need to discover fraud effectively.

Conventionally, auditors are responsible for spotting financial statement fraud. With the
increasing number of companies exercising unethical and unfair practices, detecting
fraud through normal audit measures is becoming difficult task as auditors have become

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