Distortion of Financial Statements: Strategies Used and Detection Mechanisms Coordonator Stiintific

Abstract

The distortion of financial statements is a significant issue in the financial-accounting field, with widereaching implications for economic decision-making, investor confidence, and the stability of financial markets. This article investigates the primary strategies used to manipulate financial data, such as erroneous revenue recognition techniques, overvaluation of assets, and the undervaluation of liabilities. These manipulative practices can lead to a misleading portrayal of a company's financial health, which may impact critical decisions made by investors, creditors, and other stakeholders. In addition to examining these strategies, the article explores modern mechanisms for detecting such practices, including advanced data analysis tools, financial indicators, and forensic auditing methods. Through the application of these detection methods, auditors and regulatory authorities can uncover fraudulent activities and ensure greater transparency in financial reporting. The research underscores the importance of adhering to rigorous reporting standards and maintaining financial transparency to foster trust in capital markets and mitigate the risk of financial manipulation. CZU: 657.632; JEL: M41, M42, G34