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CFEBT Risk Triangle as a Tool for Detecting and Evaluating Risks of Accounting Records: a Case Study

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  • Zita Drábková

    (Department of Finance and Accounting, Faculty of Economics, University of South Bohemia in České Budějovice, Studentská 13, 370 05 České Budějovice, Czech Republic)

Abstract

The objective of the present contribution is to evaluate the risk of accounting errors and frauds in small companies predominantly operating in agriculture. It is based on an analysis of the CFEBT risk triangle for financial statements reported for the years 2012-2016.The CFEBT risk triangle is applied in form of a case study aimed at risk detection of occurrence of accounting errors and frauds for a selected sample of companies. A detailed analysis of a risk of impact of accounting errors and frauds is illustrated in the case study of an accounting unit chosen from the sample of companies evaluated. Results of the presented case study into the detection and evaluation of the risk based on interconnections between the reported profit (loss) and the generated cash flow during 5 accounting periods confirm the significance of having a complex view for decision-making of users based on reported accounting records and accounting data.Future research into the CFEBT risk triangle focuses on performance of complex analyses for individual types of business activities of small and middle-sized companies in the context of Czech accounting standards and IFRS.

Suggested Citation

  • Zita Drábková, 2018. "CFEBT Risk Triangle as a Tool for Detecting and Evaluating Risks of Accounting Records: a Case Study," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 66(3), pages 747-754.
    • Handle: RePEc:mup:actaun:actaun_2018066030747
    DOI: 10.11118/actaun201866030747
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    References listed on IDEAS

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    1. Zita Drábková, 2015. "Analysis of Possibilities of Detectnig the Manipulation of Financial Statements in Terms of the IFRS and Czech Accounting Standards," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 63(6), pages 1859-1866.
    2. Grace Mui & Jennifer Mailley, 2015. "A tale of two triangles: comparing the Fraud Triangle with criminology’s Crime Triangle," Accounting Research Journal, Emerald Group Publishing Limited, vol. 28(1), pages 45-58, July.
    3. Caplan, D, 1999. "Internal controls and the detection of management fraud," Journal of Accounting Research, Wiley Blackwell, vol. 37(1), pages 101-117.
    4. Alexander Schuchter & Michael Levi, 2015. "Beyond the fraud triangle: Swiss and Austrian elite fraudsters," Accounting Forum, Taylor & Francis Journals, vol. 39(3), pages 176-187, September.
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