As with any type of fraud, the sooner financial statement manipulation is detected, the more likely losses can be mitigated. One tool management and fraud experts might use to assess the likelihood of earnings manipulation is the Beneish model, which measures the probability that a company’s revenue has been inflated and expenses understated. The model generally calculates an “M score” from comparisons between consecutive financial reporting periods of various metrics such as gross margin and sales growth. However, there are important limitations to the model. Contact us to learn whether using Beneish analysis is an option for your business.