Last modified: 2013-10-31
The Explanatory power of financial statements is a fair and true view of reality. Accounting remains the main source of information about the company for most users of financial statements. The article deals with possibilities of the application of a selected identification model of creative accounting in order to reduce audit risk. The urgency of the issues of distortion of the true and fair view of accounting is manifested by both the consequences of frauds of big dimensions, and the frequency of activities of distortion of the data distributed to several areas in the major part of relatively small firms.
Our hither to research has verified the hypothesis of risk identification of manipulated financial statements by an analysed case study for 5 accounting periods by the CFEBT model in the context of Czech accounting standards. The following contribution analyses and evaluates certain aspects of identification of manipulated financial statements by integrating the basic methods of creative accounting and fraud into the CFEBT identification model. The CFEBT model was designed mainly with the view of reducing the auditor risk and users’ risk of manipulated financial statements in term of Czech accounting standards.