Failing the sniff test: Researchers find new way to spot fraud

Monday, November 9, 2009 - 08:14 in Psychology & Sociology

Companies that commit fraud can find innovative ways to fudge the numbers, making it hard to tell something is wrong by just looking at their financial statements. But research from North Carolina State University unveils a new warning system that sees through accounting tricks by evaluating things that are easily verifiable, such as the number of employees or the square footage that a company owns. If a company says that its profits are up, but these nonfinancial measures (NFMs) are down, that's a sign something is probably wrong.

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