Journal of Legal, Ethical and Regulatory Issues (Print ISSN: 1544-0036; Online ISSN: 1544-0044)


Are the Score Ratios Conclusive in Detecting Financial Fraud? The Case of Clinica Las Condes in Chile

Author(s): Alberto Clavería Navarrete, Amalia Carrasco Gallego, Pablo Moreno Padilla

This research aims to test the effectiveness of certain ratios & financial models frequently used in the literature as tools to detect accounting manipulation, through the case of Clínica Las Condes in Chile. The period of accounting errors 2008 -2019 was analyzed. Situations such as the strong rejection of a forensic audit to determine the real cause of the problem support the interest in using financial analysis tools to know its health. However, the indicators used fail to classify the case as one of financial fraud, but rather as accounting "irregularities". Despite the fact that the company is awaiting a sentence that will allow it to close the case, which has generated economic, legal, social and reputational costs. The study leads to postulate that financial ratios alone are not a sufficient tool to detect manipulation in financial statements. A holistic analysis of the problem is required, using various methodologies, such as the use of data mining models to help prevent and detect financial frauds in time, which have negative consequences for managers, shareholders, investors and other agents of the economy.

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