Talk on financial fraud and misstatements

Two research talks, namely, “Financial Reporting Fraud and Corporate Governance Quality: Evidence from Malaysia” and “Financial Statement Restatements and Market Reaction in Australia”, were organised by UTAR’s Centre for Accounting, Banking and Finance, on 2 and 3 March 2016.

The speaker, Professor Dr Kamran Ahmed from La Trobe University, Australia, shared insights about the various definitions of financial fraud, the various types of fraud, and the reasons for such frauds to occur. He reiterated that the weak monitoring has allowed fraudsters to take advantage, which led to them committing these frauds, and he highlighted the importance of possessing an effective governance system.

He also explained the various micro and macro approaches in detecting and preventing frauds in financial statements. He stated that improved quality governance helps to reduce the financial statement frauds, and he shared one of his researches on the financial statement frauds in Malaysia with the audience.

Prof Kamran explaining the various definitions of financial fraud

The inspiring talk proceeded with an interactive Q&A session and followed with a souvenir presentation by Department of Commerce and Accountancy Head Ching Suet Ling to Prof Kamran.

Ching presenting a token of appreciation to Prof Kamran

In his other talk on “Financial Statement Restatements and Market Reaction in Australia”, he defined the misstatement in the financial statements as the difference between the amount, classification, presentation, or disclosure of a reported financial statement item, and the amount, classification, presentation, or disclosure that is required for the item to be in accordance with the applicable financial reporting framework.

This misstatement, as he explained, can arise from errors or fraud. He continued by sharing one of his researches with 813 Australian firms. He mentioned that misstatements were not common, with the occurrence chance at about 4%, and has been declining from 2009 to 2013.

He stated that there were no market reaction to the average misstatement announcement, and there was a reaction of -1% to the reduced prior-period earning/equity announcements. The market reacts slowly and generally negatively to the accounting issues associated with misstatements, and that these reactions were strongest for non-stealth disclosures.

After an interactive Q&A session, the talk ended with group photo of the participants