Beneish model helps detect earnings manipulation

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.