POSSIBILITIES OF DETECTING FRAUD IN FINANCIAL STATEMENTS WITH FOCUS ON ANALYTICAL METHODS OF EVALUATING FINANCIAL STATEMENTS

The aim of this paper is to point out the seriousness of the consequences of fraud in accounting. We focus on the financial and non-financial motivational factors that are responsible for the decision to commit accounting fraud. However, our attention is mainly focused on the detection of accounting fraud. Based on the studied literature, we classify individual forms of detection of these frauds which are divided into analytical methods, methods using red flags, statistical and data mining methods and behavioural methods. We pay increased attention to the application of analytical methods to the environment of small and medium-sized Slovak companies, as these companies are not subject to audit obligations and controls on their accounts are performed to a very low extent. Therefore, the possibility of detecting fraud in their accounts is considerably limited. We applied Kanapickiene - Grundiene and Persons models. Application of these methods to Slovak companies created a picture of the probability of fraud in the financial statements. Despite the limitations that the models were created under different geo - economic conditions, their use generally shows that the probability of fraud in the financial statements of Slovak companies is more than 50%. The differences between probabilities occur mainly in individual regions and business sectors. The results of this application clearly underline the need to pay increased attention to fraud in the financial statements of small and medium-sized enterprises.