Fraud Detection Research Papers - Academia.edu (original) (raw)

One of the unfortunate results of fraud is major financial commotion that results in atrocious loss for those –inter alia, investors, banks, insurance companies-that dabble in the financial markets (Obiri, 2011; Klimaitiene & Grundiene, 2010). Additionally, occupational fraud 1 tends to have very damaging economic effects especially when the result is bankruptcy (Association of Certified Fraud Examiners, 2010; Klimaitiene & Grundiene, 2010; Obiri, 2011). As such, the ability to detect the likelihood of financial fraud before it occurs or while it is in operation; is of great significance to economic progress (Klimaitiene & Grundiene, 2010; Obiri, 2011). This paper has analyzed the bankruptcy of Enron –the US Energy, Telecommunications, Commodities and Services conglomerate (Kroger, 2004) – through inter alia; its 10K filings with the Securities and Exchange Commission (SEC) and information gleaned from academic journals. The objective was to determine whether Enron's gigantic fraud could have been detected sooner. After employing tools such as Non-Financial Measures; Gross Margin Test; Altman's Z-score Bankruptcy Predictor; Modified Altman's Z-score; Chanos Algorithm; and Beneish Model, this paper concludes that, it would have been possible to detect Enron's fraud, as early as 1998 or at worst 1999.