engleski

Accounting information as indicator of money laundering

The main aim of this research was to analyse which financial statements information can be used to deduce distinctive characteristics of companies involved in money laundering. Findings indicate several »red flags« which can potentially implicate fraudulent and unlawful activities. Some of these are significant increase of income while conducting such activities and decrease of income in years after, collaboration with ficticious companies which exist only to aid unlawful activities, using companies which are mostly small entrepreneurs and not subjected to rigorous regulations, internationality of operations usually exists etc. It is important to note that aforementioned »red flags« are more apparent and easier to detect when analysing financial statements of micro and small entrepreneurs, because medium and large entrepreneurs have large figures in their balance sheets and income statements, which is more suitable for camouflage. The process of auditing has not proved to be very effective in detecting accounting manipulations and unlawful activities related to money laundering. Presumptive reasons for aforementioned fact are absence of auditor's rotation and engaging audit firms which do not belong to »Big Four«. Considering lack of relevant and available information, inductive approach was optimal for this research given that it enables »in depth« analysis of financial statements in order to determine distinctive characteristics which can be basis for future researches.

accounting ; financial statemets ; forensic accounting ; fraud ; money laundering

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